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TMFBent (99.84)

Pull Your Head Out, Mr. President

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February 04, 2009 – Comments (20)

Obama: Executives Won't Be Rewarded for Failure

Mr. President. Dude. I understand you work in a world where soundbites are more important than reality, but this soundbite doesn't "pass mustard" (as I once saw it written) at all.

First off, you're not talking about reeling in the egregious pay packages at banks you've already bailed out. So stop the pretending. This deal is for banks on double secret probation, or the ones who come begging for something extraordinary, beyond the giant handouts you've already given them, no strings attached.

You're talking tough after the bullies have already pounded you into the dirt, dude.

Second, it's not such tough talk after all. "Furthermore, the new limits would be voluntary for most recipients of fresh government aid."

Voluntary? Wow. You're really sticking it to them there, Mr. Obama.

Finally, this late-coming, get-tough act fails to acknowledge the reality that these guys already got paid a ton for the massive failure they made. They pocketed billions and billions when times were good. The theft (and that's what it is to me) is already booked. That money's gone, they blew up their businesses, and you've rescued them from those terrible decisions.

Believe me, no one on Main Street is going to believe you're tough if you explain how things really go: "You know that guy who made $80 million running his bank into the ground last year? Well, we're getting tough with him. This year, while we pour millions more into the bottomless rathole he created, Mr. CEO's only going to get half a million dollars -- that is, if the company joins our voluntary pay cut program." 

"You hear me? Only half a million dollars on top of the tens of millions they've already pocketed. That'll teach 'em!"

Doesn't that make all you laid-off citizens feel better? Do we not get justice with our new Chicago tough guy act?

I'm not sure what can be done to rectify this historical wrong, but I know that this bit of posturing is as toothless as Tom Daschle's tax inspector.

20 Comments – Post Your Own

#1) On February 04, 2009 at 5:00 PM, Option1307 (30.48) wrote:

Nice rant, I share your pain...

I personally would like to welcome everyone to "4 more years" of the same crap. Washingon will not change without a people's revolt, beit literal or figuratively speaking, we are in for more of the same. Don't kid yourself people.

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#2) On February 04, 2009 at 5:21 PM, ByrneShill (83.10) wrote:

This is almost funny. Unless shareholders (and I'm talking MF/pensions managers here) start voting against hose insane compensation packages, just let them take the money and run. Paying a bad employee too much isn't a decision for the govt to make, it's a business decision.

And btw, low pay doesn't mean high returns. Pat Byrne is only paid a buck a year you know...

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#3) On February 04, 2009 at 5:49 PM, blake303 (29.88) wrote:

Most of the execs that made out like bandits are long gone, but that is no reason not to prevent similar actions in the future. Is it even legal for him to retroactively change the terms of the TARP funds that have already been used? He voted in favor of TARP, so is somewhat responsible for its lack of teeth. However, it was mostly the creation of Paulson under Bush. 

You failed to mention that the salary cap is only voluntary if the recipient bank discloses executive compensation to the public. While this does not give the government "teeth" to enforce limits on compensation, the backlash created by bad PR has kept executives in check, such as the reversals made by the Big 3 (traveling by private jets), Citigroup (private jet), and Wells Fargo (Vegas). I would rather have shareholders approving executive pay anyway, which will be enabled by disclosing compensation.

There are other restrictions that are not so bad. I like the enhanced clawback provision, restrictions on purchasing other companies, and further limitations on golden parachutes. Rant away if you need to blow off some steam though, dude.

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#4) On February 04, 2009 at 5:49 PM, TMFBent (99.84) wrote:

Yeah, BS. As you know, people only care that you're ripping them off when they stop making money. If they're getting a taste, they don't care how ridiculous the pay packages are.

No one cared that Bernie Madoff was a crook (and they all suspected it, right?) so long as he was their crook. When it turned out he was stealing from them instead of for them, then it became a problem.

 

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#5) On February 04, 2009 at 6:12 PM, UltraContrarian (32.52) wrote:

Byrne - The point is that the government has taken and will continue to take major financial stakes in TARPed banks.  The difference between negotiating executive pay with a major new debtor and holding a shareholder vote is procedural: after the recent public outcry on this issue, they would very likely have the same results.

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#6) On February 04, 2009 at 6:21 PM, BigFatBEAR (30.14) wrote:

TMFBent,

This is funny - I actually wrote a defensive rant today, about our nation's leaders. I'd appreciate any input: http://caps.fool.com/Blogs/ViewPost.aspx?bpid=140626&t=01007595628960767877

I dunno. I can hear some of your points--and agree--but I have a feeling that this is the first in a series of steps to punish horribly greedy and irresponsible execs. Next up, I'm hoping is along the line of Dowd's "Disgorge, Wall St Fat Cats"...

