The executive compensation issue is trivial by the side of the bailout, but this is annoying (and, in any case, the issue should be executive jail time, not executive compensation). WaPo:
Treasury Secretary Hank Paulson (R-Goldman Sachs) made the rounds of the talk shows on Sunday, pleading for financial executives to be allowed to keep their multimillion-dollar compensation packages even if their companies need to be rescued by the $700 billion federal bailout.
"If we design it so it's punitive and so institutions aren't going to participate, this won't work the way we need it to work," Paulson, whose net worth is said to be north of $600 million, told Chris Wallace on "Fox News Sunday."
"While it is very appealing to think about executive compensation as being a part of this, one of the drawbacks to that is perhaps that we would have fewer entities participate in what is essentially a voluntary act," Sen. Mel Martinez (Fla.) said on CNBC yesterday morning.
Good God! Does responsibility to shareholders mean nothing? Does fiduciary responsibility mean nothing?
Simple answers to simple questions.
Meanwhile, 15% of American homeowners with a mortgage (7.5 million people) spend 50% of their income on housing, when the historical average is closer to 30%. And we get?
UPDATE In Online WSJ, here's the mindset that's the problem:
The Treasury is looking for a compromise, a structure that satisfies Congress yet doesn't punish firms that want to participate, said people familiar with the matter. One potential option is for executive compensation curbs to apply in cases where Treasury structures a deal where it injects a significant amount of capital into a firm.
The firm is not the executives, right? The shareholders own the firm, right? (at least when the firm is publicly traded).
So how does punishing the executives punish the firm? Indeed, some might say that the firm has already been punished enough -- by those same executives.
- lambert's blog
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Obviously, the plan isn't well thought out
We'd better buy the CEOs gated mega-villas in Tuscany, well-stocked with first-class hookers and the finest cocaine -- anything they want and more -- or else they might not accept taxpayer's money in order to keep their companies in business and prevent the country from plunging into a deep depression.
It's the least we can do to reward these masters of the universe for all they've done for us.
there are "shareholders" and then there are Shareholders
we all know what kind we're about to become. as i've been saying for a while, inspired by Newberry, who came up with it, "No rich people will be harmed in the making of this Depression." you can put that in the bank. as that's like the only thing you'll have.
ceos aren't taking this seriously
ok, so don't participate, why should we care. they really don't get it and our politicians might let them get away with that.
Couldn't a HOLC type of solution be structured
To allow the homeowner in trouble to opt-in? That would side step the CEO pay issue because the refinance would take place at the bottom.
The corporate IV solution of tax payer dollars could be withheld if the CEO and leadership are unwilling to hurt too.
Away
I might actually support something like this if it meant they went away.
By Away
I assume you mean Leavenworth. :-)
Many of these guys supported candidates who have passed amazingly harsh criminal statutes for money laundering and other crimes. I say we put them to good use.
"Do what you feel in your heart to be right -- for you'll be criticized anyway. You'll be damned if you do, and damned if you don't. " - Eleanor Roosevelt
Well, good!
So the sticky-fingered CEOs won't participate unless the cash conveyor keeps rolling past their glue-prepared mitts? Well, good. They were either too stupid or too corrupt (being nice -- I really think it's "both. . .and" rather than "either. . .or") not to create the problem in the first place. I doubt that they've gotten smarter and they're announcing that they sure haven't gotten less corrupt. The notion that anybody needs the kind of expertise these disaster producers have is patently absurd.
These particular financial institutions have been turned into a drag on the real economy rather than an enabler of it. Screw'em, and the horses their CEOs rode in on.
Use government money, faith, and credit to provide what responsibly structured financial support is necessary for productive institutions and their clients.