Top Headline Comments 12-15-08 | Main | Another Obama Isn't Eligible To Be President Suit Dies At The Supreme Court
December 15, 2008

Executive Pay Limits in the Financial Bailout are Dead Letter

First, let me just say what a sad reflection on the Bush Administration and congressional Republicans it is that I have to specify which bailout I'm talking about. Okay?

The real story is that the executive pay limits which were part of the financial bailout turned out to be worthless:

Congress wanted to guarantee that the $700 billion financial bailout would limit the eye-popping pay of Wall Street executives, so lawmakers included a mechanism for reviewing executive compensation and penalizing firms that break the rules.

But at the last minute, the Bush administration insisted on a one-sentence change to the provision, congressional aides said. The change stipulated that the penalty would apply only to firms that received bailout funds by selling troubled assets to the government in an auction, which was the way the Treasury Department had said it planned to use the money.

Now, however, the small change looks more like a giant loophole, according to lawmakers and legal experts. In a reversal, the Bush administration has not used auctions for any of the $335 billion committed so far from the rescue package, nor does it plan to use them in the future.

This isn't the tragedy that Democrats will make it out to be. The bank bailout flopped because Treasury was just making a wild-assed guess as to what to do. The executive compensation limit was the type of populist penalty that make Democrats (and many Republicans) feel good, but never was going to be the crucial element of the bailout that pushed the accounting back into the black. It was simply a form of civil punishment on executives (many of whom weren't involved in riding these banks into the ground).

More importantly, these companies are never going to fix themselves without real, fully-paid executives. There's just too much personal liability attached to helming one of these companies. If you want to attract real talent, you have to pay for real talent. This is patent, but comes up against an obvious response: we already paid for "real talent" and look where it got us.

Fair enough, but think of it like this. We paid for high-quality executives and they turned out to be not so high-quality. What makes you think that if we pay executives a middling salary we'll get any more than middling-quality work from them?


digg this
posted by Gabriel Malor at 09:31 AM

| Access Comments




Recent Comments
girl in Magnum intro learning to snorkel- currently represented by Gloria Allred: "Tom Selleck looked lasciviously at my butt. My but ..."

runner: "@423 I ....don't know what to say.... ..."

ALH: "1st ..."

Tonypete: "Wow! What a cookbook. I am overwhelmed by the ..."

publius, the Persistent Poperin Pear: " Oh, yes, Bogie and Cary Grant are up there. ..."

Beltway Elite: "Magnum P.I. is still fantastic.  The dog is a ..."

Yor, the Hunter from the Future: "Choose one (1). You don't get to pose as heroes wo ..."

Hadrian the Seventh: " Alors, le nood. ..."

Roc Ingersol : "Posted by: Aetius451AD Work Laptop at December 11, ..."

ALH: "Evening, Horde! Nice ONT, MisHum. Is that glass of ..."

mrp, the gauche American: "Once upon a time, my Dad returned home from a Euro ..."

Your Decidedly Devious Uncle Palpatine, Booking Agent, Aero Pinochet: "436. Because he hung out with Peter Lorre. ..."

Recent Entries
Search


MuNuvians
Polls! Polls! Polls!
Frequently Asked Questions
The (Almost) Complete Paul Anka Integrity Kick
Top Top Tens
Greatest Hitjobs

The Ace of Spades HQ Sex-for-Money Skankathon
A D&D Guide to the Democratic Candidates
Margaret Cho: Just Not Funny
More Margaret Cho Abuse
Margaret Cho: Still Not Funny
Iraqi Prisoner Claims He Was Raped... By Woman
Wonkette Announces "Morning Zoo" Format
John Kerry's "Plan" Causes Surrender of Moqtada al-Sadr's Militia
World Muslim Leaders Apologize for Nick Berg's Beheading
Michael Moore Goes on Lunchtime Manhattan Death-Spree
Milestone: Oliver Willis Posts 400th "Fake News Article" Referencing Britney Spears
Liberal Economists Rue a "New Decade of Greed"
Artificial Insouciance: Maureen Dowd's Word Processor Revolts Against Her Numbing Imbecility
Intelligence Officials Eye Blogs for Tips
They Done Found Us Out, Cletus: Intrepid Internet Detective Figures Out Our Master Plan
Shock: Josh Marshall Almost Mentions Sarin Discovery in Iraq
Leather-Clad Biker Freaks Terrorize Australian Town
When Clinton Was President, Torture Was Cool
What Wonkette Means When She Explains What Tina Brown Means
Wonkette's Stand-Up Act
Wankette HQ Gay-Rumors Du Jour
Here's What's Bugging Me: Goose and Slider
My Own Micah Wright Style Confession of Dishonesty
Outraged "Conservatives" React to the FMA
An On-Line Impression of Dennis Miller Having Sex with a Kodiak Bear
The Story the Rightwing Media Refuses to Report!
Our Lunch with David "Glengarry Glen Ross" Mamet
The House of Love: Paul Krugman
A Michael Moore Mystery (TM)
The Dowd-O-Matic!
Liberal Consistency and Other Myths
Kepler's Laws of Liberal Media Bias
John Kerry-- The Splunge! Candidate
"Divisive" Politics & "Attacks on Patriotism" (very long)
The Donkey ("The Raven" parody)
News/Chat
Archives
Powered by
Movable Type 2.64