Hedge Funds Could Get a Pass on New Executive Pay Rules
We reported earlier this week that K Street's biggest financial players are urging the Treasury Department to assuage their concerns with the executive compensation limits that were added to the new stimulus law by Senate Democrats.
But Bloomberg adds an interesting wrinkle in its story today on the narrow room for Treasury to maneuver around the new compensation caps:
It's unclear whether the rules will apply to Public-Private Investment Fund, the Treasury's effort to remove the toxic assets clogging banks' balance sheets. The fund would offer government financing to help induce private investors such as hedge funds to purchase illiquid securities.
It's understandable that the executive-pay caps' applicability to hedge funds would be uncertain -- after all, their involvement in Treasury chief Tim Geithner's new public-private fund has yet to be fully determined. But Geithner has committed to spending some amount of taxpayer money in an attempt to coax private equity giants into buying devalued, mortgage-backed assets.
Whether or not that public money comes as part of the Troubled Assets Relief Program, it seems that the new executive-compensation limits are intended to apply to hedge funds who participate. Congress even included a sliding scale (read about it here) that would limit the pay caps based on how much each company received in taxpayer-funded benefits. If private equity succeeds in wiggling around the rules, one suspects that banks not participating in the TARP's capital purchase program will be next.
Josh
Elana
Matt
Eric
Look it's simple, If you recieve TARP funds then you fall under the umbrella of having executive pay caps. If you don't think that appropriate or prudent then explain to the treasury what your reasoning is for not wanting to comply with the pay cap. After all is said and done the admin needs to ensure the public that this process is transparent and fully explained, so all rationals and reasoning needs to be transparentl. If this can not happen because of some sort of privacy or proprietary issues then explain that to the American public. It is not enough to make a statement and tell the public to trust you in today's climate, that is why sunshine is the best remedy.
February 20, 2009 12:43 PM | Reply | Permalink
if the banks get around the rule, then the curtain will have been pulled back on what interests this country choses to protect and those it chooses to admonish.
aside from pure greed, there is not a single compelling reason why the gov't cannot cap salaries for bank execs using TARP funds.
if these execs expect us to believe that there is some means by which they can earn a multimillon dollar payout in the worse economic downturn the word has seen in 50+ years based on their own skill and cunning, then i suggest these execs go find that job and prove us all wrong.
i call their bluff.
February 20, 2009 12:51 PM | Reply | Permalink
Also not escaping this fact is the continued development of the UBS story. How many of these execs could possibly be involved in hiding assets in order to not pay all there taxes. Obviously I have no evidence to support these two separate stories but there seems to be overwhelming evidence from a number of different sources that these Exec's who have been in charge were compensated for profits which did not actually take place. BOA is insolvent and probably won't last through the year without going through some form of hybrid-nationalization/bankruptcy, and yet just last year during this down-turn the current CEO thought is appropriate to bill his office over 1 million dollars for renovations. I realize this is a small matter in the big scheme of things but that is precisely the point. It is as if the collective decisions of many of the top financial executives hatched a collective scheme of a death of a thousand cuts against the financial solvency of this nation for personal gain.
The other argument I have heard by these execs and some of the op-ed's is that the CAP will chase talent away from these businesses causing them to look for work elsewhere. Where the Fuck are these Exec's going to go? I am sure some private institution is going to be just eager as a beaver to hire the guy/girl who lost hi former company millions/billions because they are just so talented. Give me a break. Call these people out; there arguments are incomplete at best and just plain stupid at worst!
February 20, 2009 1:02 PM | Reply | Permalink
Did Chelsea Clinton complain?
February 20, 2009 1:07 PM | Reply | Permalink