I think this is terrible! It undermines everything for which the free enterprise system stands. It's a slippery slope, first the government gives companies bailout money (money that is taken by force through taxes). Then they tell them how much they can pay their employees. What's next? We are treading in dangerous waters...
These companies need to be run by the most qualified people and capping salaries is not conducive for this happening.
I think that was just a token gesture to make the general public feel better about what's going on. The execs will find a way to get their pay, they always do (that's part of the problem). The execs that allowed their companies to get into this mess shouldn't continue to run the companies anyway. Executive compensation is only a small piece of the pie. There is so much other fiscal irresponsibility going on within these companies that the cap doesn't address.
I'm honestly not sure how I feel about the caps. There's a part of me that thinks it's necessary or they will take advantage of the tax dollars that the government has extended. But there's the bigger part of me that believes the government never should have extended the funds. Those institutions had their books and numbers available, they were analyzing their situation and understood very well what was going on and how they contributed and were/are affected by it. So, I suppose capping the CEO's could be the next best thing. But, I am still not sure. Perhaps this is just another ploy to keep us smiling and happy and never questioning.
Salary cap, my eye. These CEOs should be replaced by hard nosed grannies. Grannies always seem to know when a good dose of yukky medicine is in order. As sick as some these companies are, the medicine should be very yukky indeed.
Yes, I would argue for a rigid and specific limit on CEO pay.
What are we ( or you, more specifically) so afraid of if there is a limit on CEO pay for firms such as JP Morgan, Citigroup and Bank of America, that is if they are to receive additional TARP funds? What are we (you) to lose, how will this affect your own personal income? In short, nothing, other than the satisifcation that the funds may not be used to line the golden pockets of top CEO and managements at these investment/banking firms. What has stopped them from dipping into these funds, creating a complex weave of investment vehicles, in order to siphon of more funds for their own personal gain -- just as they have been done, for decades, in Latin American countries.
Look at the exmple of AIG, and the $ 130 billion dollars in funds they have recived over the last few months, apprently without any oversight, or withouot any limitations, and there is no report indicating that this has "fixed' their financial problems for the long term.
A cap on salary is a slap on the wrist for the CEO and their firm. What is needed is a team posted on the inside, as in the case of a small business, if you happen to OWE sales or payroll tax, is someone wathcing the flow of income and expenses, and a hand on the till to make sure there is no overt theft of "cash in the drawer."
If these CEO's have burned their business to the ground, created a financial storm, robbed and lied to millions of homeowners and business based on bait and switch tactics for loans, then they DO NOT deserve $ 70 million in pay for a job well done. That is not the definition of success, rather it is called a fraud and failure. The cap on salary is a start, yet the Obama administration will need to sink "teeth" into their oversight process when they lend additonal funds to these firms. They should file criminal charges aginst those firms or individuals who violate their contract or agreement in exchnage for the additional TARP funds.
The argument that you will not get good talent at these firms for the reduce pays is a quick jab in the face -- a sucker punch. An intelligent, resourcesful and ambitious leader would take a chance at turning around a failed business, therby create a platform for massive success, and reap the rewards of both prestige and profit, for a future generation. There is nothing downtrodden about this issue of a "lower payscale" for a CEO -- this is a lie -- but the idea is full of opportunity and of lofty ambition for a newly minted MBA.
I think it is a way for him to come off in a positive light to
the public. If he were really rooting for us, he wouldn't have
made the government appointments that he has.
Excellent idea. Also most exec banking salaries in Australia include a large percentage of bank shares .... so it is already in the execs interests to maximise share price and meet their targets (revenue, expense and regulatory compliance).
I wonder if capping salaries would result in skilled execs moving to other countries or industries where caps do not apply, leaving capped industries with second-best.
If I am in business, and my business is going broke, why should I pay this charlatan any bonus. I will put the business under the protection law chapter 11 and when the business recover then probably I will pay them.
That money paid to them should has been put to maintain people at their jobs.
It is my humble opinion that a cap is not enough.There should be a mandated law that these individuals should spend up to a year or more with a low income family.Here they will be stripped of all title,clout,material goods and honor.Then and only then,will they(if they have any conscience)feel the root of many ordinally folks pain.As someone who served this great country proud,it is a shame to think I personally am techically homeless.There are many others worse than I,and I can only imagine their fate.When all else is said and done,when you remove for the picture the senate hearings,investagations,blaming,pity parties,mistruths and lies,etc,rather than just "capping",these scoundrels and dare I say bottom feeders should to force to serve a type of community service whereby they "financially eduate" those whom they have hurt.
They should be fired. A pay cut is a bit late and does not address the root of the problem. Fire the execs and if someone cant get the ship back on course, let it go out of business.
The government cant stimulate the economy by making programs and spending money. We the people half to be the ones spending. But when there is no money for us to spend it cant grow. So why dont they just give us all $50,000? I mean if we are going to pay the taxes back (phantom tax inflation) we might as well get the money and spend it into the economy right?
