Obama to seek compensation limits for all financial companies

[Pangloss]

Apparently the administration is going to seek executive compensation limits for all financial services companies in the US. Even ones that aren't receiving bailout money. No, really.

 

http://www.nytimes.com/2009/03/22/us/politics/22regulate.html?ref=business

 

The new rules will cover all financial institutions, including those not now covered by any pay rules because they are not receiving federal bailout money. Officials say the rules could also be applied more broadly to publicly traded companies, which already report about some executive pay practices to the Securities and Exchange Commission.

 

Some of the stuff they're talking about in there makes sense, such as commodities trading exchanges for derivatives and so forth. But setting artificial limits on pay doesn't sound like a good idea to me. We want these companies to be competitive with each other, that's part of the point.

 

And if we're going to have executive compensation limits here, why not all American companies? Isn't the reasoning exactly the same, just with a smaller impact on the economy?

 

I think it makes more sense to focus on regulation and controls on capabilities rather than controls on compensation. Now if a company takes BAILOUT money, that's a whole other matter -- regulation or taxation, I'm fine with stopping that. But controlling compensation at companies that aren't even having problems -- that seems antithetical to the American spirit of innovation and competition.

[Dudde]

I agree,

 

Obama's been cool up til now, but he seems to be a glutton for beating himself with the American public, it doesn't seem a healthy trend.

 

interesting article though. I doubt he'll get as far as to include companies not receiving bailout money

[padren]

Sounds like a horrible idea to me as well. I would be curious to know what would come out of a discussion with say, stock holders and board members as to the problem of executive pay - if there is a problem at all. If there is some sort of systemic extortion where poor little companies must pay obscene amounts of money to get a qualified CEO who may still just ruin the company, lets hear them talk about this "crisis" first. Even then at most one would have to analyze why such a situation exists, and honestly look at what could impact it with government intervention being a last resort. This just sounds so bad it's not even funny. Not to mention it only fuels the cries of far right conservatives that Obama is a socialist who won't be happy until we all are wearing red.

 

 

BTW, what happens if a company moves it's corporate headquarters to the Cayman Islands and does business in the US?

[Pangloss]

I wonder if it's just a matter of throwing the ball just a little long, hoping that the defense will move back a bit on the next play.

 

In other words, asking for a little bit more than what you really want.

[padren]

I wonder if it's just a matter of throwing the ball just a little long, hoping that the defense will move back a bit on the next play.

 

In other words, asking for a little bit more than what you really want.

 

That's fine when negotiating the budget but I would hope he would find the idea of interfering with salaries in businesses that are doing fine morally repugnant. You don't go in claiming you want to lower the age of consent to 12 when you really want to ease statutory rape laws regarding couples that fall over both sides of the current age of consent by less than 2 years. If you have to throw the ball so long that you'd be morally repulsed by the idea of it getting actually there you should find a better way to get to where you want to go.

 

I already find the idea of the "assassination tax" very disturbing and can barely let that slide, but some things are just deal-breakers - I am all for regulations that keep companies honest but salary caps for thriving businesses is just down right chilling.

[Dudde]

That's a good point, he's shown his capability of using that tactic several times since January. That would be pretty sweet - although I think he's gambling a lot on his confidence, I hope he can deliver

[Phi for All]

I could actually see some companies welcoming a ceiling limit on executive pay. They might like to sit the exec down and say, "We've given you the maximum compensation the government will allow us to, congratulations, you have reached the top pay in the US. We'd like to give you more, but that would be illegal and we need our government contracts."

 

Playing devil's advocate here, since this really goes against everything I believe about government and businesses.

[Mokele]

Before everyone starts screaming about 'OMG COMMIES!', look at the article in detail. It's specifically proposing that executive pay be more closely tied to company performance, that shareholders be given more say in executive pay, and merely reporting the details of executive pay to the SEC.

 

How, exactly, does any of that translate into "salary caps"? If the shareholders agree they want someone enough to pay him a lot, he does a good job, and reports the pay and perks to the SEC, he can still get as much as he wants.

