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Impact of Oinkbama salary caps on NY City...

 
 
Reply Thu 5 Feb, 2009 08:01 am
Funny thing, it would be one thing if the companies in question had been reduced to bailout status due to their own malfeasance; in most if not all cases however, they have been reduced to that status by obeying government orders and the talent which makes NY city what it is may not stick around:

http://wcbstv.com/politics/executive.pay.limits.2.927082.html


Quote:


NEW YORK (CBS) ―

President Obama's Wall Street salary cap may be well intentioned and it certainly taps into public sentiment, but it's a killer for New York.

"Without the talent of Wall Street to bring us back into a position of leadership in the global economy, we're going to be in bad shape as a world economic power," said Kathryn Wilde of the Partnership for New York.

Wylde says the Obama salary cap will lead to a critical brain drain " China and the United Arab Emirates have already come to poach Wall Street talent. She also says lower salaries in the financial industry will mean dramatically lower tax revenues for the city and state.

"We also depend heavily on the financial services industry to fund our economy and our tax rolls," said Wylde. "Last year 20 percent of our income taxes in the states " 12 percent in New York City came from Wall Street."

Tell Us What You Think. Will The Salary Cap Work?

Public sentiment among Wall Street employees and local politicians is with the president.

"I'm more concerned about, again, the obscene salaries being paid by companies that are getting federal money and what that was doing to consumer confidence," said Rep. Peter King (R-Long Island.).

And that feeling dominated among those CBS 2 randomly spoke with on city streets.

"Given the current environment, I think it makes sense. In the longer term it won't last, but for now, I complete agree with it," said Bob Leverich, a Chatham, N.J. resident.

"I think that honestly it's more of a responsible way of handling what's happening in the economy right now based on people's years of mismanagement," said Colts Neck N.J. resident Anthony Wagar.

Experts said that the President's actions will make it more difficult for both New York City and New York state to come out of the recession.

In addition to a salary cap, President Obama said bonuses should be limited to stock shares, which can't be collected until federal loans are paid back.

Obama announced the dramatic new government intervention into corporate America at the White House, with Treasury Secretary Timothy Geithner at his side. The president said the executive-pay limits are a first step, to be followed by the unveiling next week of a sweeping new framework for spending what remains of the $700 billion financial industry bailout that Congress created last year.

The executive-pay move comes amid a national outcry over huge bonuses to executives heading companies seeking taxpayer dollars to remain afloat. The demand for limits was reinforced by revelations that Wall Street firms paid more than $18 billion in bonuses in 2008 even amid the economic downturn and the massive infusion of taxpayer dollars.

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

The pay cap would apply to institutions that negotiate agreements with the Treasury Department for "exceptional assistance" in the future. The restriction would not apply to such firms as American International Group Inc., Bank of America Corp., and Citigroup Inc., that already have received such help.

"There is a deep sense across the country that those who were not ... responsible for this crisis are bearing a greater burden than those who were," Geithner said.

Firms that want to pay executives above the $500,000 threshold would have to use stock that could not be sold or liquidated until they pay back the government funds.

Generally healthy institutions would have more leeway. They also face the $500,000 limit if they're getting government help, but the cap can be waived with full public disclosure and a nonbinding shareholder vote.

Obama said that massive severance packages for executives who leave failing firms are also going to be eliminated. "We're taking the air out of golden parachutes," he said.

The proposal comes after it was revealed that Wells Fargo & Co. canceled a pricey Las Vegas casino junket for employees after a torrent of criticism that it was misusing $25 billion in taxpayer bailout money.

The company initially defended the trip after The Associated Press reported it had booked 12 nights at two of the city's most expensive hotels. But within hours, investigators and lawmakers on Capitol Hill had scorned the bank, and the company canceled.

President Obama reacted angrily last week to reports that banks gave more than $18 billion of bonuses at a time when they were relying on taxpayer money for their survival, calling such bonuses "shameful," and deeming them "the height of irresponsibility."

