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Location: Butte, MT
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Bailout business; Salary caps for Executives

This was on Foxnews.com this morning. Kinda makes me nervous at some level. Yes, I realize that if the company doesn't want the cap, they can opt not to take the bailout $, but this sort of thing could create an environment that companies which don't take the bailout $ (federally imposed salary cap included), won't survive. Whatever the reasons behind this, it is Socialism at its core. Maybe nothing will be made of it in the long run, after the economy rebounds, but maybe it will. At any rate, I can see a point to this: accountability, but it certainly bothers my capitalistic sensibilities.

OBAMA CAPS EXECUTIVE SALARIES FOR BAILED OUT FIRMS AT $500G

President Obama announced strict limits on pay to executives of bailed-out financial firms Wednesday, slamming Wall Street top dogs as "shameful" for accepting billions in bonuses last year.

The new restrictions will cap pay for government-aided Wall Street executives at $500,000.

Obama said he's instituting the new rules to put a stop to what he called a "culture of narrow self-interest and short-term gain" at the expense of taxpayers, and to take the "air out of golden parachutes."

"This is America. We don't disparage wealth," Obama said. "But what gets people upset, and rightfully so, is executives being rewarded for failure, especially when those rewards are being subsidized by U.S. taxpayers.

"For top executives to award themselves these kinds of compensation packages in the midst of this economic crisis isn't just bad taste. It's bad strategy. And I will not tolerate it as president," he said.

Treasury Secretary Timothy Geithner said the limits are designed to "strengthen the public trust" in the government's goal of creating jobs and freeing up credit. He said taxpayers currently share a sense that those not responsible for the financial crisis are bearing a greater burden than those who were responsible.

Last week, Obama called it "the height of irresponsibility" for financial employees to reap the billions in bonuses they got last year. A report from the New York state comptroller found employees of the New York financial world earned about $18.4 billion in bonuses last year.

The administration's most restrictive limits would apply only to struggling large firms that receive "exceptional" assistance in the future. Healthy banks that receive government infusions of capital would have more leeway.

Under the plan, firms that want to pay executives above the $500,000 threshold would have to compensate them with stock that could not be sold or liquidated until they pay back the government funds.

In addition, under the plan banks would face tougher restrictions on so-called golden parachutes and tougher transparency rules on expenses such as office renovations, entertainment and conferences.

Bailout recipients have drawn the ire of the public and lawmakers for sometimes planning lavish retreats and logging seemingly frivolous expenses. Most recently, Wells Fargo canceled a corporate retreat to Las Vegas' Wynn and Encore hotels after the trip became public.

The president and members of Congress have been weighing various proposals to restrict chief executives' compensation as one of the conditions of receiving help under the $700 billion financial bailout fund.

Banks and other financial institutions that receive capital infusions, but are considered healthy, could waive the $500,000 salary cap and the stock restrictions. But they would have to disclose the compensation and submit the pay plan to shareholders for a nonbinding vote.

Top officials at companies that have received money from the government's Troubled Asset Relief Program already face some compensation limits. But elected officials want to place more caps.

"I do know this: We can't just say, 'Please, please,"' said Sen. Claire McCaskill, D-Mo., who has proposed that no employee of an institution that receives money under the $700 billion federal bailout can receive more than $400,000 in total compensation until it pays the money back.

The figure is equivalent to the salary of the president of the United States.

Compensation experts in the private sector have warned that such an intrusion into the internal decisions of financial institutions could discourage participation in the rescue program and slow down the financial sector's recovery. They also argue that it could set a precedent for government regulation that undermined performance-based pay.

Some Republicans, angered by company decisions to pay bonuses and buy airplanes, have few qualms about restrictions, especially if they are temporary.

"In ordinary situations where the taxpayers money is not involved, we shouldn't set executive pay," said Sen. Richard Shelby of Alabama, the top Republican in the Senate Banking Committee.

"But where you've got federal money involved, taxpayers' money involved, TARP money involved, and the way they have spent it, with no accountability, is getting close to being criminal."

The administration's compensation announcement precedes its more comprehensive plans for how to spend the remaining $350 billion in the TARP program. Geithner and Obama's economic team have been revamping the framework of the program and are expected to announce the changes next week.

Officials are considering a government-run "bad bank" that would take on the bad debts and investments of financial institutions. In addition, the Treasury could seek help from the Federal Reserve and the Federal Deposit Insurance Corp. to provide banks with guarantees against losses on assets backed by residential and commercial real estate loans.

On Tuesday, Sen. Charles Schumer, D-N.Y., a member of the Senate Banking Committee with close ties to Wall Street, warned against the "bad bank" idea saying it could be too expensive and the government would have a difficult time setting a value on the assets. He instead endorsed guaranteeing bad assets at a value lower than what banks have on the books.

FOX News' Mike Emanuel and The Associated Press contributed to this report.

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Bailout business; Salary caps for Executives

"Officials are considering a government-run "bad bank" that would take on the bad debts and investments of financial institutions. In addition, the Treasury could seek help from the Federal Reserve and the Federal Deposit Insurance Corp. to provide banks with guarantees against losses on assets backed by residential and commercial real estate loans. "

I'm concerned with this statement. Just doesn't smell right.

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Bailout business; Salary caps for Executives

I agree that it's insulting to see companies receive government bailout money, and then turn around and give big bonuses to executives that put the company in the red to begin with.