[bascule]

Before everyone starts screaming about 'OMG COMMIES!', look at the article in detail. It's specifically proposing that executive pay be more closely tied to company performance, that shareholders be given more say in executive pay, and merely reporting the details of executive pay to the SEC.

 

Yeah, the article is pretty vague. I'm certainly not freaking about it yet, but this sounds like a Randroid's worst nightmare.

 

This, for example:

 

Officials said the plan would also call for increasing the levels of capital that financial institutions need to hold to absorb possible losses

 

...makes it sound like they intends to change the reserve requirement to ensure financial institutions have more cash on hand, which I'm sure some of the anti-Fed people around here would like.

Edited March 23, 2009 by bascule

[ecoli]

Before everyone starts screaming about 'OMG COMMIES!', look at the article in detail. It's specifically proposing that executive pay be more closely tied to company performance, that shareholders be given more say in executive pay, and merely reporting the details of executive pay to the SEC.

 

How, exactly, does any of that translate into "salary caps"? If the shareholders agree they want someone enough to pay him a lot, he does a good job, and reports the pay and perks to the SEC, he can still get as much as he wants.

It's still fishy to me. If shareholders wanted pay to be more closely tied to company performance, why wouldn't it be already?

 

The point, as I've stated repeatedly, is by guaranteeing the bonuses regardless of performance, you attract the best talent who will take risks without worrying about not being paid.

 

Sometimes those risks will work, and they'll get compensated. Sometimes they won't work, and they'll go home - but not empty handed.

 

If companies said - only reward based on performance, then people won't take risks (even if its likely to pay off) and real talent will move to a sector where their pay is more secure.

 

If you're a factory worker and your goal is to make 50 shirts a week at an hourly wage, you'll get a bonus if you make 60 shirts. You won't, however, get docked pay if you only make 45 (the unions make sure of that). If we limit the pay of CEOs, you can make the argument that EVERYONE's gross pay should be tied to performance.

 

Ironically, this is something that the Marxians don't like to hear.

[Saryctos]

If you're a factory worker and your goal is to make 50 shirts a week at an hourly wage, you'll get a bonus if you make 60 shirts. You won't, however, get docked pay if you only make 45 (the unions make sure of that). If we limit the pay of CEOs, you can make the argument that EVERYONE's gross pay should be tied to performance.

 

Actually the unions make sure you don't get paid for making those extra shirts too. They don't like the idea of better performance being paid more, it's "unfair".(as a disclaimer I am only knowledgeable about auto-unions not shirt makers =P)

[ParanoiA]

It's a commie plan. Every american should have every right to get the maximum benefit from any trade; have every right to compete for top dollar in any market. Rationalizations to the contrary are just that; making shit up to lie to yourself so you can make it ok to pass judgement on a minority. If this was being done to any other class of citizen, everyone would be up in arms on how unfair and egregious such acts by the government really are.

 

But since it's those filthy rich assholes, then by all means, stick it to them. There's not enough of them to do anything about it, they're a minority. We've already justified stealing a higher percentage of their money than everyone else, might as well start from the other end, the income side, and assail that until we finally meet in the middle. After all, that's what the american dream is all about. If you can't elevate yourself, grab an ankle and pull somebody else down.

 

How long until we do this with the NFL? Hollywood? Music? Why do we stop with CEO's? Oh yeah, cuz they're in the news and you don't want to "waste an opportunity" to take advantage of american's fears over the economy.

 

I really liked this tyrannical gem:

 

A central aspect of the plan, which has already been announced by the administration, would give the government greater authority to take over and resolve problems at large troubled companies not now regulated by Washington, like insurance companies and hedge funds.

 

That proposal would, for instance, make it easier for the government to cancel bonus contracts like those given to executives at the American International Group, which have stoked a political furor. Under the proposal, the Treasury secretary would have the authority to seize and wind down a struggling institution after consulting with the president and upon the recommendation of two-thirds of the Federal Reserve board.

 

How cute. The good ole boy network gets to increase it's power and anyone who isn't "with us" (wink-nod), may just conveniently find itself "struggling", which could require the good ole boys to take over. Oh, how nice of them.

