Despite Treasury's New Rule, Senators Aren't Giving Up Their Push to Cap CEO Pay
Here's an important point about President Obama's new restrictions on executive pay at companies receiving aid from the Treasury Department: they're not retroactive. A bank that has already received bailout money would not need to abide by the limits unless it accepts more cash in the future.
(The WaPo buries this in the middle of its story on the issue, then notes that even if they were retroactive, the rules likely would have applied to only three companies: AIG, Citigroup, and Bank of America.)
But Sen. Claire McCaskill's (D-MO) executive-pay cap bill is retroactive, applying to companies that have received past as well as pending bailout infusions. And McCaskill just said she has no intention of giving up her push to attach her version of CEO pay caps to the economic stimulus bill. Here's her statement:
Everyone is on the right track here. I'm proud the president made this announcement in terms of the rules changing. I'm gratified that my colleagues also agreed that something must be done to restore the confidence of the American people that we have some idea of what's going on. I stand willing and ready to work with everyone to change the arrogant, greedy culture that created this mess in the first place.
McCaskill's office added that she would still push her CEO pay proposal "as a fallback assurance" that the new Treasury Department rules would be heeded. Sen. Bernie Sanders (I-VT), another leader on the executive-pay issue, also weighed in to call Obama's move "a good step forward, but we have to go further."
Will Democratic leaders allow a vote on McCaskill's bill during the stimulus debate? That remains to be seen.
Late Update: Sen. John Kerry (D-MA) joined the emerging chorus this afternoon with a letter to Treasury Secretary Geithner touting his proposal to limit the tax-deductibility of executive pay -- a separate issue, but equally relevant in terms of reining in bailed-out companies that are playing fast and loose with public funds.
Late Late Update: Sens. Olympia Snowe (R-ME) and Ron Wyden (D-OR) aren't giving up either; they just announced plans to offer an amendment forcing bailed-out companies to repay already distributed executive bonuses that exceed $100,000. The subtle message from Congress to the administration on these executive pay caps seems to be, "Good start -- but not enough for us."
Josh
Elana
Matt
Eric
Apparently Larry Summers and his disciple Geithner don't get it yet. America is as mad as hell and we aren't going to take any more crap from the Wall Street Masters of the Universe.
If you take money from us you take it with strings attached.
February 4, 2009 1:17 PM | Reply | Permalink
If you take money from us you take it with strings attached.
Or rope. Depending on the level of arrogance you show.
C
February 5, 2009 11:14 AM | Reply | Permalink
The executives will take as much money as they please. They do it all day, every day. They have more means of moving money around than the government guys can follow.
Limiting compensation is a noble idea. But it is just about unenforceable.
February 5, 2009 11:17 AM | Reply | Permalink
But there were no strings attached when Bush gave out the $$ in the first place. There is nothing for Summers and Geithner to "get" about that--it is what it is, and we're all stuck with it unless someone can come up with a legal way to take the $$ back or place retroactive restrictions on it.
February 5, 2009 12:18 PM | Reply | Permalink
Well Worth Watching
Claire McCaskill was on Democracy Now yesterday and was fantastic. Even more fun was Bruce Marks, CEO of Neighborhood Assistance Corporation of America (www.naca.com) who is planning a "Predator Tour" for this weekend where people are going to go to the homes of the Wall Street Banksters and Fraudsters so these scumbags can actually meet and greet all the "little people" they're screwing. He's listed their home addresses and everything on the NACA website.
This, I thought, was a really delicious development. The angry mob sans torches and pitchforks send a not-so subtle message. Check it out and spread the word.
http://www.democracynow.org/
February 4, 2009 1:23 PM | Reply | Permalink
McCaskill in not going to give up her chance to make this stand (and rightfully so). I also think she might want a floor vote on the matter to see if any Republicans are silly enough to vote against it.
February 4, 2009 1:39 PM | Reply | Permalink
I just sent her an email praising her efforts. I know emails to Senators are just single data points, but I'd encourage everyone to use the system -- it's super easy -- to send a note to someone every day urging action, encouraging the fight against stupidity. If every progressive reading blogs and getting mad would make an actual contact with power every day, it might do some good. So, of course, might tar and feathers -- and it's coming to that pretty damn quick in my opinion.
February 5, 2009 11:13 AM | Reply | Permalink
Right...uh huh....were these most of the same Senate critters who passed the TARP in record time without this provision? Are these the same stiff backbone Senators who are waltzing around the stimulus bill?
Yeah, sure, real backbone.....
February 4, 2009 1:46 PM | Reply | Permalink
I'm not taking credit for this, as I saw it on another thread.
Tax regular income at the present rate. Tax bonuses over, say, one million dollars at 95%.
February 4, 2009 7:39 PM | Reply | Permalink
That's a start, though I'm more inclined to push for Eisenhower-era tax rates, adjusted for inflation.