I dont think they should do either but if they are we should get the money. They wont stimulate the economy this way. The dollar is going to fall like a stone just like Peter Schiff, Robert Kiyosaki, Ron Paul, Myself and many others said and people thought it was crazy. Its funny, the same people who called this all wrong said it would never happen, the news goes back to them for the solution on how to fix this. THEY DONT KNOW! They were wrong the first time and their solution is to O.D. the economy on currency. This isn't the last, there will be more bailouts bigger and bigger. What heppens when other countries a dropping our dollar and it actually gets back into our market? Your going to have that same gallon of gas, banana, bread, toys, oil, silver, gold, real estate and EVERYTHING YOU CAN BUY being chased by ALOT more dollars which means inflation big time with how much they are doing. GET ALL THE LOANS YOU CAN!
I think the salary cap thing is just a ploy for president Obama to say, "see, I'm making some changes." The whole thing is smoke and mirrors. He has already made exceptions for lobbyists so he can "obtain the best and brightest." I am sure there will be some exceptions for the salary cap also.
I think that the Obama administration's cap on executive compensation for those institutions that have received bailout money is fantastic. Really, it appears like who ever is behind this kind of legislation is really trying to make a difference. Of course, their is the possibility that is it a metaphorical smoke and mirrors technique to support the image of change.
I don't think that it is going to have any real impact on the level of cooruption involved here. I mean, sure executives of institutions that have received bailout money will not be able to make more than (I think it was) $400,000 per year, but they are just pawns in this big game of chess anyways. We are talking about the confiscation of the wealth of the masses here and they think that a compensation cap is going to make a difference?
We already know that the illusion of money does not solve problems. High-quality monetary policies do, period; but since Obama is just as much apart of the illusion, then it is up to the individual to establish their own monetary policies, period.
This is closing the barn door after the horses escaped. These companies should not have received bailouts. They should all be allowed to fail. The CEOs mismanaged the businesses; they should be fired without severance packages. We need to start holding people accountable for their actions and allow them to experience the natural consequences of their choices.
I would say Obama administration will need to forcefully kick out the banks with huge toxic asset. Stop saving them and let them fail. Start all over. You save the taxpayers money and start fresh.
Im an Irish person who likes to follow american markets,I find Mr Obamas decision frankly LAUGHABLE.There should always be an a consequence to incompetence, In the real world this can only mean an end to bail-outs and the removal of these executives from their posts, however in the fantasy land of wall st and politics the fairytale continues, the nightmare their decisions create make life more difficult in the real world
It was fine to cap the slaries but can this really be enforced? I doubt it. There are ways around this. Wall Street knows more than the President does so I doubt his tough talk bothers them much.
I think that this is a wonderful idea...in theory. As with many of his "ideas", they are only good in theory. The problem that this will obviously create is that these executives are almost guaranteed to be recruited by other well-to-do corporations who will offer them no such cap to speak of. I think that there will be a mass exodus from these bailout companies. This could be beneficial, because we can clear out some of the people who helped create this problem, but it could also be harmful because these extremely powerful and influential companies could be ran by individuals who are not nearly as smart or experienced as the former executives.
Many in big business have abused high salaries and bonuses - they should both be directly connected to productivity and results. This act by the President, however, is but another example of the government encroaching into private enterprise. When government gives, government controls. The Rich Dad philosophy deals with our obtaining self-sufficiency while this act is but another example of government taking control of our lives. When it controls our access to money, it can then control what we do with it. Slippery slope?
Bussiness leaders failed, their compensation shoud be reduced drastically so that their lifestyles drop too. This may make them to do more deligence work before taking decisions. They have caused suffering to many vulnerable people world wide.
If they received bailout money then I think there should be a cap on salaries. It may make them think twice before always sticking their hands out. I think the salaries CEOs are receiving has gotten out of hand. They do not seem to be accountable to anyone for the ever increasing salaries. Other workers have to show productivity increase before a pay increase.
The salary caps are only guarantees that the bailouts will fail. With caps in those companies the best and brightest will go elsewhere to find employment or start companies where they can be paid more. If you want a case example, read about what Ben and Jerry's ice cream did with CEO compensation, how long it lasted and how it turned out. This is just another example of government with good intentions screwing things up. Fascism does not work...it didnt work with bailout money and it wont work out with CEO caps. The best answer is to get the govt out completly and let the consumers decide who wins and looses, not govt bureacrats and rich fat cats.
I believe the salary caps are justified. The banks who received TARP money were (are?) INSOLVENT. When a company is insolvent, it is shameful for employees and CEOs to receive bonuses.
Bonuses for WHAT? Bankrupting their companies, selling junk paper to pension, endowment, and 401K funds, driving their stock prices to single digits, etc. They should be thankful to even have jobs at this stage. To receive taxpayer money to save their companies from insolvency and then pay themselves outrageous salaries is just plain sinful! Talk about unbridled greed!