Edited March 24, 2009 by ParanoiA

[bascule]

I think more details are needed before it can be determined that this is a "commie plan"

[Mokele]

It's a commie plan.

 

Is it possible for political philosophies to Jump the Shark?

[ParanoiA]

I think more details are needed before it can be determined that this is a "commie plan"

 

It's a strike right at the heart of property rights. Whether it's a little itty bitty one (which somehow makes it easier to rationalize around principles), or a sledgehammer exercise, it equates to blatant disregard for an individual's right to market themselves for maximum compensation - a right ALL of us enjoy, whether we use it or not.

 

The easiest way to realize this, is to follow through. Why isn't EVERY job in the country subject to compensation oversight? Why should my company run around offering me top dollar, or satisfying union demands for bonus packages, when their income/expense ratio doesn't justify such compensation?

 

If everyone's salary was effected, which is more what you'd expect from a country predicated on equality, then my arguments would be deafened by the storm of protest from the major, major, majority of americans.

 

But since we're picking on a minority, then in typical american fashion, we don't give a shit. We make excuses, help each other lie to each other to work around sticky things like property rights and free speech.

 

Commie is a strong word, and necessary when people are fooling themselves into stripping your rights away.

 

 

 

I believe this works by pitting the lower and middle classes against the upper classes. The majority against the minority. Disparage this minority and make believe they are the cause of our problems; or they represent the fodder that got us into this mess. You read your history books and you wonder how people could have treated minorities so badly. No need to wonder, this is how it's done.

 

Since they have property that we want (money), in this way the majority can effectively "vote" the minority's money away. Remember, you don't want to waste a perfectly good opportunity to swindle the people.

[bascule]

It's a strike right at the heart of property rights. Whether it's a little itty bitty one (which somehow makes it easier to rationalize around principles), or a sledgehammer exercise, it equates to blatant disregard for an individual's right to market themselves for maximum compensation - a right ALL of us enjoy, whether we use it or not.

 

Can you cite something specific you're objecting to, or possibly find a related article with more detail? That's quite a bit of grandstanding there with not a lot of substance.

 

The easiest way to realize this, is to follow through. Why isn't EVERY job in the country subject to compensation oversight?

 

That sounds an awful lot like a slippery slope argument

[Mokele]

Yes, those poor oppressed millionaries. Whatever shall they do!

[ParanoiA]

Can you cite something specific you're objecting to, or possibly find a related article with more detail? That's quite a bit of grandstanding there with not a lot of substance.

 

 

 

That sounds an awful lot like a slippery slope argument

 

You mean cite something other than that bit I cited the first time?

 

There's really nothing I like when the subject is overseeing someone's pay. Right out of the gate, it presupposes such a thing to exist, which I disagree with to any degree.

 

Also it's not a slippery slope argument since I didn't argue that it would LEAD to that, I argued that if you APPLIED this garbage to everyone's job, there would be no need for me to explain the problem, nor any need for anyone to step up and take up for what's right, when it's not popular.

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Consecutive posts merged

Yes, those poor oppressed millionaries. Whatever shall they do!

 

Apparently do without their property, since they're outnumbered and the majority has rationalized unfair treatment to a minority group. Imagine that, in America....

[jackson33]

I'll try again; Very, very few CEO, COO, CFO or major manager earns anything close to an outrageous wage. Many in fact own their own Company and others have worked their way up in one. Those that are HIRED by a BOARD OF DIRECTOR'S, who are themselves usually successful business people, solicit who they want and negotiate a pay PACKAGE. Of the 40 to 60 thousand larger Corporations, maybe 2-400 are run by someone those other thousands would love to hire. There maybe many lower level managers, qualified and are working their way up through the system, but have yet to establish the track record to qualify running some of the Corporations your talking about.

 

Right now, today many of those future people are quietly being made, while stock prices plummet, sales drop, yet the Company is maintaining some sort of stability. Stockholders, analyst and investors like Buffet search out these Companies and their management and have made fortunes betting on these principle. KFC, Taco Bell or all that is now 'YUM Foods' were and are built on these people as was/is Wal Mart, GE or any conglomerate in today business world.