We do, after all, have some gigantic budget deficits, and a national debt which simply dwarfs the deficits themselves - to the point of blotting out the sun.
The legal national debt limit has been raised numerous times over the last 8 years. If we don't do something, nothing will get done, and the price tag gets bigger the longer we wait.
I'm not that interested in punitive tax rates on the folks who work 70-80+ hour weeks for subsistence wages(in Manhattan) and receive performance-related bonuses that compensate for the grueling hours.
Anyone who spends part of their workday at a country club, or luncheons? Yeah, you get paid too much.
But business gets done there? Too bad - not anymore.
February 5, 2009 11:20 AM | Reply | Permalink
While I think that the caps should have been included in the original bill, I have mixed feelings about retroactive caps. If the government has already committed itself to lend the banks money without such a provision, it seems like the legality of inserting a cap later on is questionable at best. While I don't think it would constitute an ex post facto law that would be unconstitutional, it would be heading in that direction.
February 5, 2009 1:35 AM | Reply | Permalink
This is mostly cosmetic but good nevertheless.
However I believe what is really needed before giving these banks another effing dime is denying them the ability to use TARP money to facilitate mergers.
February 5, 2009 10:07 AM | Reply | Permalink
Has anyone checked into what the limits of power are for the current Treasury Department? Since the last admin got to hand out the bailout $$ with no oversight, would it even be possible for this admin to impose retroactive restrictions on the funds that were handed out? Or would that be something that had to occur legislatively, since (IIRC) Congress handed over the last wad of cash with few restrictions on its use?
February 5, 2009 10:13 AM | Reply | Permalink
Not sure it's a smart thing to do to retroactively pull money away from people. Also, not sure exactly who these "executives" are. . .if we are talking about the top 5 or 10 executives in these companies that are disclosed in Proxy Statements, fine, a lot of them already gave up bonuses this year anyway. But if they are talking about every Tom, Dick and Mary from the high flying FX trader to the Compliance professional who gets bonues over $100K, then I think you've gone too far. Remember, for the vast majority of wall street workers, a "bonus" is really just deferred comp. If they want to change the compensation structure and start paying people market rates in salaries (let's say a $250K salary instead of a $125K salary and a $125 bonus) then fine, let's adjust the structure and put away the pitchfork and torches. Or maybe the institutional traders drop the salary and bonus structure altogether and go on a commission grid like stock brokers.
Full disclosure, I'm part of this "Wall Street" culture and believe me, we are not all rich and greedy and quite a few of us voted for BO.
While we're at it, if government subsidies and preferential treatment for certain industries is the big thing, then let's get rid of the federal anti-trust laws exemption for Major League Baseball and let all those millionaires fend for themselves in an open market.
February 5, 2009 10:36 AM | Reply | Permalink
Senators need to put TEETH into the bill. Go Senator McCaskill!!!
February 5, 2009 10:45 AM | Reply | Permalink
Enough tip-toeing around these bastards. Any type of compensation, salary, bonus, stock option, paid out to executives of investment firms, banks and corporations that was rooted in the fraud creating this disaster should be repaid. Seize their assets, all of them.
If an institutions participation is deemed neccessary for the national recovery and it's executives don't wish to join in then the institution should be compelled to do so and the executives fired.
Why does anyone think these losers can't be replaced? Who cares what they want? They are responsible for untold hardship and misery and the sooner they're gone the better. They are a cancer on the body of the United States and in a sane world not one of them would still have a job.
February 5, 2009 11:29 AM | Reply | Permalink
These proposals are based on good intentions and right thinking -- but retroactive restrictions are going to end up in court. Obama was being pragmatic in not making his caps retroactive -- a nice idea but a sticky one.
February 5, 2009 11:45 AM | Reply | Permalink
Yes, that was what I was wondering earlier--if the first half of the bailout $$ was given to Bush by Congress, and then handed out to financial institutions, without any restrictions on it, wouldn't it take more than an executive order to place retroactive restrictions on it?
Isn't McCaskill's bill, therefore, the natural legal complement to Obama's executive action--one that, surely, Obama supports, seeing how he and McCaskill are "BFFs."
I really object to TPM calling Obama's act a "joke" with no analysis of the legal framework he was working within.
February 5, 2009 12:15 PM | Reply | Permalink
Heh.
Some of you may have seen my modest proposal to pass a retroactive tax rate of 100% applicable to 2008 bonuses paid by companies receiving bailout funds. (And yes, this is constitutional; I checked. Retroactive tax hikes have been passed numerous times since 1909.)
I had sent the idea to Barney Frank and to the White House, and earlier this week, sent it on to Sen. McCaskill when she announced her bill to limit executive compensation at TARP firms.
Maybe just this once someone was listening? Because it now sounds like there's a move underway to take back the bonuses.
February 5, 2009 1:18 PM | Reply | Permalink