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Surfdaddy 10-22-2009 10:34 PM

U.S. cuts pay at bailed out firms
 
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 10-22-2009 11:02 PM

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

bssc 10-23-2009 12:54 AM

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?

JustNtime 10-23-2009 05:38 AM

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.

RonBoyd 10-23-2009 05:48 AM

Quote:

Originally Posted by bssc (Post 868042)
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"?

farmerEd 10-23-2009 06:06 AM

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 10-23-2009 07:04 AM

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 10-23-2009 07:54 AM

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

Walt34 10-23-2009 08:00 AM

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 10-23-2009 08:04 AM

Quote:

Originally Posted by Walt34 (Post 868075)
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 10-23-2009 08:08 AM

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 10-23-2009 08:19 AM

Quote:

Originally Posted by ziggy29 (Post 868078)
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.

JustNtime 10-23-2009 08:35 AM

Actually, I have a bigger problem with MY money being 'lent' without sufficient collateral or repayment schedule... Credit Cards do the changing terms thing constantly and your option is to either accept it or go elsewhere. When you take or get money from the gov't - you're subject to changing laws and legislation. Option - don't take money from the gov't... Paying millions in bonuses to failed execs is obscene. Capping compensation at the level of a congressman's is exceedingly generous for someone unable to profitably run a company...

WB52 10-23-2009 08:44 AM

The best government is the least government. However, the free market forces have been disrupted by the bailout. Therefore, I think the government is justified in forcing changes, since they (we taxpayers) are invested in the bailout companies.
OK... it also feels good to cut the pay of those rascals.:)

RonBoyd 10-23-2009 08:53 AM

Quote:

Originally Posted by Worker Bee (Post 868090)
OK... it also feels good to cut the pay of those rascals.:)

And it would feel even gooder if the pay was cut of those Weasels who thought up and voted in the bailout and are now making matters worse. They don't seem to be any more competent than the banking executives.

Everyone here keeps skirting the issue but if these people are so bad in their jobs, how can paying them less make them more capable? (Yeah, I know firing a Weasel is only possible every four or six years but those others... )

HFWR 10-23-2009 09:10 AM

Article on CNN today...

Who cares if Wall Street 'talent' leaves? - Oct. 23, 2009

Quote:

Still, we say Godspeed to this "talent." After all, the traders and suits in the corner offices don't exactly have an unblemished track record. In 2008, Citigroup, BofA and Merrill Lynch (since acquired by BofA) posted a grand total of $51 billion in losses.
Bolding mine...

Martha 10-23-2009 09:10 AM

Given the market I think paycuts are not going to result in a substantial loss of good people. How talented are any of these people? Talented at what? And people are more replaceable than some think. We better have strings attached when giving government money.

I read an article a while back about fears of wall street losing the best and the brightest. The author said the best and the brightest weren't in these job--they went to academia. The greediest and aggressive were in the big shot Wall Street jobs.

Texas Proud 10-23-2009 09:13 AM

Quote:

Originally Posted by ziggy29 (Post 868078)
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....

bssc 10-23-2009 09:37 AM

I see this like going into bankruptcy court. The government cuts your some slack but you aren't allowed to keep your fourth vacation home. Almost all contracts can be renegotiated or negated by the court.

ziggy29 10-23-2009 09:48 AM

Quote:

Originally Posted by Texas Proud (Post 868097)
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.


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