 

Neglected by the Obama ADMINISTRATION (is that better bascule), is who/why/what caused the problems of today in the first place and how to avoid the next problem (I don't think possible), but certainly is arguably IMO the Federal Government, specifically Congress and previous actions or lack of in the past. NOT necessarily management...

[ecoli]

Yes, those poor oppressed millionaries. Whatever shall they do!

I don't think your implying that only people who make less than the medium income have the right to keep their property.

[bascule]

You mean cite something other than that bit I cited the first time?

 

Okay, let's work with that quote... can you tell me definitively from that whether the government would seize troubled companies that don't want to be seized, or would it work more like AIG? It's an important point the article doesn't cover.

 

From what I've been reading elsewhere this is primarily intended to target recipients of corporate welfare. How do you feel about that?

 

Also it's not a slippery slope argument since I didn't argue that it would LEAD to that, I argued that if you APPLIED this garbage to everyone's job, there would be no need for me to explain the problem

 

You're right, it's more of a strawman than a slippery slope.

[ParanoiA]

Okay' date=' let's work with that quote... can you tell me definitively from that whether the government would seize troubled companies that don't want to be seized, or would it work more like AIG? It's an important point the article doesn't cover.

 

From what I've been reading elsewhere this is primarily intended to target recipients of corporate welfare. How do you feel about that?[/quote']

 

I agree it's an important point and we do have to be careful with language like "seize". I'll back off that point since I did let that word effect my interpretation. I strongly suspect I'll be reaffirming that position once the details are given away. When they use phrases like "take over" within the same proposal as overseeing someone's salary and compensation, then it doesn't look good.

 

You already know how I feel about corporate welfare. I don't agree with welfare, for anybody. No one is too big to fail or too small to succeed. The worse thing you can do is hand someone an income. Hand up is one thing, hand out is quite another. Our country has invested in hand outs. The resultant psychological effect seems to be an increasing impulse for entitlement. Purely speculation on my part, I admit.

 

You're right, it's more of a strawman than a slippery slope.

 

Wrong, again. I never implied you made such an argument. You might try dropping the canned rebuttals and formulate your own argument.

 

Again...it's easy to see the blatant violation of principle, property rights and freedom of speech to "oversee" someone's compensation in the market. Purely socialist. Bordering on communism, if not fully migrated. And I wouldn't have to make this argument if your salary and everyone else's was under the same scrutiny. You know...equality? That bit everyone keeps bringing up in the gay marriage thread?

 

But since it's just the "rich" being scrutinized, and because "everybody knows" they're a bunch of greedy pricks that stole from the backs of the poor and downtrodden to build their corporations that rape babies and starve children, then it's no big deal.

[waitforufo]

But since it's just the "rich" being scrutinized, and because "everybody knows" they're a bunch of greedy pricks that stole from the backs of the poor and downtrodden to build their corporations that rape babies and starve children, then it's no big deal.

 

ParanoiA,

Please try to remember that any part of your income that the government lets you keep is a subsidy. How on earth can the government justify subsidizing some more that others? It can't. Compensation limits are simply the application of social justice. You would perhaps understand this better if you could only accept the free enterprise is bad because it is based on greed where socialism is good because it is based on envy.

[bascule]

Again...it's easy to see the blatant violation of principle, property rights and freedom of speech to "oversee" someone's compensation in the market. Purely socialist. Bordering on communism, if not fully migrated.

 

If your argument isn't a straw man, perhaps you'd care to point out where they're actually talking about doing that.

[ParanoiA]

If your argument isn't a straw man, perhaps you'd care to point out where they're actually talking about doing that.

 

The Obama administration will call for increased oversight of executive pay at all banks, Wall Street firms and possibly other companies as part of a sweeping plan to overhaul financial regulation, government officials said.

 

There ya' go. What else do you need? Are you under the impression that there's such a thing as "overseeing" someone's pay that doesn't....uh...oversee their pay? You do realize that oversight means to supervise, right? Which therefore establishes authority, which is a clear violation of property rights and freedom of speech in this case.