Who Needs a Signing Statement When You Have a Year to Regulate?
A funny thing happened this weekend, after congressional Democrats surmounted a fierce lobbying effort and maintained one of three executive-pay limitation plans that were being eyed for removal from the final stimulus bill.
It turns out that Wall Street wasn't the only opponent of more stringent limits on bonuses for bailed-out executives -- Treasury Secretary Tim Geithner and White House economic adviser Larry Summers were leading the charge to keep CEO pay caps out of the stimulus.
Oops. Though Geithner and Summers wanted President Obama's loophole-riddled executive compensation limits to be the only game in town, they ultimately lost that battle with Congress. Now what can they do to make sure eminently qualified leaders at companies like AIG and Merrill Lynch don't have to forgo their lucrative pay packages?
President Obama could always issue a signing statement during tomorrow's scheduled approval of the stimulus bill that exempts the Treasury Department from having to follow the new compensation limits.
That would amount to a massive thumb in the eye for Obama's base, though he never made a campaign promise to stop using signing statements. And it would certainly piss off House Financial Services Committee Chairman Barney Frank (D-MA), who told CBS yesterday that
[White House spokesman Robert] Gibbs may not like [the new CEO pay limit], but it is going to be enforced ...This is not, frankly, the Bush administration, where they're going to issue a signing statement and refuse to enforce it. They will enforce it.
In fact, the Obama administration doesn't need to use a signing statement to delay the congressionally mandated compensation limits. The language inserted into the stimulus bill gives Geithner a full year to release regulations on the implementation of the new law. That's a long time for an opponent of the new pay caps to figure out the best way to circumvent them.
Late Update: Another option on the table for the administration is seeking legislation later this year that would relax part of the new compensation limits, as corporate governance expert Nell Minow suggested today in an interview with Bloomberg.
The AP also hinted at that possibility in its initial report on the Obama team's opposition to extra pay caps:
Officials also said that it would be up to Geithner to implement the bill and cautioned that the administration might be able to work out a deal with leaders on the Hill to modify some of the rules later.
| TOPICS: Bailout, Barack Obama, David Axelrod, Democrats, Robert Gibbs
Josh
Matt
Eric
Or, you know, as long as we're engaging in snarky, baseless speculation, he could declare himself King-Emperor of the the Known Universe and abolish Congress and all laws other than his own word.
February 16, 2009 3:31 PM | Reply | Permalink
Oh my god, you're right! He could, therefore I should assume he will!
Be right back, I have to take this latest development around the internet while ending all my comments with "is this change you can believe in?" and other such witticisms.
February 16, 2009 5:15 PM | Reply | Permalink
so obama could tell geithner to not enforce a part of the law. In which case he would be breaking the law with nill chance of ever being called on it. Or obama would write a signing statement that tells geithner to not enforce a part of the law. In which case he would be breaking the law with nill chance of ever being called on it.
there is probably a third possibility ...
February 16, 2009 3:44 PM | Reply | Permalink
Will it matter? I suspect that in a year's time many of these banks will be "nationalized" any ways.
February 16, 2009 4:02 PM | Reply | Permalink
Executive pay limits are exactly the wrong direction.
Let them pay themselves as much as they want - and require an income tax rate of 75% on salary and all perks, plus limit bonuses to stock which cannot be sold until all taxpayer/government investment/loans and interest-dividends have been paid in full.
This, of course, assumes that the current crop of corporate big dogs deserve to keep their jobs - and speaking of top dogs, we ought to start with a second, closer look at Geithner.
February 16, 2009 4:09 PM | Reply | Permalink
And, while looking at Geithner, please give Summers another once-over. These two are the Tweedledum and Tweedledee of our present economic collapse.
February 16, 2009 4:17 PM | Reply | Permalink
Emmett Kelly wrote:
So you'd have Obama raise income taxes to the highest levels in generations?