Other new requirements on "exceptional assistance" will include:

- The expansion to 20, from five, the number of executives who would face reduced bonuses and incentives if they are found to have knowingly provided inaccurate information related to company financial statements or performance measurements.

- An increase in the ban on golden parachutes from a firm's top five senior executives to its top 10. The next 25 would be prohibited from golden parachutes that exceed one year's compensation.

- A requirement that boards of directors adopt policies on spending such as corporate jets, renovations and entertainment.

The administration also will propose long-term compensation restrictions even for companies that don't receive government assistance, Obama said.

Those proposals include:

- Requiring top executives at financial institutions to hold stock for several years before they can cash out.

- Requiring nonbinding "say on pay" resolutions -- that is, giving shareholders more say on executive compensation.

- A Treasury-sponsored conference on a long-term overhaul of executive compensation.

Top officials at companies that have received money from the government's Troubled Asset Relief Program already face some compensation limits.

And 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 undermines performance-based pay.

"It's not a government takeover," Obama stressed in an interview Tuesday with CNN. "Private enterprise will still be taking place. But people will be accountable and responsible."

Still, some elected officials were pushing for the stricter caps.

Sen. Claire McCaskill, D-Mo., 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. Her figure is equivalent to the salary of the president of the United States.

Even some Republicans, angered by company decisions to pay bonuses and buy airplanes while receiving government help, have few qualms about restrictions.

"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 on 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."





 
Frank Apisa
 
  1  
Reply Thu 5 Feb, 2009 08:07 am
I'm delighted the president took this step...and I hope he sticks with it.
0 Replies
 
Woiyo9
 
  1  
Reply Thu 5 Feb, 2009 08:46 am
Funny how the author did not include the impact of the fat cats decision to payoff thousands of underlings and it's impact to the NYC economy.
0 Replies
 
gungasnake
 
  1  
Reply Thu 5 Feb, 2009 08:55 am
Funny thing how what some of these guys are worth is still based on what people are willing to pay and it sounds like others are willing and there probably is a reason for that.

What's going to happen is that Barack Oinkbama, who was suing banks to FORCE them to make these bullshit loans two years ago, is going to try to say something about patriotism to some of these guys as they're headed towards the terminal and they're going to tell him to go **** himself and head straight onto that plane for China or the UAE.
Woiyo9
 
  1  
Reply Thu 5 Feb, 2009 09:02 am
@gungasnake,
Well maybe these CEO's who have demonstrated their inability to run large organizations should go to China or UAE to find work. I hear the penalties for messing up over there are just a tad more harsh then they are here.

This to me is purely a symbolic measure on Obama's part as it is not retroactive and will not effect B of A, AIG or any firm that has already received TARP funds. Plus most of these CEO's base salary is about 500K anyway.
rosborne979
 
  1  
Reply Thu 5 Feb, 2009 09:07 am
I bet there's a whole lot of people out there who would just love to make a $0.5million a year salary, and would be just as good at the job as the guys who were making $10million in bonuses. This could open up a whole new world for talented young execs who couldn't break into the industry before without starting in middle management and learning how to manipulate their way to the top like their predecessors.
maporsche
 
  2  
Reply Thu 5 Feb, 2009 09:09 am
I do think that it's bullshit that this will only apply to the financial institutions and not to say, GM or Chrysler.

It also doesn't apply to government funded, non-profit cooporations who have executives who make over 500k (i.e. ALL OF THEM).

Frank Apisa
 
  1  
Reply Thu 5 Feb, 2009 09:15 am
@maporsche,
Amen!
0 Replies
 
Frank Apisa
 
  1  
Reply Thu 5 Feb, 2009 09:17 am
@gungasnake,
Quote:
What's going to happen is that Barack Oinkbama, who was suing banks to FORCE them to make these bullshit loans two years ago, is going to try to say something about patriotism to some of these guys as they're headed towards the terminal and they're going to tell him to go **** himself and head straight onto that plane for China or the UAE.


