Security firms paid their top executives a total of $18.4 billion in bonuses last year, and finally we have a President who denounces such waste, fraud, and abuse (as Republicans would call it were it not corporate executives). With Treasury Secretary Timothy Geithner at his side, President Obama on Thursday said in part:
One point I want to make is that all of us are going to have responsibilities to get this economy moving again. And when I saw an article today indicating that Wall Street bankers had given themselves $20 billion worth of bonuses -- the same amount of bonuses as they gave themselves in 2004 -- at a time when most of these institutions were teetering on collapse and they are asking for taxpayers to help sustain them, and when taxpayers find themselves in the difficult position that if they don't provide help that the entire system could come down on top of our heads --that is the height of irresponsibility. It is shameful.
And part of what we're going to need is for folks on Wall Street who are asking for help to show some restraint and show some discipline and show some sense of responsibility. The American people understand that we've got a big hole that we've got to dig ourselves out of -- but they don't like the idea that people are digging a bigger hole even as they're being asked to fill it up.
This is great, but unfortunately talk is no substitute for action. The Washington Post reports that the Obama Administration has finished drafting the central elements of its bailout/rescue plan, whose strategy probably will be announced in approximately one week. And
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.
Particularly excessive, but still indicative of corporate greed, is the example of Robert Nardelli, the chairman and chief executive of Home Depot and now chairman of Chrysler Corporation, about whom the Washington Post reported in January, 2007.
Home Depot's board of directors and Nardelli said they "mutually agreed" to the resignation, which took effect Tuesday. Under the terms of a separation agreement negotiated when he joined the company in 2000, Nardelli, 58, is to receive about $210 million in cash and stock options, including a $20 million severance payment and retirement benefits of $32 million....
Last year, he received more than $30 million in compensation and stock options. During his six years at the company, he earned about $125.57 million in annual salary, bonuses, stocks and other payments, according to Equilar, a compensation research firm in San Mateo, Calif.
It's hard to sympathize with the likes of Nardelli, who was under fire at Home Depot, then moved on to Chrysler, where he has requested a government bailout. Yet, if the Post's report is correct, the Administration worries that strict limits on compensation of corporate executives would unfairly discourage those captains of finance from demanding free money from American taxpayers. On this point at least, in what is truly an upset, President Obama appears to be wrong and the junior senator from Missouri correct. A partial transcript from the blog of a statewide radio news network in her state quotes Claire McCaskill (hardly a reliable liberal) as asserting (video below) on the floor of the Senate:
So here's what this bill's going to do. This is called the Chief Executive Officer Pay Act of 2009, and it's very simple. Going forward if you want taxpayers to help you survive, if you want the people at your financial institution to have a job tomorrow, then you're going to have to limit everyone's pay at your company to the same salary that the President of the United States makes. Now once they're off the public dole, once the taxpayers aren't footing the bill, then it's not as much our business what they get paid. But right now they're on the hook to us. And they owe us something other than a fancy waste basket and $50 million jet. They owe us some common sense. And if any of them think it's a hardship to take the salary of the President of the United States, I dare them to say so out loud right now. Because that's not going to instill confidence.
What is going to instill confidence for the men and women in these companies to realize that everyone in this country needs to tighten their belts. It's time for everyone to realize that we must have our financial institutions survive, but not with a culture that thinks it's ok to kick the taxpayer in the shins while they drink champagne and fly in fancy jets. It doesn't work. Not in the United States of America.
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