Sure, it would only be on a few corporate execs that everyone hates. Of course it wouldn't impact average Americans in any way. And those caveats wouldn't matter one bit.
The Republican's headline from such a plan would be that that Obama had raised income taxes to the Highest Rates in Generations!. Worse, the Republicans would be telling the complete truth.
Passing a 75% income tax would be a political own goal. Obama is way too smart to even consider such a proposal.
I only hope Obama is smart enough to override Geithner and let these restrictions be quickly implemented. It seems pretty clear that Geithner doesn't seem to have realized he's no longer working for the banks.
The country is demanding that bankers on the government dole have their bonuses restricted. This is not an unreasonable request.
If Obama gives into Geithner's politically tone-deaf requests to slow roll these restrictions, Obama will take, and deserve a lot of heat.
And for what? Most economists don't see these restrictions as a serious impediment to economic growth. Sure, a few bankers may move to banks that have not received handouts. Most don't believe there would be a mass movement of bankers because there simply aren't enough banking jobs out there. Wall Street has taken the same employment hit as the rest of the country.
These bankers are crying wolf, let them cry. Bring in the restrictions with full force, and with all due speed.
February 16, 2009 7:27 PM | Reply | Permalink
This isn't 1999. People aren't buying that stuff anymore and the problem isn't the branding, its the product.
Call it the "Greedy Executive Excess Compensation Tax Act" or something similarly forceful, and I suspect it would play well.
February 17, 2009 10:15 AM | Reply | Permalink
They say we shouldn't be this strict because it wouldn't work. However, if we see more stories of CEO extravagance while they are getting bailed out what will be their explanation.
February 16, 2009 4:26 PM | Reply | Permalink
Issuing a signing statement, or otherwise overtly trying to undermine the clear language of the stimulus bill on the bonus issue would be evidence of monumental stupidity on the part of Obama's team. I don't think that Obama's team has even the tiniest stupid bone in its body, unlike say George Will today.
The Obama people will certainly work with Congress to modify the bonus restriction language, trying to convince them of a more effective path. But bashing bonuses carries too much sympathy with the electorate, and Dodd has found just the ticket to buy himself out of his Countrywide mortgage problem in his 2010 re-election campaign.
February 16, 2009 4:28 PM | Reply | Permalink
Possibly, except some of his constituents are those very same executives.
Dodd's position probably plays well in interior CT. Not so much on the coast.
February 16, 2009 4:44 PM | Reply | Permalink
Perhaps, but not that many of them. They are strong in financing, but not strong in numbers.
February 16, 2009 5:18 PM | Reply | Permalink
I would still limit compensation. But mostly I would rather see most of these CEOs and the Board Members FIRED.
I would've like to see legislation that Immediately TAXED their Bonuses going back a few years - at 50-75%
In the meantime - I want to see their tax filings for the last 10 years - AUDITED to death. That should pull in a few billion.
February 16, 2009 5:29 PM | Reply | Permalink
The problem isn't exactly whether they should be limited in compensation. The problem lies with the fact that I believe the stimulus bill attempts to retroactively stem the bonuses and salaries of top officials at the banks. I think there is a legal problem here and I could see many banks suing the Federal Government if this were the case. I don't know if that's in the stimulus per se, but I would hope to check.
Further, we have to remember the ultimate goal for loaning these companies money. The goal is to get people to lend again. If the banks pay back the money too quickly, we lose our leverage against them to force that.
February 16, 2009 5:46 PM | Reply | Permalink
Don't forget that this is the proverbial "Act of Congress". It is new law that supersedes prior law. The only imaginable legal problem would be one of a constitutionality.
In this, there seems to be only the smallest of windows, that of Ex Post Facto. My recollection is that the Supreme Court has ruled that the Ex Post Facto provisions of the constitution apply only to criminal matters, not civil. This is most definitely a civil matter.
Even if the grounds were clearer, who would dare challenge this law?