I feel that there should be a cap on their salary if they did receive a bailout. Higher executives are not being held accountable for their actions and it needs to start somewhere. When I was a child growing up, if my parents did not work or buy food, we did not eat. No one bailed us out. The serious issue in America is "BAILOUT", living on credit and the government enabling such irresponsible behavior to go on and on. The bailout is preventing real change in the financial irresponsibility of the American people. ON a personal level I have had to change my spending habits and take baby steps to get my financial house in order and not one person is bailing me out and I have self-respect for it.
We have already been betrayed by the TARP team. The term cap is a joke, it should have been mandated from the start that NO ONE in any company receiving TARP monies would be receiving their "bonus" for performance. Their performance was a joke.
If anything we should institute a negative bonus draw for top ranking officers of a company that performs poorly. Also I'd do away with any payments made to CEO's that are terminated prior to their 'contract' fulfillment. I worked for a company that hired a CEO who ran our company into the ground. We then had to pay her over 3 million dollars to go away. Why isn't this considered lunacy??
Like in any business, the reward should be in step with the performance. If they ran their "business" into the ground, their business should no longer exist. Where do we draw the line? Who ISN'T privy to bailout funds (other than you and me, they typical taxpayer)?
Why do the RICH get help while the POOR are allowed to fall flat on their face? Because allowing them to do so (reap what they've sown) will force the day of reckoning. It's what we need, but no leader wants it to happen, not on "his" watch.
A great idea in form, but I'll believe it when I see it in practice.
And why wasn't it retroactive? The President should go back and make it retroactive to the Wall Strret group, but then that wouldn't be bailing out their buddies would it?
How do you keep executives in their job (to return the banks and institutions that received public bailout money) to turn them around, if they can not earn compensation equal to the task at hand, or those executives "market value" (at least in their own minds)? While it might be a nice idea, I think it will be hard to actually enforce...(i.e., keep execs in those jobs for 1/2m)
Sorry, I just got it. Limits for executives for the bailouts that have already been funded? ha ha
The financial institutions will not even tell the American people where the bailout money has gone thus far and we the people will be paying that bill??
The Executives need to either pay those bills or go to jail. This should not be the "people's" responsibility.
The government needs to stay out of business. I think the bailout is a huge mistake that we, the taxpayers, will eventually have to pay for. Rather than limit salaries, why don't we simply make them pay it back.
I am not quite sure I really understand what Obama is working on here. It is my understanding he is intending to limit their bonuses. Why does the President of the U.S. have to do this. Why aren't the corporations doing this themselves.
You know, for as long as I can remember, every time a corporation announced earnings lower compared to "whenever" my response has always been - what, the executives aren't getting the bonuses they "expect"? At least now I know my comments were right on and no one seemed to ever be in tuned to my comment. I always thought that the profit was always bigger than "whenever", just not big enough for who?
I don't think we should be bailing out the banks or the auto industry. They aren't helping the small business owner so why the heck should the big guys get the money. They made bad decisions so they should be held responsible for their actions just like every other business owner. I don't think Obama is going to do us any favors and at some point in time the tax payer is the one that will suffer with all this free money they keep printing. Just wait, the interest rates will go up, I don't know if it'll be like the 80's but somethings going to have to give. At this point what's the point, when they can't even tell us where the monies gone. It's gone.
Jobs with such importance should not go to the lowest bidder
Qualified talents is always worth the money in running any business. Any business that is profit driven that is. Unlike most government run enterprises that's not the case, huge responsibilities with huge consequences usually meets the lowest paid talents. It is completely counterproductive to have invested $350 from the TARP fund and not have the smartest and brightest to watch over it by limiting their pay. By limiting the compensation of the people that will direct the use of the TARP money is to ensure its lost. Perhaps that is the idea, hence the conspiracy.
Isn't this just another way of telling the excutices," yeah, we are not going to pay you money for whatever you do, that is, but it is ok to run the company to the ditch and we will pumb more of the funny money to you since we got plenty of where they come from and you do not have to pay it back. Just do what I say, Moron."
Do we really trust that there is not going to be a hidden agenda in the disclosure womehwere?
I do not trust the people who run the government.
Don't give me wrong, I do love this great country that is why, like millions of others before me 200 years ago, I came to this great place that I call home now.
I think its HILARIOUS! that these banks are asking for money to bail them out to bail out the economy, and they have an elite and exclusive attitude that we should not be asking how they do business with taxpayers' money. I can't wait to find out how they going to do if they keep turning down more bailout because of government oversight! They are just terrible as the automobile giants flying to DC in corporate jets to beg the Senate.
I had no idea that it was Constitutional to steal the purchasing power of my dollar without getting my consent! A cap on the executive compensation? Is that referring to the slang of a 'bullet' on the executive compensation? The right to bear arms and protect my home and my family; and people are still able to steal money from me that's under my mattress or in my very pocket without coming into my house....something is messed up with this system for sure.
