WASHINGTON – Call it the maximum wage. President Barack Obamawants to impose a $500,000 pay cap on executives whose firms receive government financial rescue funds, a dramatic intervention intocorporate governance in the midst of financial crisis.
The new restrictions, described by an administration official familiar with the new rules, are to be announced Wednesday morning at the White House. The steps set the stage for the administration's unveiling next week of a new framework for spending the money that remains in the $700 billion financial rescue fund.
"If the taxpayers are helping you, then you've got certain responsibilities to not be living high on the hog," President Barack Obama said Tuesday.
The official, speaking on the condition of anonymity because the plan had not yet been made public, said the 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.
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, the official said.
The great thing about this idea is it will effectively put an end to the Federal bailout of corporations. It is a negative incentive (an incentive from Socialism).
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.
ReplyDeleteFor example: If you loan me money to assist me in paying my mortgage because I’ve fallen on hard times (e.g. unemployment) and I turn around take a trip to Paris and buy a new porche, you’re right to be outraged and upset. Worse still, if someone else compels you to loan me the money (the government) and I turn around and take that trip and make that purchase you’re likely to be even more upset because you had no direct, immediate say in the loan.
Yes, you elect the officials who sign off on these decisions, but once they make decisions like this that you don’t agree with you’re stuck until their terms are up.
When the government decides to loan MY tax dollars to institutions which I have no direct interest in, I demand that reasonable restrictions be attached to their acceptance of my hard earned money.
THE BASIC CONCEPT IS FINE; THE EXECUTION BY OBAMA SUCKED.
ReplyDeleteSURE: FED MONEY SHOULD COME WITH STRINGS ATTACHED, BUT A ONE-SIZE FITS ALL POLICY ON EXEC COMP IS SIMPLY IDIOTIC.
A GUY WHO RUNS A 5 BILLION DOLLAR COMPANY AND IS RIGHTFULLY PAID 3 MILLION PER YEAR IS NOT GOING TO TAKE A HUMONGOUS PAYCUT, AND NO ONE WILL TAKE HIS JOB FOR 1/6TH OF WHAT IT DESERVES.
THIS IS STALINISM.
THE MARKETS TANKED BECAUSE IT'S EFFIN DUMB.
OBAMA IS A DUMMIE.
Like I said, it's a negative incentive from Socialism. Yes, this is Obama's pinko side coming out, but he is messing with the wrong people when he messes with executives of major corporations. His action will have the opposite effect he thinks it will have.
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