-BFB Report this comment
#7) On February 04, 2009 at 6:52 PM, cbwang888 (25.84) wrote:

To have the government to own shares of the private companies is the worst plan ever. No one care about making $$$ for the government.

More bailouts = more failures. 

 

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#8) On February 04, 2009 at 10:55 PM, rulita (< 20) wrote:

Are you all serious? where have you been for the last 8 years? The President, Mr. Obama just took office January 21, 2009, I think if I know some math that should make it 14 days(+or-), how can you all direct your frustrations on Obama? If you read and follow what was going on during the Bush administratation you know as well as I do that there was no control, it was as if the parents went out and left a couple of teens alone at home; guess what? They had a party  and it was huge, full of greedies and they did whatever they thought it would make them money, and whatever was left they drank it!. Now Mr. Obama has inherited this huge problem along with you and me. What are we going to do? How can we get the economy of this country get going again, how can we recuperate all the jobs lost to China, Asia and South and Central America? We did not loose those jobs out of our choice, noone asked me DO you think that is great idea to take all theses jobs outside the USA so we(the corporations and CEO"s) can make more money, after all, we are paying all these Americans employees too much money, we can pay theses people from China approximately 20cents an hour, immagine the difference is our gain! I am not asking you what is going to happen to you the guy that worked for Pratt and WHitney for 20 years and knew so well how to put those parts together, and helped us built our reputation as one of the best companies to build airplanes parts, OH NO! who cares about you or those third world country people? Honestly, all I care is about me, immagine now I will be able to afford a house in Nantaucket and perhaps in Martha's Vineyard.  That was their thinking, it was not globalization is good for the world, it was not that we are going to make all those countries better, IT WAS ALL ABOUT MONEY and The Bush Administration did not do a thing about it. Now that the problem is ours(meaning the people that make a salary to pay alll their bills and hopefully save some money for the kid's education) let's support our President Obama, let's give him a chance. let's not complain but be positive. If you are able to bring people that think differently together , you will see that even if we see the problem differently, we can find some solution that will make both parties content, this is what we have to do now, we have to build up not destroy, America is beautiful and we need to save her! We do not know for sure if this plan will work, we need to try until we can find the balance.

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#9) On February 04, 2009 at 11:31 PM, cwlawrence (< 20) wrote:

now, now, we all despise bush (even the people who say they don't  but really struggle every day with their duplicitous lives, choking down the digust and begrudgingly burying their shame in the back yard right next to their shattered hopes and childhood optimism. But I digress,,,)

The OP was ciriticising President Obama for towing the party line here. Yeah, we can't blame the President for the current situation and we can't blame him for the bailouts, but we can certainly criticise what he says about all of that...

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#10) On February 04, 2009 at 11:40 PM, RainierMan (40.03) wrote:

Oh, so let them just keep shafting us even more and do nothing about it? No thanks.

 It may be mostly symbolic, but what the heck. 

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#11) On February 05, 2009 at 1:21 AM, uclayoda87 (29.86) wrote:

Besides some symbolic executive orders and poorly vetted appointees, the new President has not really done much other than spending a little money on White House decor.  So right now he is way ahead of former President Bush on helping the economy.  If President Obama can just manage to avoid signing any documents for the next 4 years, we might just be able to dig ourselves out of this financial hole.

Unfortunately, I suspect that Big Brother will insist on "helping"; and the next generation will learn what we have forgotten:  What Communism is all about.

 

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#12) On February 05, 2009 at 11:32 AM, drgroup (68.37) wrote:

I have to congratulate the Madison Ave marketing company that gave birth to Obama. They taught him to be able to create an insignificant issue on one hand while destroying your life with the other hand. So much insignificant rambeling about exec pay on one hand while establishing the precident of communism on the other hand.

All of these execs had a board of directors they answer to regarding there performance. It is their job to monitor and direct these clowns, not Obamas.  Where does this abuse of power stop? f you want to punish someone for not doing their job and getting absurb compensation while doing it, then cap compensation for Hollywood actors, professional athelets who lose and this list goes on....

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#13) On February 05, 2009 at 11:44 AM, cwlawrence (< 20) wrote:

Seriously, communism? You have to be joking... because that is most ridiculous claim I have heard (and there are a lot of ridiculous claims on CAPS)

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#14) On February 05, 2009 at 1:18 PM, eldemonio (98.81) wrote:

Bent - ranting feels good, doesn't it? 