Is there a way to just start our own 'federal reserve' since it's not even federal and not even a reserve?
Robert - My answer is a conflicted one. I do not agree with capping executive compensation. That should be left up to the Shareholders by way of the Board of Directors.
I did not agree with the bailout in the first place. Regardless of whether it is called a loan or not, it is still a handout. A handout of our tax dollars to a free market entity. Which leads us down the road to Socialism. To be plain and clear, the financial institutions should have collapsed. The vacuum created would have been filled with more fiscally responsible institutions and our free market would have been stronger for it. The government helped create the mess and allowing them to head up the process of recovery is like putting an alcoholic in charge of a liquor store - a recipe for disaster because they have already shown their inability to manage the situation in the first place.
To answer your question, a straight across the board cap is not the way to handle executive compensation. Give them an average salary based on the national average of the lowest 5000 corporations that have executive positions. 100 corporations form each state. Add the salaries together and compute the average. For the sake of argument, let's say that number is $25,000 per year. Allow the executives a salary of $25,000 per year, but give them a compensation bonus depending upon profits. If and only if the company profits, does the executive receive compensation. If an executive can pull an entity that is 1 billion in the hole to a 2 billion dollar surplus, that person deserves millions in compensation. However, if that person does not, then they receive their average wage. A confident and competent executive would have no problem with that as long as they were granted an adequate period of time to complete the task (ie: not terminated the month before profits are estimated to be achieved).
The rich executives probably did not blink with an earnings cap because there are other compensation methods to use to work around the cap. It is a gesture to appease us simple folk by a man whom we want to believe in. We are members of the greatest country in the world.
The executive's pay might get capped, but I'm sure they'll go on extra conferences in Hawaii, get extra bonuses, etc. There's no way to stop executives from milking the earnings of a company. These are very educated people who can think of a million ways to be compensated through means other than pay.
Don't forget, the executives don't own the companies they run. The investors are the ones who took the hit for management's incompetence.
Absolutely yes... but let me explain. First off... our government has no business what so ever in conducting this bailout in the first place. The "bailout" is the governmental crime and overstep here... not the caps. Secondly... the officers in charge of these failed institutions should be fired... any other company leader or business owner would be out on his/her head if they failed to this extent. However... IF the government gives bailout money and IF those in charge of this failure are not fired... then YES to the caps. What an insult to intelligence and logic for these Execs to otherwise receive multi-million dollar salaries/bonuses taken from bailout money. Yes it stinks... but you KNOW that they will not behave themselves with this money otherwise. The caps MAY be the only reason they would decline the bailout money in the first place.
No. There should not have to be a cap on executive pay. The United States Government was not created in order to determine what we can and cannot make! It was created in order that we may have liberty and freedom. Those who say that there should be because these executives should be punished are falling prey to the Obama teams strategy of diverting you off the true problem! The execs should have been ALLOWED TO FAIL! If you want to punish an executive for doing a bad job, you don't just dock or cap his pay, YOU FIRE HIM OR LET HIM FAIL! This safety cap is just a political ploy, and frankly the governments way of getting more of their dirty little fingers into our lives. Conspiracy of the rich? Yes. If not just that, then its at the very least a conspiracy of the politician in order to keep their power.
I generally would think this a terrible thing for the country, but I also think, serves these people right. Look if you practice political entreprenuership this is what your going to get. Sort like selling your soul to the devil, it may appear great and wonderful at first but then he comes and claims his toll.
Of course thats my initial reaction when somebody askes me my opinion. When I really think about it though, I feel that there obviously something that I cant see.
Obama, and all government(yes including Bush, dont want some over sensitive Lib. getting upset), get and stay rich off of these companies that have this sort of business practice.
My overall thought would be if I were explaining this to my children would be, this is classic socialism, and socialism is a very bad way of life. It has always been proven to have detrimental(hope i spelled that right!) effects on any group of people that it has touched, including the first American settelers.
I watched a TV program just the other day on Stalin and Russia. Man, need I say more!? It truly amazes me that anyone can honestly say that they support socialism, and I think that this is what is beginning, with DC leading the charge, and lining thier pockets.
On the one hand I like the idea of there being guidelines for bailout money so that it actually does some good for the economy since we are in the situation now. On the other hand I very much don't like the idea of the government telling you how to use your money and getting their hands in places it shouldn't. Putting a cap on executives pay will only be the beginning I think.
Surely teh best thing to do woudl be to deny bonuses full stop.
Why reward failure?
Some of the so called fat cats have invented schemes to line their pockets,I am thinking of derivative traders etc here
Tom
I think this is terrible! It undermines everything for which the free enterprise system stands. It's a slippery slope, first the government gives companies bailout money (money that is taken by force through taxes). Then they tell them how much they can pay their employees. What's next? We are treading in dangerous waters...
These companies need to be run by the most qualified people and capping salaries is not conducive for this happening.