Good fuckin' riddence to 'em. Hope the door doesn't hit 'em in the ass.
0 Replies
 
gungasnake
 
  1  
Reply Thu 5 Feb, 2009 09:33 am
@Woiyo9,
Quote:
Well maybe these CEO's ...


When you're talking about 500K I don't think you're talking about CEOs. In fact Chinese firms assuredly have their own CEOs and it is fairly certain that you'd have to speak Mandarin Chinese fairly well to even apply for one of those jobs. Try again....
BigTexN
 
  1  
Reply Thu 5 Feb, 2009 09:58 am
@rosborne979,
Quote:
I bet there's a whole lot of people out there who would just love to make a $0.5million a year salary, and would be just as good at the job as the guys who were making $10million in bonuses.


Janitors and wet-behind-the-ears college grads might agree with you but is that the kind of "experienced" person you want to turn around the largest banks in the U.S.?

No truly qualified, talented and experienced candidate would accept a position for $500,000 plus stock options to try to turn around a government infested financial firm that has an unknown amount of cancerous assets and an uncertain viabilty.

Stock options in a bankrupt firm are worth ZIPPO.

So, $10 million as CEO somewhere else or $500,000 + worthless stock options...hmm, I'd have to think about that one.

That means that the only guys who would be willing to hold these positions at this compensation level are the ones who caused the problems in the first place because they know that they would be unemployed otherwise!

Great job Obozo! Your quest to nationalize the banks is working!
georgeob1
 
  3  
Reply Thu 5 Feb, 2009 10:16 am
The president's rhetoric on executive pay implicitly assigns all responsibility for the collapsed economic bubble that besets us now to the class of business executives of the banks, financial firms and manufacturers that are seeking Federal aid.

Entirely absent from his rhetoric are (1) folks like Barney Frank & Maxine Waters in the Democrat controlled Congress who authored legislation mandating mortgage loans to otherwise financially unqualified recipients and penalizing bakns that faile to meet government mandated quotas; (2) others like Democrat hack Frankllin Raines, formerly Chairman of Fannie Mae, an ex Clinton advisor appointed to that post by ole Bill, who pioneered the mass securitization of mortgages and poured billions of new capital into the expanding bubble; (3) individual mortgageholders who refinanced loans on homes as their values rose or who got into the "house flipping" game for personal gain; or (4) the host of local Democrat politicians who facilitated the subsidized explosion of new housing for designated "low income" or favored minority populations - all of which tapped into the government-mandated mortgage loan program, and which has left an abundance of new and empty structures in major cities.

In short, however soaring his rhetoric continues to be, it is merely a partisan appeal to class warfare. Economically these compensation caps accomplish very little. They are instead a palliative for an aroused public that wrongfully distorts public impressions of where the blame really lies, and wrongfully obscures the actions of his political allies that also contriburted in a major way t0 the present crisis.
mysteryman
 
  1  
Reply Thu 5 Feb, 2009 07:34 pm
My only concern is that it isnt a big step to go from this plan to one that determines how much everyone can make.
parados
 
  1  
Reply Thu 5 Feb, 2009 08:05 pm
@gungasnake,
Did you read the article you originally posted dumbsnake? It specifically states China is poaching CEOs.
0 Replies
 
JTT
 
  1  
Reply Thu 5 Feb, 2009 09:30 pm
@mysteryman,
boogeyman, boogeyman.

You idiots really love this stuff, don't you?
0 Replies
 
maporsche
 
  1  
Reply Thu 5 Feb, 2009 10:12 pm
@maporsche,
maporsche wrote:

I do think that it's bullshit that this will only apply to the financial institutions and not to say, GM or Chrysler.

It also doesn't apply to government funded, non-profit cooporations who have executives who make over 500k (i.e. ALL OF THEM).





