U.S. cuts pay at bailed out firms

[Surfdaddy]

An article on Yahoo today says that the Obama Administration is telling the companies like AIG, GM, Bank of America who were bailed out and have not yet repaid the loans that they must drastically cut the pay of the top 25 execs at the firm. Bank of America said the ruling would put it at a disadvantage in competing with companies not under the pay czar's thumb. "People want to work here, but they want to be paid fairly," said BofA spokesman.

What does everybody think about this?

[eridanus]

The partially taxpayer-owned companies can do what Goldman did - repay the loans.

[bssc]

Fair is such a loaded term, especially when it comes to pay. Since they are essentially government employees, is it fair that they get paid more than other government employees, say in the services?

[RonBoyd]

Quote:

Originally Posted by bssc Fair is such a loaded term, especially when it comes to pay.

Like in "fair market value." The banks are correct in this case. I don't see how the worth, to a particular enterprise, of an executive can be determined by an outside committee. I see many Dragons down that path -- too many unintended consequences are possible/probable. (If the Government were to determine the rates of pay at ALL banks, I might feel differently, however.)

BTW, I don't understand the "middle" choice. Like a "gut" feeling? Or just "warm & fuzzy"?

[JustNtime]

I needed another option! It doesn't go nearly far enough... NO ONE in a bailed out company (entity) should make more than old 'exec pay cap' (a Congressman's pay)...

Further anyone making more than exec pay cap in the two years preceding a bail out (OR bankruptcy) should forfeit the excess. Including any and all 'bonuses', etc. That would put a big hole in those 'golden parachutes'.

IF self-regulation worked, bail outs would NOT have been necessary! This would definitely provide some strong incentives to appropriate management and NOT creating these 'crisis' situations in the first place...

While I'm dreamin'... It would also be nice, if those who committed fraud and those who encouraged that fraud were fined and prosecuted to the fullest extent of the law.

[farmerEd]

Sounds fair to me, any company I've ever owned or run I decided what to pay my employees, in this case the taxpayers essentially own the companies, or control a voting majority, so why shouldn't the "owners" dictate the pay?

This stuff makes me so mad, companies that are essentially bankrupt, paying millions of dollars to the very people that led the companies into bankruptcy (and by the way came close to a causing a complete economic collapse), crying poor because the "bad government" is cutting their pay...boo hoo.

Don't like it? Go find another job...same thing I use to tell my employees.

[FUEGO]

I think those employees should just be glad they have a job in these difficult economic times. They should be willing to accept minimum wage. After all, the government has extended a helping hand to these banks and auto companies, so they should return the altruistic gesture by volunteering to work for minimum wage. They should be forced to work for the benefit of their employers and their shareholders at whatever rate the government sets because that is fair.

[Bimmerbill]

I don't agree. Gov't should butt out. This sets a bad and dangerous precident, IMO.

[Walt34]

I agree. Those "private companies" stopped being private when they accepted government/taxpayer money. The government is now a major stockholder in them and therefore should have a say in how they're run.

That said, I think the bailouts were stupid to begin with.

[RonBoyd]

Quote:

Originally Posted by Walt34 The government is now a major stockholder in them and therefore should have a say in how they're run.

Is that true? "We" purchased stock? Then shouldn't there be a Stockholder's meeting in which this issue is brought up for vote (a "say")?

[ziggy29]

In general I have no problem with the concept that if you want the government's help, it comes with strings attached that you should agree to accept if you want the bailout.

Having said that, the fact that (a) some of these businesses were *forced* to take the bailout and (b) terms are being changed and created after the fact is problematic. How would you like to take a loan where the lender was free to legally change the terms of the contract after the fact?

[RonBoyd]

Quote:

Originally Posted by ziggy29 How would you like to take a loan where the lender was free to legally change the terms of the contract after the fact?

... and retroactively.

[Texas Proud]

Quote:

Originally Posted by ziggy29 In general I have no problem with the concept that if you want the government's help, it comes with strings attached that you should agree to accept if you want the bailout. Having said that, the fact that (a) some of these businesses were *forced* to take the bailout and (b) terms are being changed and created after the fact is problematic. How would you like to take a loan where the lender was free to legally change the terms of the contract after the fact?

The ones listed were not 'forced'... they are the sick ones... they NEEDED the money to stay alive... the ones that were forced have already paid back the money and are now about to pay our record bonuses....

[ziggy29]

Quote:

Originally Posted by Texas Proud The ones listed were not 'forced'... they are the sick ones... they NEEDED the money to stay alive... the ones that were forced have already paid back the money and are now about to pay our record bonuses....

Actually, there have been several cases where the businesses wanted to pay the bailout money back but the government refused to allow it -- presumably because they still wanted to tell these businesses how to run themselves, leverage they'd lose if the businesses paid it off.

[Texas Proud]

Quote:

Originally Posted by ziggy29 Actually, there have been several cases where the businesses wanted to pay the bailout money back but the government refused to allow it -- presumably because they still wanted to tell these businesses how to run themselves, leverage they'd lose if the businesses paid it off.

Or the patient is still 'sick' but wants out of the hospital since the doctor is telling them they can not do what they want...

There were some requirements for the banks to do so they could pay back the funds... and IIRC, one was to get new capital on the open market... I have not looked, but has anybody done all the things on the list to pay back money and still not been allowed? Also, IIRC, there was a timeframe for them paying it back... the ones who paid back so far were 'early'...

[HFWR]

Quote:

Originally Posted by ziggy29 Actually, there have been several cases where the businesses wanted to pay the bailout money back but the government refused to allow it -- presumably because they still wanted to tell these businesses how to run themselves, leverage they'd lose if the businesses paid it off.

I believe the rationale was for everyone to take it in the shorts bailout money, so that no one could be singled out as being more risky, possibly producing runs on those institutions. Not to say there were no hidden agendas...

[Bikerdude]

How is a company going to pay back loans when they can't get the best people? Any company run like the Government would soon go bankrupt. If Congress were to institute "pay for performance" Congress would be paid -0-.

[Midpack]

While I have heard some specific cases of seemingly outrageous compensation over the past year, all this discussion seems to take place without any facts. It's political pandering/hyperbole without knowing compensation specifics, are these execs going from $100K/yr to $50K/yr OR $100M/yr to $50M/yr (exaggerating to make a point). How can any of us have anything other than a 'feel good' opinion without knowing the actual compensation and fair market compensation? We've gone mad...

[HFWR]

Quote:

Originally Posted by Bikerdude How is a company going to pay back loans when they can't get the best people?

I'm not real big on meddling by the govt, but I find myself crying crocodile tears on this one. Methinks there's a lot of self-righteous indignation involved...

In an ideal world, the "best and brightest" should be designing the next electric car, or curing cancer, or converting bullshit biomass to methane...

Quote:

Any company run like the Government would soon go bankrupt. If Congress were to institute "pay for performance" Congress would be paid -0-.

An excellent idea! In fact, the Congress critters should be repaying us...

[. . . Yrs to Go]

Quote:

Originally Posted by Bikerdude How is a company going to pay back loans when they can't get the best people? Any company run like the Government would soon go bankrupt. If Congress were to institute "pay for performance" Congress would be paid -0-.

Maybe, but my air and water are clean. My house has never been robbed and I've never been mugged. Our borders have never been invaded. My mail always arrives at its destination. My food is safe to eat and my products are safe to use. Business runs smoothly due to contracts rendered enforceable by the courts. My retirement portfolio has generally been safe from fraud. I've never lost a dollar on my bank deposits. My car drives nicely over public roads and my public education has served me well . . .

I don't know what I'd pay to achieve all of that, but I think it is something north of $0.