I think that was just a token gesture to make the general public feel better about what's going on. The execs will find a way to get their pay, they always do (that's part of the problem). The execs that allowed their companies to get into this mess shouldn't continue to run the companies anyway. Executive compensation is only a small piece of the pie. There is so much other fiscal irresponsibility going on within these companies that the cap doesn't address.
I'm honestly not sure how I feel about the caps. There's a part of me that thinks it's necessary or they will take advantage of the tax dollars that the government has extended. But there's the bigger part of me that believes the government never should have extended the funds. Those institutions had their books and numbers available, they were analyzing their situation and understood very well what was going on and how they contributed and were/are affected by it. So, I suppose capping the CEO's could be the next best thing. But, I am still not sure. Perhaps this is just another ploy to keep us smiling and happy and never questioning.
Caps are what they wear to bed in the early decades. The administration shouldn't be able to touch this money. It is to get the people back into jobs.
All that will lead to is more government jobs for people getting paid by tax dollars. No pun intended!
Salary cap, my eye. These CEOs should be replaced by hard nosed grannies. Grannies always seem to know when a good dose of yukky medicine is in order. As sick as some these companies are, the medicine should be very yukky indeed.
Yes, I would argue for a rigid and specific limit on CEO pay.
What are we ( or you, more specifically) so afraid of if there is a limit on CEO pay for firms such as JP Morgan, Citigroup and Bank of America, that is if they are to receive additional TARP funds? What are we (you) to lose, how will this affect your own personal income? In short, nothing, other than the satisifcation that the funds may not be used to line the golden pockets of top CEO and managements at these investment/banking firms. What has stopped them from dipping into these funds, creating a complex weave of investment vehicles, in order to siphon of more funds for their own personal gain -- just as they have been done, for decades, in Latin American countries.
Look at the exmple of AIG, and the $ 130 billion dollars in funds they have recived over the last few months, apprently without any oversight, or withouot any limitations, and there is no report indicating that this has "fixed' their financial problems for the long term.
A cap on salary is a slap on the wrist for the CEO and their firm. What is needed is a team posted on the inside, as in the case of a small business, if you happen to OWE sales or payroll tax, is someone wathcing the flow of income and expenses, and a hand on the till to make sure there is no overt theft of "cash in the drawer."
If these CEO's have burned their business to the ground, created a financial storm, robbed and lied to millions of homeowners and business based on bait and switch tactics for loans, then they DO NOT deserve $ 70 million in pay for a job well done. That is not the definition of success, rather it is called a fraud and failure. The cap on salary is a start, yet the Obama administration will need to sink "teeth" into their oversight process when they lend additonal funds to these firms. They should file criminal charges aginst those firms or individuals who violate their contract or agreement in exchnage for the additional TARP funds.
The argument that you will not get good talent at these firms for the reduce pays is a quick jab in the face -- a sucker punch. An intelligent, resourcesful and ambitious leader would take a chance at turning around a failed business, therby create a platform for massive success, and reap the rewards of both prestige and profit, for a future generation. There is nothing downtrodden about this issue of a "lower payscale" for a CEO -- this is a lie -- but the idea is full of opportunity and of lofty ambition for a newly minted MBA.
I think it is a way for him to come off in a positive light to
the public. If he were really rooting for us, he wouldn't have
made the government appointments that he has.
Excellent idea. Also most exec banking salaries in Australia include a large percentage of bank shares .... so it is already in the execs interests to maximise share price and meet their targets (revenue, expense and regulatory compliance).
I wonder if capping salaries would result in skilled execs moving to other countries or industries where caps do not apply, leaving capped industries with second-best.
Excellent!
If I am in business, and my business is going broke, why should I pay this charlatan any bonus. I will put the business under the protection law chapter 11 and when the business recover then probably I will pay them.
That money paid to them should has been put to maintain people at their jobs.
KISS. Common sense.
It is my humble opinion that a cap is not enough.There should be a mandated law that these individuals should spend up to a year or more with a low income family.Here they will be stripped of all title,clout,material goods and honor.Then and only then,will they(if they have any conscience)feel the root of many ordinally folks pain.As someone who served this great country proud,it is a shame to think I personally am techically homeless.There are many others worse than I,and I can only imagine their fate.When all else is said and done,when you remove for the picture the senate hearings,investagations,blaming,pity parties,mistruths and lies,etc,rather than just "capping",these scoundrels and dare I say bottom feeders should to force to serve a type of community service whereby they "financially eduate" those whom they have hurt.
They should be fired. A pay cut is a bit late and does not address the root of the problem. Fire the execs and if someone cant get the ship back on course, let it go out of business.
The government cant stimulate the economy by making programs and spending money. We the people half to be the ones spending. But when there is no money for us to spend it cant grow. So why dont they just give us all $50,000? I mean if we are going to pay the taxes back (phantom tax inflation) we might as well get the money and spend it into the economy right?
