I thought his statement was good.
We all need to take responsibility. And this includes executives at major financial firms who turned to the American people, hat in hand, when they were in trouble, even as they paid themselves customary lavish bonuses. As I said last week, this is the height of irresponsibility. It's shameful. And that's exactly the kind of disregard of the costs and consequences of their actions that brought about this crisis: a culture of narrow self-interest and short-term gain at the expense of everything else.
This is America. We don't disparage wealth. We don't begrudge anybody for achieving success. And we certainly believe that success should be rewarded. But what gets people upset -- and rightfully so -- are executives being rewarded for failure, especially when those rewards are subsidized by U.S. taxpayers, many of whom are having a tough time themselves.
For top executives to award themselves these kinds of compensation packages in the midst of this economic crisis isn't just bad taste -- it's bad strategy -- and I will not tolerate it as President. We're going to be demanding some restraint in exchange for federal aid -- so that when firms seek new federal dollars, we won't find them up to the same old tricks.
As part of the reforms we're announcing today, top executives at firms receiving extraordinary help from U.S. taxpayers will have their compensation capped at $500,000 -- a fraction of the salaries that have been reported recently. And if these executives receive any additional compensation, it will come in the form of stock that can't be paid up until taxpayers are paid back for their assistance.
Companies receiving federal aid are going to have to disclose publicly all the perks and luxuries bestowed upon senior executives, and provide an explanation to the taxpayers and to shareholders as to why these expenses are justified. And we're putting a stop to these kinds of massive severance packages we've all read about with disgust; we're taking the air out of golden parachutes.
Shame about "taking the air out of golden parachutes"--not quite right. But now that taxpayers are shareholders, I think the substance is hard to quarrel with. And I liked the "This is America" paragraph, which I think judges the country's mood very well. This indeed is not about disparaging wealth or pay for performance, but about curbing rewards for failure, something Wall Street seems incapable of doing for itself. Quite where this policy goes beyond the short term, we shall see. (As this FT editorial argues, some broader questions need to be addressed.) But an immediate political necessity had to be confronted and it has been.
If he now kills the Buy American provision in the fiscal stimulus, I will be even more impressed.
I would be really happy to never read/hear the cliche "hat in hand" again.
but this was my favorite bit:
Good because it ties compensation to a much-longer term prosperity; the opposite of what's happened with selling risk.
I agree totally with this view; if i'm laying out the cash, i will certainly demand that i'll set the standard, not them. They're lucky that they haven't been terminated. Our funds wouldn't have been necessary if they hadn't mismanaged their business so definitely we will set the standard.
Is the term Senior Executive a well defined term in the US or is it a matter of some "consideration" who is senior and not so senior?
Silke
Umm, okay, is anyone at the SEC who was responsible for the Madoff investigation(s) going to have their compensation reduced? Is anyone at the CIA who messed up on either 9/11 or the Iraqi WMD going to suffer any consequences? Are all the perks and luxuries lavished on members of Congress going to be disclosed and put to public vote? Or is this just a bunch of jealous government bureaucrats punishing the people they have always envied and hated? Tell me which.
Isn't it funny how a little carrot, like a serous pay cut, spurs ingenuity and a sudden recovering feeling in the market? I'm so proud BofA can stand plans to be paying the US Taxpayer back soon and won't need any more TARP funding.
But I would suggest that every cent that goes to covering toxic assets originated at BofA be included moving in to the future; I see a lot of potential for selling off assets to another holder who will get TARP support as a way around this little rule.
Vacuous nonsense that addresses a tiny symptom and not a root cause of any of the problems we face. About what I expected from a candidate who ran on a mealy-mouthed "Change" non-platform.
Meet the new boss, same as the old boss.
Those bankers have it lucky -- where I work we've laid off about 10% of the workforce. Those recently unemployed are gonna miss making less then a tenth of what bank execs can make under these new 'unfair' rules. Anyone who is worried about bankers pay in these times is either a sucker or a suck up. Tell me which.