Yeah, I'm not thrilled with those AIG bonuses either. It's frustrating to see the very people who ruined our economy behing the only ones who make out from it. Again.
My feeling is if we're putting money into AIG we're investors, and as investors we should be able to name some terms. Remember in early February, when a handful of pundits went on Fox to ridicule that 500k salary cap that Obama was proposing? Those people may not be on this week.
Still, the bonuses are an ugly but tiny portion of the whole bailout and therefore are getting much more attention than they deserve.
Wednesday, March 18, 2009
Executive Compensation
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23 comments:
Yer dancin' pretty hard there, Fred Astair, It's horrible.... yet it's OK. And if Bush had done it... it wold have been another example of the end of the USA and another anti-American Bushhitler move. Dance, Piker, dance.
Where is the outrage from Barney Frank on the Fannie and Freddie bonus payouts?
Fannie and Freddie are pretty small potatoes compared to AIG, which may explain the outrage gap.
Publius, I think you're confusing me with Kos.
So some bonuses are more equal than others?
How about the report of Citi using bailout funds to redecorate an executive suite to the tune of $10 million?
How about the 13 (at least) firms that got bailout money that didn't pay their taxes?
This Administration has no control over anything, and you know it.
You guys are both using me to argue with someone else. I don't like the bonuses paid to any of these failing executives.
The alternative, of course is for the companies to either refuse government money (fine with me!) or for the government to take more control over companies they bail out. As a Republican, I assume you're not clamoring for the latter. Or am I wrong there?
Ahh, but what of in the instances where certain banks were forced to take money, even though they didn't need it?
I hadn't heard about that. Which banks?
Ahh. You must be like Congress, not reading before signing, eh? I'll give you the Cliff Notes version.
TARP funds were basically given to every bank, needed or not. The Feds didn't want to have runs on the "bad" banks (those which didn't get TARP funds, so they made all of 'em take them.
There was also speculation that the banks that didn't need TARP, with a sudden windfall of cash, would make loans, or maybe buy up some of the "bad" banks. What Congress didn't take into account was that the "good" banks were "good", because they didn't make bad loans in the first place. They also didn't buy up the "bad" banks, cause why would you?
So, should the execs at the "good" banks, who "took" TARP money, be held to the same standard if they were to receive big bonuses?
Remember how Congress wouldn't list which banks were "bad" banks, and which were "good" ones (with the exception of Schumer, but I digress)? Good luck trying to find a list of "bad" or "good" banks, Congress kept that info from us (who provided the funds for TARP in the first place!), so we wouldn't freak out, and take our money out of failing banks.
http://www.chron.com/disp/story.mpl/business/steffy/6087315.html
http://blogs.wsj.com/deals/2008/10/31/banks-to-treasury-keep-your-bailout-well-keep-our-bonuses/
http://www.iht.com/articles/2008/10/31/business/31plan.php
http://www.riehlworldview.com/carnivorous_conservative/2009/02/bank-exec-trashes-tarp.html
I'm curious how you missed all this. You must have been looking for good Abramhoff/Foley snark to write about.
Well, you got me on that. The first iteration of TARP, as we both agree, was even more flawed than the more recent one. Gonna blame Obama for it?
All the more reason why Government shouldn't be bailing out Companies.
Something I've said since day one, regardless of who lives at 1600 Pennsylvania
True enough, you have indeed.
So should banks that got TARP funds be allowed to give their execs bonuses, without the punitive 90% tax rate?
No answer?
I had to wrestle with this one... government is a blunt instrument sometimes and I think, sadly, those guys should lose their bonuses too. It's unfair but we need to just write this off as a bad year to be in the financial services industry.
So what would happen to an already decimated industry if we didn't pay the good guys, who might be the only ones to help us out of this mess?
What is the motivation to get any smart banking minds to stay/get into the industry, if there is no chance of financial reward?
Look at Liddy, the current head of AIG. He's making $1 per year, with no bonus opportunity whatsoever. He was begged to come out of retirement to help fix the problem. He had nothing to do with the mess AIG is currently in, and is trying to fix the problem. He goes before the "smart guys" in D.C., and is painted as the villan.
If I was Liddy, I probably would have told Braney Frank, et al, to kiss my ass, and left. But he didn't.
Here is a great piece on this very topic:
http://www.realclearpolitics.com/articles/2009/03/bonfire_of_the_trivialities.html
I agree that this is a bad time to be in the financial sector, but does removing/taxing those bonuses make the situation better or worse?
Say you are the #1 salesguy at your branch of Dunder Mifflin. You are always at 115% or better on your numbers, and lead the office. Some guy named Andy is #3, and starts padding his numbers to become the #1 sales guy. The guys at Corporate get wind of Andy's shenanigans, and decide to eliminate the bonus plan for everyone completely, with no adjustments to base salary. Andy gets fired, and it is made public that there will be no bonus program anymore.
Is this fair to you? Of course not, you played by the rules. Is it fair to Andy? Certainly.
Now how hard will it be to hire someone to fill Andy's role? The qualified sales guy will go down the street until he finds a job where he can be paid according to what he brings to the company.
There will be someone who needs a job, is a little desperate, who will take the opening, but is that guy the best one for the job?
Missing your bonus one quarter (or even one year) won't make you leave the business. It's a wake-up call. There may be some people who can afford not to work who will be shaken out by this, but they're not that motivated to make it work anyway. Liddy will survive, like we all will.
I'd argue that punishing the ones who played fair DOES some good, because it encourages those people to berate the others. It makes the industry self-regulate, which keeps Government at a safe distance.
Your OFFICE metaphor is flawed because what's the guy going to do, go into the other financial services industry down the street? Unless he's going to another planet to work at XXXXFFZ-Stearns, it's the only game in town.
There are plenty of other places for the financial whiz-kid to go besides AIG.
With Barney Frank trying to remove ALL bonuses from ALL Companies that receive TARP/Bailout money today, it will only make the situation worse.
I have to ask: did you read the linked piece?
No I didn't (very little free time this week) but you surely know that not ALL bonuses are at stake here. I understand it's only for people who would earn over 250k with the bonus, and for companies receiving a certain amount of bailout money.
No, you are wrong:
http://www.house.gov/apps/list/press/financialsvcs_dem/press0324095.shtml
Frank is looking into new legislation (not the dog-and-pony show passed yesterday) that would do away with ALL bonus payments to ANY entity that gets bailout monies.
Let's talk about that one once they start voting, shall we? I suspect it'll get shot down before it comes to that point, because Democrats are as beholden to the rich as Republicans are. It's a miracle they got yesterday's bill through.
The fact that it's even being discussed shows that Barney Frank has no clue what he is doing in theis matter.
Hey, this'll raise your hackles: Nate Silver agrees with you.
Doesn't raise MY hackles, maybe now you'll take the threat from Barney seriously..
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