I dont think they should do either but if they are we should get the money. They wont stimulate the economy this way. The dollar is going to fall like a stone just like Peter Schiff, Robert Kiyosaki, Ron Paul, Myself and many others said and people thought it was crazy. Its funny, the same people who called this all wrong said it would never happen, the news goes back to them for the solution on how to fix this. THEY DONT KNOW! They were wrong the first time and their solution is to O.D. the economy on currency. This isn't the last, there will be more bailouts bigger and bigger. What heppens when other countries a dropping our dollar and it actually gets back into our market? Your going to have that same gallon of gas, banana, bread, toys, oil, silver, gold, real estate and EVERYTHING YOU CAN BUY being chased by ALOT more dollars which means inflation big time with how much they are doing. GET ALL THE LOANS YOU CAN!
I think the salary cap thing is just a ploy for president Obama to say, "see, I'm making some changes." The whole thing is smoke and mirrors. He has already made exceptions for lobbyists so he can "obtain the best and brightest." I am sure there will be some exceptions for the salary cap also.
I think that the Obama administration's cap on executive compensation for those institutions that have received bailout money is fantastic. Really, it appears like who ever is behind this kind of legislation is really trying to make a difference. Of course, their is the possibility that is it a metaphorical smoke and mirrors technique to support the image of change.
I don't think that it is going to have any real impact on the level of cooruption involved here. I mean, sure executives of institutions that have received bailout money will not be able to make more than (I think it was) $400,000 per year, but they are just pawns in this big game of chess anyways. We are talking about the confiscation of the wealth of the masses here and they think that a compensation cap is going to make a difference?
We already know that the illusion of money does not solve problems. High-quality monetary policies do, period; but since Obama is just as much apart of the illusion, then it is up to the individual to establish their own monetary policies, period.
This is closing the barn door after the horses escaped. These companies should not have received bailouts. They should all be allowed to fail. The CEOs mismanaged the businesses; they should be fired without severance packages. We need to start holding people accountable for their actions and allow them to experience the natural consequences of their choices.
The creative minds will find loopholes out if it.
I would say Obama administration will need to forcefully kick out the banks with huge toxic asset. Stop saving them and let them fail. Start all over. You save the taxpayers money and start fresh.
Im an Irish person who likes to follow american markets,I find Mr Obamas decision frankly LAUGHABLE.There should always be an a consequence to incompetence, In the real world this can only mean an end to bail-outs and the removal of these executives from their posts, however in the fantasy land of wall st and politics the fairytale continues, the nightmare their decisions create make life more difficult in the real world
It was fine to cap the slaries but can this really be enforced? I doubt it. There are ways around this. Wall Street knows more than the President does so I doubt his tough talk bothers them much.
I think that this is a wonderful idea...in theory. As with many of his "ideas", they are only good in theory. The problem that this will obviously create is that these executives are almost guaranteed to be recruited by other well-to-do corporations who will offer them no such cap to speak of. I think that there will be a mass exodus from these bailout companies. This could be beneficial, because we can clear out some of the people who helped create this problem, but it could also be harmful because these extremely powerful and influential companies could be ran by individuals who are not nearly as smart or experienced as the former executives.
Many in big business have abused high salaries and bonuses - they should both be directly connected to productivity and results. This act by the President, however, is but another example of the government encroaching into private enterprise. When government gives, government controls. The Rich Dad philosophy deals with our obtaining self-sufficiency while this act is but another example of government taking control of our lives. When it controls our access to money, it can then control what we do with it. Slippery slope?
Bussiness leaders failed, their compensation shoud be reduced drastically so that their lifestyles drop too. This may make them to do more deligence work before taking decisions. They have caused suffering to many vulnerable people world wide.
I'll admit. I started a business and failed. What I got was a lesson learned, not $250,000 from the government. (Or whatever the "cap" is.)
If they received bailout money then I think there should be a cap on salaries. It may make them think twice before always sticking their hands out. I think the salaries CEOs are receiving has gotten out of hand. They do not seem to be accountable to anyone for the ever increasing salaries. Other workers have to show productivity increase before a pay increase.
This is purely a small gesture to appease the masses.
CEOs might perform better is they were paid commission instead of salary.
The salary caps are only guarantees that the bailouts will fail. With caps in those companies the best and brightest will go elsewhere to find employment or start companies where they can be paid more. If you want a case example, read about what Ben and Jerry's ice cream did with CEO compensation, how long it lasted and how it turned out. This is just another example of government with good intentions screwing things up. Fascism does not work...it didnt work with bailout money and it wont work out with CEO caps. The best answer is to get the govt out completly and let the consumers decide who wins and looses, not govt bureacrats and rich fat cats.
I believe the salary caps are justified. The banks who received TARP money were (are?) INSOLVENT. When a company is insolvent, it is shameful for employees and CEOs to receive bonuses.
