Bye bye financial bailouts?
Cartoon frm MattFlies
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.
Personal Finance Articles
- BillShrink: Seven Financial Mistakes That Ended Disastrously
- Len Penzo: A Layman’s Guide to Mortgage Application Junk Fees
- Intelligent Speculator: Proof That Compensation Limits Don’t Make Sense
- Carnival of Money Stories