Wednesday, February 04, 2009

Obama Diddly

Obama Orders Pay Limits Pay at Banks Getting Aid

Makes good headline but has more holes than a sieve.

Feb. 4 (Bloomberg) -- President Barack Obama called bonus payouts at banks getting rescue funds “shameful” as he and Treasury Secretary Timothy Geithner announced the government will require financial companies getting aid in the future to cap compensation of top officials at $500,000 a year.

--- Key words - "in the future." Remember folks, tomorrow never comes. Also "pay" is not the issue with these executive fatcats - the bulk of their compensation comes in the form of stocks, perks, bonuses, benefits, etc. The average CEO salary in 2007 was $610,170. Cap pay at $500,000 but top officials will still receive obscene "compensation."

“In order to restore our financial system, we’ve got to restore trust,” the president said at the White House as the administration set out new rules for companies that seek “exceptional” assistance from the Treasury. “And in order to restore trust, we’ve got to make certain that taxpayer funds are not subsidizing excessive compensation packages on Wall Street.”

---- Key word - "excessive." Okey dokey - compensation packages for Wall Street. Who determines what is an "excessive" amount? Gee, I wonder if those boys on Wall Street can give the appearance their packages are from company profit and not taxpayer funds. A little Halliburton style bookkeeping of cost overrun goes a long way. Or heck, start a war and watch real revenues increase.

Obama also urged Congress to finish work on economic stimulus legislation, saying that a failure to act “will turn crisis into a catastrophe and guarantee a longer recession.”

--- Key words - "crisis ... catastrophe ... guarantee recession." Got fear? Extortion 101.

Reacting to public outcry over bonuses paid to bankers getting government bailout money, the administration is imposing conditions that would force greater transparency for expenses such as corporate jets, office renovations, entertainment and holiday parties, and restrict severance pay when executives leave the company.

--- Key words - "greater transparency." Does not mean there will be fewer jets or parties or pay packages, but that the public will continue to clearly see the payoffs ... er, bonuses.

While pay would be limited, there are provisions that would allow additional compensation in the form of restricted stock that can’t be sold until taxpayers have been paid back.

--- Key words - "additional compensation ... until paid back." Cook the books.

Outrage among the public and lawmakers has been building since October, when Congress passed a $700 billion financial-rescue plan for financial firms. Lawmakers complained that the first half of the fund was doled out with little public accounting of how the money was spent. A New York state comptroller report that $18.4 billion in bonuses were paid out to Wall Street executives and employees as the U.S. sank into a recession further inflamed Americans.

--- Key words - "first half of the fund doled out." The best and the brightest had no idea the rescue money would be used for bonuses, winky-wink.

“For top executives to award themselves these kinds of compensation packages in the midst of this economic crisis is not only in bad taste, it’s a bad strategy, and I will not tolerate it as president,” Obama said.

--- Key words - "in the midst of this economic crisis." Bad taste, bad strategy?! How about immoral and evil?

Rules apply to companies that in the future take “exceptional” amounts of bailout money from the Treasury, as Citigroup Inc. and American International Group Inc. have in the past. They don’t apply to companies that have already taken rescue money, although those companies must in the future agree to strict monitoring and oversight.

--- Key words - "future ... exceptional ... don't apply to already taken money." Who determines the amount of "exceptional?" Isn't it convenient that looting laws for the ruling political class never apply to money already taken? Always rules for "the future" but never any vision.

The compensation restrictions announced today are part of a wider White House plan to overhaul rules governing the remaining $350 billion in the Troubled Asset Relief Program.

--- Key word - "overhaul." A doublespeak term pols use; means nothing will change but the "rules" will be overhauled to read as if change has been made. And isn't the program acronym interesting TARP? A tarp is a cover, sometimes used to protect, sometimes to hide something.

On Wall Street, there is concern that compensation curbs would infringe on a company’s ability to attract top-notch employees, and that would lead to a talent drain, Meredith Whitney, an analyst at Oppenheimer & Co., said on Bloomberg Television. “If you cap compensation, the best and the brightest are still going to figure out a way to make money and it may not be on Wall Street, when those minds are needed most,” Whitney said.

--- Keyword - "attract talent." Brain drain, words often used by the best and the brightest in snakeoil sales.

Under the guidelines announced today, top executives at financial institutions would be required to hold stock for several years before they can sell it, thus holding them to long-term objectives, rather than making a quick buck. Rules would require a “say on pay” feature, giving shareholders a voice on compensation, though it would be nonbinding.

--- Key words - "several years ... nonbinding." Three years is considered long-term, and a long time if you are a top executive holding those multi-million quick buck packages. And those new rules would say a shareholder can have a pay say, but your say won't mean diddly binding squat.

5 comments: said...

While I believe less is more when it comes to government intervention, on this issue I wholeheartedly agree that income and perks should be limited for those who participate in the bailout until the money has been repaid. A good start but It's time to do more. How about the stocks and other options that could easily add up to millions of dollars?

Ted said...

While it should go without saying that even a legitimate President's "ordered" $500,000 pay cap is an unenforceable intrusion into the private sector, as if that weren't enough, Obama LACKS EVEN OSTENSIBLE AUTHORITY to issue the order UNTIL HE OVERCOMES "RES IPSA LOQUITUR" BY SUPPLYING HIS LONG FORM BIRTH CERTIFICATE AND PROVING HIS ELIGIBILITY TO BE PRESIDENT UNDER ARTICLE 2 OF THE US CONSTITUTION.

Kate-A said...

Suggestions4O - the multimillion dollars packages have always been the options/bonuses that hiked up the income of these guys - one of the "new rules" would force them to hang on to stock longer, not sell it for quick bucks.

There's no way the government is going to enforce these type of "rules." As Ted says it's intrusion. It's all for circus and show.

The birth certificate issue is a nit, a distraction. TPTB have too many potential Obamas so why choose one who is not a citizen. Birth certificate just another sideshow in the political circus.

Anonymous said...


I don't know how you feel about Daschle, but I was so disappointed when he gave his resignation. I liked him.

Do you think that was the doing of TPTB?

Kate-A said...

Daschle spent 30 years in politics and has helped bring the nation to where it is today.

He also aided Obama with fundraisers and his own personal donor list of big money givers.

The job offer from Obama was just tit for tat.

Daschle accepted the nomination, and waited too long to warn the Obama camp about his tax problem. Maybe he thought he was above the tax law.

I think Tom, nice guy or not, is the typical self-serving, lying political career player - not good for the country.

Not sure if it is the PTB or just sometimes these guys get so big on themselves that the PTB want to bring them down a notch. Maybe it's their brand of amusement.

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