Bonuses for WHAT? Bankrupting their companies, selling junk paper to pension, endowment, and 401K funds, driving their stock prices to single digits, etc. They should be thankful to even have jobs at this stage. To receive taxpayer money to save their companies from insolvency and then pay themselves outrageous salaries is just plain sinful! Talk about unbridled greed!
I feel that there should be a cap on their salary if they did receive a bailout. Higher executives are not being held accountable for their actions and it needs to start somewhere. When I was a child growing up, if my parents did not work or buy food, we did not eat. No one bailed us out. The serious issue in America is "BAILOUT", living on credit and the government enabling such irresponsible behavior to go on and on. The bailout is preventing real change in the financial irresponsibility of the American people. ON a personal level I have had to change my spending habits and take baby steps to get my financial house in order and not one person is bailing me out and I have self-respect for it.
We have already been betrayed by the TARP team. The term cap is a joke, it should have been mandated from the start that NO ONE in any company receiving TARP monies would be receiving their "bonus" for performance. Their performance was a joke.
If anything we should institute a negative bonus draw for top ranking officers of a company that performs poorly. Also I'd do away with any payments made to CEO's that are terminated prior to their 'contract' fulfillment. I worked for a company that hired a CEO who ran our company into the ground. We then had to pay her over 3 million dollars to go away. Why isn't this considered lunacy??
Like in any business, the reward should be in step with the performance. If they ran their "business" into the ground, their business should no longer exist. Where do we draw the line? Who ISN'T privy to bailout funds (other than you and me, they typical taxpayer)?
Why do the RICH get help while the POOR are allowed to fall flat on their face? Because allowing them to do so (reap what they've sown) will force the day of reckoning. It's what we need, but no leader wants it to happen, not on "his" watch.
A great idea in form, but I'll believe it when I see it in practice.
And why wasn't it retroactive? The President should go back and make it retroactive to the Wall Strret group, but then that wouldn't be bailing out their buddies would it?
How do you keep executives in their job (to return the banks and institutions that received public bailout money) to turn them around, if they can not earn compensation equal to the task at hand, or those executives "market value" (at least in their own minds)? While it might be a nice idea, I think it will be hard to actually enforce...(i.e., keep execs in those jobs for 1/2m)
Sorry, I just got it. Limits for executives for the bailouts that have already been funded? ha ha
The financial institutions will not even tell the American people where the bailout money has gone thus far and we the people will be paying that bill??
The Executives need to either pay those bills or go to jail. This should not be the "people's" responsibility.
The government needs to stay out of business. I think the bailout is a huge mistake that we, the taxpayers, will eventually have to pay for. Rather than limit salaries, why don't we simply make them pay it back.
I am not quite sure I really understand what Obama is working on here. It is my understanding he is intending to limit their bonuses. Why does the President of the U.S. have to do this. Why aren't the corporations doing this themselves.
You know, for as long as I can remember, every time a corporation announced earnings lower compared to "whenever" my response has always been - what, the executives aren't getting the bonuses they "expect"? At least now I know my comments were right on and no one seemed to ever be in tuned to my comment. I always thought that the profit was always bigger than "whenever", just not big enough for who?
I don't think we should be bailing out the banks or the auto industry. They aren't helping the small business owner so why the heck should the big guys get the money. They made bad decisions so they should be held responsible for their actions just like every other business owner. I don't think Obama is going to do us any favors and at some point in time the tax payer is the one that will suffer with all this free money they keep printing. Just wait, the interest rates will go up, I don't know if it'll be like the 80's but somethings going to have to give. At this point what's the point, when they can't even tell us where the monies gone. It's gone.
Qualified talents is always worth the money in running any business. Any business that is profit driven that is. Unlike most government run enterprises that's not the case, huge responsibilities with huge consequences usually meets the lowest paid talents. It is completely counterproductive to have invested $350 from the TARP fund and not have the smartest and brightest to watch over it by limiting their pay. By limiting the compensation of the people that will direct the use of the TARP money is to ensure its lost. Perhaps that is the idea, hence the conspiracy.
Isn't this just another way of telling the excutices," yeah, we are not going to pay you money for whatever you do, that is, but it is ok to run the company to the ditch and we will pumb more of the funny money to you since we got plenty of where they come from and you do not have to pay it back. Just do what I say, Moron."
Do we really trust that there is not going to be a hidden agenda in the disclosure womehwere?
I do not trust the people who run the government.
Don't give me wrong, I do love this great country that is why, like millions of others before me 200 years ago, I came to this great place that I call home now.
I think its HILARIOUS! that these banks are asking for money to bail them out to bail out the economy, and they have an elite and exclusive attitude that we should not be asking how they do business with taxpayers' money. I can't wait to find out how they going to do if they keep turning down more bailout because of government oversight! They are just terrible as the automobile giants flying to DC in corporate jets to beg the Senate.
