Obama unlikely to toughen Wall St. pay rules: report

[depakid]

Source: Reuters

The Obama administration is not likely to impose tougher restrictions on executive pay on most firms receiving aid under the government's $700 billion financial rescue program, the Washington Post reported on Saturday.

Citing a source familiar with the administration's deliberations, the Post said officials are concerned that harsh limits could discourage some firms from asking for aid.

President Barack Obama and some members of Congress have strongly criticized recent bonuses given out to executives at Wall Street companies that received government assistance.

The issue of executive compensation is part of Obama's plan to rescue financial markets. While some details need to be hammered out, the strategy is likely to be laid out publicly in about a week, the paper said.

Read more: http://www.reuters.com/article/newsOne/idUSTRE50U0R320090131

[Journeyman]

1. I would think a company that decided against seeking aid because of such a rationale. . .

but did in fact need a taxpayer bailout to make it, that company would find itself under intense pressure from its shareholders to submit to whatever caveats were set for them to qualify for the aid.

However, if they could, indeed, make it without CEO pay restrictions -- i.e., make it without a taxpayer bailout -- then it's a win-win all around.

But if they can't, and they want our money, they should submit to whatever restrictions we put on it.

[DUlover2909]

2. Exactly. If they don't take the money for that reason, fire the decision makers.

Get someone in there that is willing to accept the terms and stay in business.

[sendero]

13. I agree..

.... if they don't want to do what needs to be done, fine. But bag the bullshit excuse.

[Frank Booth]

31. Nice analysis.

:thumbsup:

[elleng]

3. Lets see.

http://www.washingtonpost.com/wp-dyn/content/article/2009/01/30/AR2009013003665.html?hpid=topnews

[No Elephants]

4. Harsh limits could discourage companies from

asking for a bailout? Why am I not seeing the downside to "harsh" limits? These people created paper profits that did not exist in real life in order to get past bonuses. So, they did not actually deserve the bonuses they got in the past. And now, they want bonuses for driving the global economy into the ground with funny paper? But, we're supposed to be afraid because they might not ask the feds for still more money?

I worked so hard for a Democratic President and a Democratic Congress and this is what I get?

Are you freakin' kidding me?

[Enthusiast]

9. Dude! I agree with you!

What is the downside?!

[OneBlueSky]

5. I've said all along that success for Obama will depend largely on . . .

his willingness to go after the corporations head-on -- strict regulation, prosecution for misdeeds, taxation of windfall profits, strong penalties for moving American jobs overseas (and for moving corporate headquarters offshore to avoid taxes), removing corporations from the election process, prohibiting corporations from any participation in writing legislation affecting their industries, etc. . .

this is NOT a hopeful sign . . . Obama's attitude toward/relationship with corporations has been the one major reservation I've had about his presidency . . . allowing corporations to function as they have for the past eight years will not result in any kind of meaningful change, imo . . .

[woodwrite]

6. What you said.....

All those things are among precisely what needs to happen. Things like Wall Street bonuses and that stupid corporate jet for Citi are exactly the kinds of things that can incite a REAL public outcry,...... witness the overnight public rejection of that Congressional payraise in the late 80's,... or the instaneous reaction to Bush's plan to outsource US port security to a mideast nation. Those events inspired true tidal waves of public incredulity and outrage,... and corporate excesses have that same potential. Keep your powder dry.

[dcindian]

7. A sad sad thing if true.

We are trying to cure cancer with bed rest and candy. President Obama must dig deep and do the hard things we need corporate responsibility more then anything else right now.

[Mari333]

15. ditto n/t

[stillcool]

18. I don't get it...

what does this part mean?

The issue of executive compensation is part of Obama's plan to rescue financial markets. While some details need to be hammered out, the strategy is likely to be laid out publicly in about a week, the paper said.

[Alhena]

8. The fatcats always wins- always have, always will

sad to see Obama won't try to change that.

[Runcible Spoon]

19. There's not much LEFT to win.

And that's when things will get ugly.

[Buns_of_Fire]

10. If it discourages some firms from asking for a bailout, what's the problem?

If the firm needs the money to stay afloat, but rejects the aid because their CEO might get his panties in a wad and split, they obviously didn't need the money (or the CEO) in the first place.

And if that happens, and the firm goes under, they can deal with the torches and pitchforks held by their OWN stockholders -- thereby saving wear and tear on everyone ELSE'S torches and pitchforks (I'm trying to keep mine in perfect working order for a few "special" people, y'know?:evilgrin:)

[chimpymustgo]

11. But there will be "stern letters", right?

[peaches2003]

12. Can't control Pelosi so why would he buck Wall Street

This whole stimulus package started going downhill when it became apparent Obama, who I 100% supported, is unable or unwilling to control Pelosi from putting in so much crap into the bill that it became almost nothing but pork and favorite non-stimulus Dem programs. We needed a clean stimulus-only bill, not a mish-mash of garbage that took all the headlines and said 'same ole, same ole'. Nothing ever changes.

