White House Orders Pay Cut For Bailout Firms

White House Orders Pay Cut For Bailout Firms


Who’s this guy?

Meet Kenneth R. Feinberg, the new pay “czar” for the White House. He’s tasked with reigning in the out of control compensation at companies the government helped recently.

I think it should be noted right off the bat that this is tied to executive compensation and bonuses…two pots of money that are so out of step with compensation in the real world it’s obscene. I mean, one year after all of these places went under and they’re giving out billions in bonuses?

Here’s more from Wash Post:

The cuts will affect 25 of the most highly paid executives at each of five major financial companies and two automakers, according to the sources, who spoke on the condition of anonymity because the plan has not been made public. Cash salaries will be cut by about 90 percent compared with last year, they said.

The administration will also curtail many corporate perks, including the use of corporate jets for personal travel, chauffeured drivers and country club fee reimbursement, people familiar with the matter have said. Individual perks worth more than $25,000 have received particular scrutiny.

And here are the companies affected…

The seven companies under Feinberg’s purview are Citigroup, Bank of America, General Motors, Chrysler, GMAC, Chrysler Financial and American International Group. These firms have received a total of about $250 billion in bailout funds from the Troubled Assets Relief Program, adopted last year by Congress, and benefited from hundreds of billions of dollars more in government guarantees and other support.

Personally, I’d like to see executive pay at publicly traded companies capped at a set price with stock options/bonuses only triggering when those folks actually produce provable results. But this “failing up” nonsense that CEOs continue to do decade after decade is ridiculous.

Of course I know this won’t happen because Wall Street firms will continue to claim that these compensation models are key to attracting the right talent, even though there are usually dozens of qualified applicants for every position they have.

Still, one can dream…

  • Aaron

    I really have absolutely no regrets for who I voted for in November.. But can we get away from calling everyone a Czar of something? I know its a superficial thing to complain about, but cmon! 😉

  • http://stubbornfacts.us Simon

    Aaron, the bigger concern isn’t the title but the character of the office. Even folks like Sen. Feingold have expressed concerns about the increasing role of de facto officials appointed outside of the Constitutional scheme for appointing officers. The system is flexible, and innovations like the “czars” are useful to the extent that they can temporarily bridge gaps in the formal structure; they should be kept in that capacity, however, not used as an end-run around the Senate confirmation process.

  • Chris

    Which is what they’ll be used for of course. But honestly either way does it matter? The insiders still get the jobs either way.

  • Bob

    I would like to see some of these executives and the congresscritters they support go to jail for the outright fraud that has been committed. The pay issue is a PR stunt at best.

  • gerryf

    I think it is much better to wait until Congress is out of session and then appoint completely unqualified yes men and cronies to positions.

    Goodness, we certainly don’t want a competent, accomplished attorney and mediator who has handled such delicate issues like Vet compensation for Agent Orange exposure, or compensation for 9-11 victims–not when we can get horse association commissioners to run FEMA or appoint a political hack who got just about everything he ever said about Iraq wrong, and also opposed to the US participation in the UN , as the permanent representative of the US on the UN.

    Yes, much better idea.

    Of course, all completely irrelevent to this topic. I have no issue with them making gobs and gobs of money–provided they earn it by doing something productive. Too often, these guys are compensated for risky behavior that improves short term bottom line improvements to the detriment of the long term health of the company.

    Executives should be compensated for growing a company not “fixing” bottom lines.

  • http://www.warning1938alert.ytmnd.com Jimmy the Dhimmi

    How about not giving them a bailout when they fail.

  • gerryf

    Tell you what Jimmy, if we actually enforce the anti-trust laws, and break up these megabanks into smaller competitors, I am all for letting them fail. But if allow the merger mania so that people running the show make scads of money and threaten to take us all down with them when to make bad decisions, it is hard to say, “Yeah, after we put the gun to your head, I will be taking a shot in the temple myself”

  • TerenceC

    “Attracting the right talent” – where is that evident? They are collectively responsible for 100’s of billions of dollars in losses, any schlameel could have done that.

    They believe they are entitled to the big checks because their CEO titles require pay packages and lifestyles to match their even larger ego’s. I know for a fact that there are hundreds of people just as talented as any of these guys who quietly do their jobs efficiently, without ego or drama, and for a a lot less money.

    I hate the idea of the government setting wage scales for private industry – but it really has gone too far and no other power in society has the strength to get these people under the heal – so it has to be them. Frankly, if they were so good – why did they need the tax payer to bail them out? Why haven’t they paid back their debt to society? How can they claim to post profits in any way, shape, or form unless they have paid back their loans to us?

    It’s ridiculous really – the largest wholesale theft of tax payer money (done right before our eye’s) in history and it’s business as usual for them. Maybe they can’t be controlled by government with their greedy ways – but government could serve a purpose by forcing them to diversify, forcing them to split their commercial and investment banking arms into different companies, forcing their different insurance interests into profit and non-profit organizations. Basically creating more competition when their slice of the pie is the whole pie itself.

  • http://wordsofwilbert.com/ Wilbert

    Every time i see a ford commercial on TV i get upset because I see the peoples money being spet so that others can make more and more money. I find it very dissapointing.

  • http://detroitskeptic.com/blogs Nick Benjamin

    Ford didn’t take bailout money.

    Chrysler and GM did.