I had no idea that it was Constitutional to steal the purchasing power of my dollar without getting my consent! A cap on the executive compensation? Is that referring to the slang of a 'bullet' on the executive compensation? The right to bear arms and protect my home and my family; and people are still able to steal money from me that's under my mattress or in my very pocket without coming into my house....something is messed up with this system for sure.
Is there a way to just start our own 'federal reserve' since it's not even federal and not even a reserve?
Robert - My answer is a conflicted one. I do not agree with capping executive compensation. That should be left up to the Shareholders by way of the Board of Directors.
I did not agree with the bailout in the first place. Regardless of whether it is called a loan or not, it is still a handout. A handout of our tax dollars to a free market entity. Which leads us down the road to Socialism. To be plain and clear, the financial institutions should have collapsed. The vacuum created would have been filled with more fiscally responsible institutions and our free market would have been stronger for it. The government helped create the mess and allowing them to head up the process of recovery is like putting an alcoholic in charge of a liquor store - a recipe for disaster because they have already shown their inability to manage the situation in the first place.
To answer your question, a straight across the board cap is not the way to handle executive compensation. Give them an average salary based on the national average of the lowest 5000 corporations that have executive positions. 100 corporations form each state. Add the salaries together and compute the average. For the sake of argument, let's say that number is $25,000 per year. Allow the executives a salary of $25,000 per year, but give them a compensation bonus depending upon profits. If and only if the company profits, does the executive receive compensation. If an executive can pull an entity that is 1 billion in the hole to a 2 billion dollar surplus, that person deserves millions in compensation. However, if that person does not, then they receive their average wage. A confident and competent executive would have no problem with that as long as they were granted an adequate period of time to complete the task (ie: not terminated the month before profits are estimated to be achieved).
The rich executives probably did not blink with an earnings cap because there are other compensation methods to use to work around the cap. It is a gesture to appease us simple folk by a man whom we want to believe in. We are members of the greatest country in the world.
The executive's pay might get capped, but I'm sure they'll go on extra conferences in Hawaii, get extra bonuses, etc. There's no way to stop executives from milking the earnings of a company. These are very educated people who can think of a million ways to be compensated through means other than pay.
Don't forget, the executives don't own the companies they run. The investors are the ones who took the hit for management's incompetence.
Absolutely yes... but let me explain. First off... our government has no business what so ever in conducting this bailout in the first place. The "bailout" is the governmental crime and overstep here... not the caps. Secondly... the officers in charge of these failed institutions should be fired... any other company leader or business owner would be out on his/her head if they failed to this extent. However... IF the government gives bailout money and IF those in charge of this failure are not fired... then YES to the caps. What an insult to intelligence and logic for these Execs to otherwise receive multi-million dollar salaries/bonuses taken from bailout money. Yes it stinks... but you KNOW that they will not behave themselves with this money otherwise. The caps MAY be the only reason they would decline the bailout money in the first place.
No. There should not have to be a cap on executive pay. The United States Government was not created in order to determine what we can and cannot make! It was created in order that we may have liberty and freedom. Those who say that there should be because these executives should be punished are falling prey to the Obama teams strategy of diverting you off the true problem! The execs should have been ALLOWED TO FAIL! If you want to punish an executive for doing a bad job, you don't just dock or cap his pay, YOU FIRE HIM OR LET HIM FAIL! This safety cap is just a political ploy, and frankly the governments way of getting more of their dirty little fingers into our lives. Conspiracy of the rich? Yes. If not just that, then its at the very least a conspiracy of the politician in order to keep their power.
I generally would think this a terrible thing for the country, but I also think, serves these people right. Look if you practice political entreprenuership this is what your going to get. Sort like selling your soul to the devil, it may appear great and wonderful at first but then he comes and claims his toll.
Of course thats my initial reaction when somebody askes me my opinion. When I really think about it though, I feel that there obviously something that I cant see.
Obama, and all government(yes including Bush, dont want some over sensitive Lib. getting upset), get and stay rich off of these companies that have this sort of business practice.
My overall thought would be if I were explaining this to my children would be, this is classic socialism, and socialism is a very bad way of life. It has always been proven to have detrimental(hope i spelled that right!) effects on any group of people that it has touched, including the first American settelers.
I watched a TV program just the other day on Stalin and Russia. Man, need I say more!? It truly amazes me that anyone can honestly say that they support socialism, and I think that this is what is beginning, with DC leading the charge, and lining thier pockets.
On the one hand I like the idea of there being guidelines for bailout money so that it actually does some good for the economy since we are in the situation now. On the other hand I very much don't like the idea of the government telling you how to use your money and getting their hands in places it shouldn't. Putting a cap on executives pay will only be the beginning I think.
Surely teh best thing to do woudl be to deny bonuses full stop.
Why reward failure?
Some of the so called fat cats have invented schemes to line their pockets,I am thinking of derivative traders etc here
Tom
I think that imposing a cap on executive compensation is to distract the public and make us think that Obama is working to protect the bailout money.