Bye bye financial bailouts?
Executive Pay Cuts at Troubled Companies Are A-Comin’
Yeah that’s it. This is the kind of news I want to hear: finally, we’re getting the pay cuts that we all wanted for them and what they justly deserve. I’m talking about how the Obama administration is taking steps to get back some of the taxpayers’ money that have kept certain troubled financial and auto manufacturing companies afloat. What the Feds giveth, they now taketh away. Here’s how the plan is being described (from this ABC News article):
The plan calls for halving overall compensation (of executives at companies that received bailouts), and cutting cash salary payouts by an average of 90 percent.
This will radically cut pay packages for about 175 key executives at companies that were granted TARP funds.
Paying Back The Taxpayer
Happy happy joy joy, it’s a big triumph for the little taxpayer in the midst of a downturn where unemployment rates are shooting up through the roof. The companies impacted by this development are the big banks and financial institutions: Bank of America, Citigroup, GMAC and AIG, and the auto companies: General Motors, Chrysler and Chrysler Financial. All these companies were recipients of bailout funds; and I remember thinking just how incomprehensible it was that they got a hold of billions of dollars of our money. I just never understood the “too big to fail argument”: so they’re big…. so what if they fail? I believe in letting “the chips fall where they may”. Something’s messed up here if we allow people to pick the pockets of the downtrodden taxpayer in order to neutralize some colossal screw ups.
Unfortunately, the big corporate players don’t see things like you and me do. You see, even as they made mistakes and failed at their jobs (by compromising the health of their companies), some of these people continued to feel a warped sense of entitlement and continued to request rewards and absolution of all wrongdoing. Now that some of these executives will have pay capped at $200,000 — that’s just too bad. That must hurt.
Let me just remind everyone just how outrageous some of these executives are, as they fight tooth and nail to defend their lofty positions and fat paychecks. Here’s some dirt on AIG:
- Its employees were receiving $165 million in retention bonuses, after taxpayers had pledged up to $180 billion to keep the company afloat.
- The bailed out companies have delivered a “consistent message” that they need to keep their pay competitive.
- A lawyer in defense of the big companies feels discouraged, saying “Taxpayers have a big stake in them. Don’t we want them to be nourished rather than seeking retribution, which is what this seems to be.”
No, Mr. Lawyer, this is NOT retribution, but rather, reclamation of funds that belong to the multitude who’ve been hurt by the very actions of those who’ve almost caused the collapse of our economy. We’re simply taking back what is rightfully ours.
P.S. I’m not condemning these troubled companies, just criticizing certain policies that were executed and which make no sense to me. I’m all for supporting these companies in their quest for success — minus any kind of government assistance.
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It’s about time. Executive compensation throughout this whole mess has been a crime. Score one for Main Street.
It’s more like a no win situation. The “so called” bail out -was a joke to begin wth. There were no regulations or guide lines or penalties so why did’nt every american get a free hand out? It’s a mess thats going to keep on going and we’re not going to like the end result for sure.
To understand these banking executives perspective you have to realize the full extent of their arrogance. You see when they are in charge they believe their are two sets of rules – one for them and another for you and me, and unfortunately, from what I have seen in my life, true.
To make my case let me ask you a simple questions: If you lose your job do you get a multi-million bonus on the way out? We all know the answer to that.
So for banking executives to be subjected to the same rules that you and I live by is a rude awaking which they don’t consider fair.
In their fairy tale world of money and power it probably doesn’t seem fair, but the truth is that it’s probably the fairest thing that has happened to them in a very long time. It’s been so long since they have seen fair they don’t know what it looks like even when it is slapping them in the face.
These banking executives continue to rip off both the stock holders (i.e. the owners) and employees with their greed, egos and excessive spending.
The public, and myself include, is not going to feel sorry for these guys. What people should be asking is why is no one going to jail? Bernie M. is small potatoes relative to the scam relative to what the bankers have accomplished.
The arrogance makes me sick and let me tell you, I experience major Schadenfreude when I hear about stories like this. Mind you, I have close relatives in the banking industry who argue with me relentlessly about this matter, taking the defense of the “poor financial executives”. Sorry, my philosophy is and always will be: if you screw up, then you need to pay for it, so this is just an example of people getting their just desserts.
What we did with the banking industry is create the “Moral Hazard” that everyone fears so much. Since there is no downside for their risky actions, expect the banks to take even more risks in the future knowing that the government will bail them out because the government views them as too big to let fail.