[No Elephants]

16. LOL, who said "One man's pork is another man's infrastructure? Schumer?

[FormerOstrich]

14. It's early....

I think my reading comprehension must be impaired because I do not see anything in the Reuters article OR the subsequently linked Washington Post article to indicate Obama is unlikely to toughen pay.

If executive compensation is a key component to rescue the financial markets in Obama's plan it seems more likely than not....

The OP includes text from the article which actually seems to contradict the heading:

The issue of executive compensation is part of Obama's plan to rescue financial markets. While some details need to be hammered out, the strategy is likely to be laid out publicly in about a week, the paper said.

While relatively healthy firms are unlikely to face stiff restrictions on executive compensation, companies that need more dramatic government assistance would face more punitive terms under the plan, it said.

:shrug:

[mac56]

21. I agree with you.

That was my thought too - - where does it say so in either of the articles?

We've had a rash of misleading headlines in recent days, that contradict or at least don't support the attached articles.

[muriel_volestrangler]

29. 1st 2 paragraphs of teh Reuters article; and here's the WP article (not linked to yet in this thread

WASHINGTON (Reuters) - The Obama administration is not likely to impose tougher restrictions on executive pay on most firms receiving aid under the government's $700 billion financial rescue program, the Washington Post reported on Saturday.

Citing a source familiar with the administration's deliberations, the Post said officials are concerned that harsh limits could discourage some firms from asking for aid.

And that comes from:

A Multi-Pronged Bank Plan
Administration Probably Won't Toughen Pay Restrictions at Healthy Firms

...
In finalizing the plan, officials have made a policy decision that could dismay lawmakers. The administration is likely to refrain from imposing tougher restrictions on executive compensation at most firms receiving government aid but instead retain looser requirements initially included in the Treasury's $700 billion rescue program, a source familiar with the deliberations said. Officials are concerned that harsh limits could discourage some firms from asking for aid.
...
Obama's officials have said they will clearly lay out the conditions for any government investment. While relatively healthy firms are unlikely to face stiff restrictions on executive compensation, companies that need more dramatic government assistance would face more punitive terms, a source said.

Under the original rescue program approved by Congress in October, executives at financial firms for the first time faced federal limits on their multimillion-dollar pay packages. But those restrictions were unlikely to significantly reduce executive pay, analysts and banks said at the time.

The law largely focused on banning "golden parachute" payments to departing executives under certain circumstances. But most banks participating in the Treasury's capital purchase program were permitted to offer senior managers severance packages worth up to three times their average annual earnings. That amounts to a very large sum in most cases, the analysts said.

http://www.washingtonpost.com/wp-dyn/content/article/2009/01/30/AR2009013003742.html?hpid=topnews

I'd say that any bank needing government assistance is 'unhealthy', and therefore the restrictions are needed.

I wouldn't object to something like "if, in the future, you manage to pay back government loans ahead of schedule, ie a good sign that you've succeeded, then you can have a bonus". Nothing huge. I worked for a company where the bonuses, in a really good year, were about a month's salary. That seems reasonable to me.

[stillcool]

17. That is one confusing article..

First we have 'citing a source familiar with the administration deliberations'. Okay. But further down in the article there is this..

The issue of executive compensation is part of Obama's plan to rescue financial markets. While some details need to be hammered out, the strategy is likely to be laid out publicly in about a week, the paper said.

[daleo]

20. I met a panhandler once

Who didn't want to take a lousy dollar - he insisted on two dollars at at time. Quite a character, he was.

[Posteritatis]

23. Friend of mine knew one who would accept nothing more, or less, than seven cents at a time

Apparently he was comfortable insofar as one in that situation can be; the request was trivial (and weird) enough that folks felt silly not handing over a nickel and two pennies.

The fact that his spot was on the edge of an art school's campus probably didn't hurt.

[eilen]

30. We had a guy we called "Spare Change"

that is literally all he said.

[w4rma]

22. The bailout money just gets laundered without this provision. It's *very* important to our nation's

economy to make sure any bailout includes this.

[anonymous171]

24. They should have two options: Take the money (w/ pay cut) or be nationalized.

I'm tired of these fuckers. We need to start playing hardball.

[Azlady]

25. Off to the Greatest & Annonymous171 I agree!

[OhioChick]

26. Is this the same man that I voted for? n/t

[ProgressIn2008]

27. Yes. nt

[VADem11]

28. Obama administration is disputing this

"Administration officials challenged a report in The Washington Post that suggested Obama was unlikely to tighten restrictions on compensation for banks that accept bailout funds, saying the report was "simply untrue."

White House and Treasury officials said the president will soon crack down on those big bonuses, shareholder enrichment and overall accountability."


http://www.abcnews.go.com/Politics/CEOProfiles/story?id=6778419&page=1