By John Bougearel
From Bloomberg:
Oct. 22 (Bloomberg) — President Barack Obama said limiting pay for top executives at firms that got the most government aid strikes a balance between the interests of taxpayers and restoring stability to the financial system.
The president said the independent rulings by Kenneth Feinberg, Obama’s special master on executive compensation, are “an important step forward in curbing the influence of executive compensation on Wall Street while still allowing these companies to succeed and prosper.”
“We don’t disparage wealth, we don’t begrudge anybody for doing well, we believe in success,” Obama said today at the White House. “But it does offend our values when executives of big financial firms, firms that are struggling, pay themselves huge bonuses even as they continue to rely on taxpayer assistance to stay afloat.”
Feinberg is ordering pay cuts of an average of 50 percent and caps on benefits for top executives at seven companies that still owe the government billions of dollars from taxpayer- funded bailouts.
Feinberg “was faced with the difficult task of striking the proper balance between standing up for taxpayers and returning a measure of stability to our financial system,” Obama said.
While praising Feinberg’s plan, Obama said “more work needs to be done.” He reiterated his push for a regulatory overhaul as well as legislation that would give shareholders a greater say on executive compensation.
First, “curbing the influence of executive compensation on Wall Street while still allowing these companies to succeed and prosper” is a flawed statement. Most of the failed WS firms from 2008 have got out from under TARP and are awarding themselves record bonuses in 2009. This includes GS, JPM and RBS, to name a few. AIG is also handing out bonuses again, but I don’t know how egregious AIG is going to be this year. Second, these companies companies were bankrupt a year ago. It is only the taxpayer largesse that allows them to exist. Third, the robber barons do not succeed and prosper, they are government sanctioned to exploit, pillage and plunder the middle class taxpayers.
Fourth, in no way can Feinberg, the executive pay czar be categorized as “standing up for taxpayers,” if he had done that, he’d of shot the robber barron’s dead on sight and returned the hundreds of billions of taxpayer dollars to the public. Fifth, in now way can Feinberg’s job be construed as ” returning a measure of stability to our financial system.” The risks in our financial system are more concentrated and unstable than it ever was. The capital markets are still loaded with toxic securities that have never been resolved, just off-loaded/transferred onto the Fed’s balance sheet. CDS’s and other financial weapons of mass destruction are still trading as non-transparent and unregulated as they ever were. Not in any sense has the pay czar returned stability to the financial system. That would be a tall order far outside the scope of his meager job description and far outside his means.
For more on the plight of the middle crass after the robber barron’s stagecoach heist see here