However, it's just not the American way for government to put a cap on success. What concerns me is the precedent...a toe in the door to put government in charge of wages. Today the cap is contingent on bailout dollars. But what form of government assistance will be the excuse tomorrow? Tax breaks to develop green technology? Labor programs that subsidize hiring?

Is it a stretch to envision government offering reduced corporate tax rates to companies that meet government-defined criteria like salary caps?

We're creating a heck of a precedent for government control over private business, and doing it for very little effect. Does anyone honestly think this will make a difference? Or will corporations just find other ways to compensate executives -- like stock awards, real estate, etc.?

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Bailout business; Salary caps for Executives

"Obama said he's instituting the new rules to put a stop to what he called a "culture of narrow self-interest and short-term gain" at the expense of taxpayers, and to take the "air out of golden parachutes."

Let it not slip into the shadows that it was not Wall St who took our money from us, it was the Government who took it from us and GAVE it to them.
The Taxpayers expense is not the Bailout recipients but rather the Government.

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Bailout business; Salary caps for Executives

Of coarse the whole thing is classic socialism. The old carrot and stick incentive. The money is the carrot, government control is the stick.

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Bailout business; Salary caps for Executives

The banks, and more importantly their stockholders are enjoying the benefits of socialism already, albiet a Republican style socialism. I use Republican rather than conservative becaus a true conservative would never prop up losing companies like this.

Republican Socialism is where if a company makes money it's given to the shareholders and if it loses money tax payers keep the shareholders from losing their money. Heads I win, tails you lose. It's worked for quite a while.

I love this quote from Expatriate, " it's just not the American way for government to put a cap on success".

Success? You're surely not talking about the failed banks that have led to the biggest meltdown of our economy in 50 years. If that's a success I'd hate to see failure. I think if they are getting my money they shouldn't make any more than anyone else on welfare. Subsidising failure is what it's doing.

The bad bank plan is a stop gap to avoid govt take over of the banks. Obama says govt isn't good at running banks, doesn't want to get that socialism tag stamped on him. So who is good at running banks? Right Now Citi Bank and Goldman Sachs combined sure aren't worth much, maybe 50B. I say save all that money by just buying them out and hiring some foreign bankers to run them, say some Indians or Chinese or something. Tell those tassel toes bankers they've been outsourced.

All the investors have lost money sure. That's the deal when you play the stock market, don't you read the warning that they put on all the literature, "past performance is no guarantee, blah blah blah".

All those in favor of paying taxes to support a bunch of worthles failures raise their hands. You fail you lose. Bottomline.

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Bailout business; Salary caps for Executives

I was talking about the idea that it's not American for the government to step in and say you're making too much money. In this country, we believe it's not the State's role to put a cap on personal achievement.

And by the way, the banks failed because of subprime mortgages pushed as a social agenda by the Democrats.

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Bailout business; Salary caps for Executives

I don't get it. Taxpayers should pay huge bonuses for these losers after we bail out their businesses? I thought in capitalism we just let losers die a natural death. Believe me there are no caps being put on achievement, all those fraudsters did was lose a bunch of money.

"the banks failed because of subprime mortgages pushed as a social agenda by the Democrats" It's legal to grow your own up there isn't it? Why not just blame it on black people or something.

Let me do a reality check. Mortgage companies make huge loans to every and anybody who wants them, banks repackage mortgages as bonds, banks flog the bonds as investment securities, so it's the Dems. Makes sense to me.

Location: Butte, MT
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Bailout business; Salary caps for Executives

Civet, The issue is one of federal government excising control over private business and banks. Our economy is in crisis, and that's the reason for all this, but this is a slipery slope to get on. It's that simple.

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Wow, Civet. I point out that this whole mess started in Fannie Mae and Freddie Mac, and you suggest that I'm a racist. That tells me how desperate you are on this issue.

As Ronald Reagan said, facts are stubborn things. No matter how many times you chant the same mantra, you can't change the fact that our economic crisis was triggered by the collapse of the mortgage industry, and that in turn was caused by subprime loans in Fannie Mae. The historical record is also full of documentation of Democrats pushing bad loans for people who couldn't afford them in the face of Republican warnings.

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Bailout business; Salary caps for Executives
expatriate wrote:
Wow, Civet. I point out that this whole mess started in Fannie Mae and Freddie Mac, and you suggest that I'm a racist. That tells me how desperate you are on this issue.

As Ronald Reagan said, facts are stubborn things. No matter how many times you chant the same mantra, you can't change the fact that our economic crisis was triggered by the collapse of the mortgage industry, and that in turn was caused by subprime loans in Fannie Mae. The historical record is also full of documentation of Democrats pushing bad loans for people who couldn't afford them in the face of Republican warnings.

Quit being so obtuse, he's pointing out that blaming it on 'the dems' is about as ridiculous as saying something like the comparison he provided. Does Clinton have some blame in the sub prime mortgage affair? Sure, as does Bush, as does predatory lenders, bankers, and so forth. But, I forgot in your simple world everything is their fault and if your party was in charge the world would be perfect. They were in charge for about eight years, six of them with full and total control of our Gov. and this is where we've arrived after those years. If they were doing such a stellar job of leadership you'd think they'd still be in charge. But, oh, I forgot the main excuse I read about from the right is that 'those' people who don't normally vote, did this time because of a certain 'reason' only and that's why the repubs aren't in charge anymore.

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