Here's an idea.  How about forcing banks to actually lend some of the money they are taking? 

Instead - these dumbsh!ts are putting it right back into the Fed, earning a whopping 1% when they have to pay out their customers 2-3%.  OMGFICBTSPWAROC!

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#15) On February 05, 2009 at 2:54 PM, drgroup (68.37) wrote:

CWL... now that you know what it is all about, what are you going to do? Shocking isn't it?

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#16) On February 05, 2009 at 3:14 PM, blake303 (29.88) wrote:

Where does this abuse of power stop? f you want to punish someone for not doing their job and getting absurb compensation while doing it, then cap compensation for Hollywood actors, professional athelets who lose and this list goes on....

If executives do not want their pay capped they can look for capital elsewhere or publish their compensation. It is not an abuse of power to restrict executive pay at firms that will go under without taxpayer support. Actors and athletes generally have very short careers and are paid for their ability to fill seats/sell merchandise. This is not a fair comparison to executives, which have received increasingly excessive salaries while failing to improve the companies they run.  

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#17) On February 06, 2009 at 12:56 PM, BigFatBEAR (30.14) wrote:

blake303

Hit the nail on the head there. If you're going to receive support from taxpayers, you damn well better use it to make a better business, and you damn well better NOT use it to pad your already huge bank accounts, fly to Vegas, etc.

Accountability is all we're asking. Anyone that sees communism here has a last name that begins with "Mc" and ends with "Carthy".

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#18) On February 06, 2009 at 1:41 PM, drgroup (68.37) wrote:

Blake303... you are not asking for accountability, you are asking the government to take over private enterprise. This is what socialist/fasciast/communist do. Just open the door to these bozo's and you can never get the clown out.

The board of directors of these companies are responsible for ceo accountabilty, not the gov.

 Anyone that sees communism here has a last name that begins with "Mc" and ends with "Carthy". Great point, Mcarthy worked for the gov. and was on a witch hunt to silence a lot of patriots. The opposite applies here...

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#19) On February 07, 2009 at 4:01 AM, uclayoda87 (29.86) wrote:

communism |ˈkämyəˌnizəm| (often Communism)
noun
a political theory derived from Karl Marx, advocating class war and leading to a society in which all property is publicly owned and each person works and is paid according to their abilities and needs. See also Marxism .
The most familiar form of communism is that established by the Bolsheviks after the Russian Revolution of 1917, and it has generally been understood in terms of the system practiced by the former USSR and its allies in eastern Europe, in China since 1949, and in some developing countries such as Cuba, Vietnam, and North Korea. Communism embraced a revolutionary ideology in which the state would wither away after the overthrow of the capitalist system. In practice, however, the state grew to control all aspects of communist society. Communism in eastern Europe collapsed in the late 1980s and early 1990s against a background of failure to meet people's economic expectations, a shift to more democracy in political life, and increasing nationalism such as that which led to the breakup of the USSR.
DERIVATIVES
communist noun & adjective
communistic |ˌkämyəˈnistik| adjective
ORIGIN mid 19th cent.: from French communisme, from commun (see common ).

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#20) On February 07, 2009 at 1:10 PM, blake303 (29.88) wrote:

drgroup Blake303... you are not asking for accountability, you are asking the government to take over private enterprise. This is what socialist/fasciast/communist do. Just open the door to these bozo's and you can never get the clown out.

That is not what I am saying at all. I am saying that if you ran your company so poorly that the government MUST help you out, you have no right to bitch about what your salary is. The government is not taking control, they are infusing capital. The companies that take these funds are still run by the same CEOs, board of directors, and majority shareholders. It has nothing to do with any of those economic systems. I would encourage you to go back to school to study those philosophies, but I'm not sure that clown college offers curriculum in politics or economics.

The board of directors of these companies are responsible for ceo accountabilty, not the gov.

Directors did a horrible job of holding execs accountable. Where was the board of directors when lenders were giving mortgages to anyone with a pulse (that probably could have been waived for a fee too)?  Where was the board when AIG decided to send its execs on a luxury retreat after destroying one of the largest insurance companies in the world?  Where was the board when Thain went curtain shopping? Where were the boards when rating agencies were doling out AAA rated charmin? Where were the boards when CEOs of the big three decided it was prudent to fly to Washington? Do you see a pattern emerging?

Boards of directors are beholden to CEOs. Board members are often CEOs themselves, who are "held accountable" by other executives they select and determine compensation for.

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