So Frank is the only person besides me w/ a problem with this?
0 Replies
 
msolga
 
  2  
Reply Thu 5 Feb, 2009 10:16 pm
@gungasnake,
Pardon the digression, but ...

What is this "Oinkbama" nonsense all about?

Is it meant to be clever? (It isn't clever.)

Is it meant to be funny? (It isn't funny.)

If you want your comments to be taken seriously, then use a person's proper name. This sounds like stuff that 13 year olds might think is really, really smart. (It isn't. But maybe it could be to 13 year olds?)

gungasnake
 
  1  
Reply Thu 5 Feb, 2009 11:44 pm
@msolga,
Quote:
What is this "Oinkbama" nonsense all about?

Is it meant to be clever? (It isn't clever.)

Is it meant to be funny? (It isn't funny.)...


Did you spend the last eight years working similarly to reform the legions of demokkkrats who were referring to W. as "chimpy", or is the lack of humor more of a one-way thing??


0 Replies
 
BigTexN
 
  1  
Reply Fri 6 Feb, 2009 08:58 am
@msolga,
Or maybe, msolga, you made this same statement on the "Ben and Jerry's new ice cream for Bush" thread from yesterday? I liked "Credit Crunch"!

http://able2know.org/topic/128960-1

I should add my own...Git mo Chocolate...actually, I just did!

Each side has its pet names and jokes for the opposition's leaders...its fun...often times pretty creative...and you're right, a bit of a childish outlet...

I've heard people refer to Bush as Bushwacker, Shrub, etc. Even I can appreciate the fun in it.
0 Replies
 
Cycloptichorn
 
  1  
Reply Fri 6 Feb, 2009 09:39 am
@georgeob1,
georgeob1 wrote:

The president's rhetoric on executive pay implicitly assigns all responsibility for the collapsed economic bubble that besets us now to the class of business executives of the banks, financial firms and manufacturers that are seeking Federal aid.

Entirely absent from his rhetoric are (1) folks like Barney Frank & Maxine Waters in the Democrat controlled Congress who authored legislation mandating mortgage loans to otherwise financially unqualified recipients and penalizing bakns that faile to meet government mandated quotas; (2) others like Democrat hack Frankllin Raines, formerly Chairman of Fannie Mae, an ex Clinton advisor appointed to that post by ole Bill, who pioneered the mass securitization of mortgages and poured billions of new capital into the expanding bubble; (3) individual mortgageholders who refinanced loans on homes as their values rose or who got into the "house flipping" game for personal gain; or (4) the host of local Democrat politicians who facilitated the subsidized explosion of new housing for designated "low income" or favored minority populations - all of which tapped into the government-mandated mortgage loan program, and which has left an abundance of new and empty structures in major cities.

In short, however soaring his rhetoric continues to be, it is merely a partisan appeal to class warfare. Economically these compensation caps accomplish very little. They are instead a palliative for an aroused public that wrongfully distorts public impressions of where the blame really lies, and wrongfully obscures the actions of his political allies that also contriburted in a major way t0 the present crisis.


This is Bullshit, George.

You are forgetting that these companies are supposedly coming begging for public monies.

It's not a question of 'blame,' - though you are incorrect and the CEOs and investment bankers are primarily at fault. They made the decision to invest in what they knew were risky securities. It doesn't matter what the Government did. The CEOs bear a personal responsibility to make strong decisions regardless of the climate they operate in. They chose bad investments and their banks crashed b/c of it. There literally is nobody more to blame for their losses than themselves. What kind of Conservative are you, anyway? The non-personal responsibility kind?

Anyway, it's a question of 'what will the public pay for.' We will not pay for multi-million dollar salaries for failed banks and executives. Now, you may disagree with that, but public sentiment is decidedly against you and as it is our money being spent...

Attempting to blame the housing cycle (natural) for the poor investment choices of these CEOs is ridiculous.

Cycloptichorn
 

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