I simply cannot imagine bailed out banks expending the significant legal and political capital necessary to challenge this law. Spending government money to sue the government for increased executive bonuses? The immediate result would be to multiply the banks current unpopularity by 100!
I suppose a group of banking executives could individually fund a challenge. Even a self-funded challenge would reflect very poorly on the banks, so I doubt any challenge would occur.
While I think the prospects of a legal challenge are exceedingly dim, I don't discount the real possibility that Geithner could convince Obama to slow roll the implementation. I think it would be a huge mistake for Obama to not implement the restrictions, but unfortunately, it wouldn't shock me.
February 16, 2009 7:55 PM | Reply | Permalink
If the WH manipulates the provision, it will cost them dearly. Those that voted for Obama voted for a new ethical and transparent way of conducting government. Subverting this provision to reward those that had a huge part in the banking collapse with millions of tax subsidized dollar is repugent on every level. Their deeds are resulting in millions of American loosing their homes. Their must be consequences. In addition, they should be forced to return some of the recent bonuses.
February 16, 2009 7:12 PM | Reply | Permalink
No one's pay was reduced by the Stimulus Bill.
Chriss Dodd's limits only apply to NEW top executives.
http://news.yahoo.com/s/ap/20090214/ap_on_go_pr_wh/stimulus_executive_pay
"The prohibition would not apply to bonuses that are spelled out in an executive's contract signed before Feb. 11, 2009."
February 16, 2009 7:34 PM | Reply | Permalink
Pay is not the same as bonus.
February 16, 2009 8:48 PM | Reply | Permalink
The fact is that the Republicans have tapped a vein of distrust of this stimulus package that is shared by many on the progressive side of the spectrum, many of whom do believe that a stimulus is necessary--just not the one presented. This is a win/win for Repuglies. They have nothing to lose by not going along with this stimulus, and nothing to gain by going along with it.
Talk of a "signing statement" by Obama to modify the intentions of Congress only magnifies the distrust--more of the samo/samo Bush policies. Looks like political suicide to me. Cockiness is no substitute for good instinct, and I'm not seeing many good instincts with this team. What I AM seeing is a lot of "Clinton already tried that in the nineties". Remember how Clinton wanted to make nice with the Repuglies by not pursuing Iran/contra? Remember how they kicked him in the teeth for his efforts? This is NOT the nineties. Where are the people who warned that this economic crisis was coming? Those are the ones I want to see in this administration. Those are the ones I am more likely to trust, not a bunch of has-beens who were a part of the problem.
February 16, 2009 10:38 PM | Reply | Permalink
Remember how Clinton wanted to make nice with the Repuglies by not pursuing Iran/contra? Remember how they kicked him in the teeth for his efforts? This is NOT the nineties. Where are the people who warned that this economic crisis was coming? Those are the ones I want to see in this administration.
What I want to see is for people to let Obama do his job, with none of this second-guessing stuff. It has been 3 weeks, people! Let's look back in 3 months and then start making judgments. Even Josh has been just horrendous about this -- second guessing everything Obama is doing without knowing all the facts. This weekend's posting, "A Bit of Wiggle Room," is proof. Maybe we're not the experts and maybe Obama and his team have a few more of the facts than we.
We surely have beaten-wife syndrome in that we have just endured the W administration, never knowing what was going to happen next. We're worried that Obama will be more of the same -- we can't trust him yet. But, at least Obama KNOWS Constitutional law. Bush neither knew it or cared to learn it, much to the advantage of his evil puppetmaster.
February 17, 2009 7:07 AM | Reply | Permalink
Will somebody please blow Larry Summers so we can get rid of this fucker?
And remember to get it on tape.
February 17, 2009 8:51 AM | Reply | Permalink
All the "regulations" an do is design a way to skirt the caps contained in the statute. After all it is in the best interests of all that the federal money be repaid as fast as possible. Once repaid the caps would not apply.
February 17, 2009 10:29 AM | Reply | Permalink