"President Obama has imposed a $500,000 cap on executive pay at financial institutions receiving federal bailout funds."

Anyone else think this is a good idea or even a bad idea?

I am actually pretty happy with this. If the government is giving tax dollars to these institutions, they should be responsible with spending the money in a way that is going to improve their business, rather then reward these executives that have not done enough to keep their business from plummeting. I also feel the same way about the government spending tax dollars. I know there is some opposition to this and one of them being that we will push these top executives out of the country.

 

Personally I think the executives in a company failing so hard that they need TARP funds should get only $100/month.

 

i wonder if there's a limitation on bonuses as well.

 

Well...From first impressions I think it is slightly trivial/public gesture and might not turn out to be that effective.

It is not the salary that is the problem but rather the bonus structure. Wall Street paid out $18.5 billion in bonus on TOP of salary. This obviously included non executive staff as well, bankers/traders/analysts/etc, where distributions seemed more culture than performance related. Yes, some of those people work 100+ hours a week and that's commendable effort, but at the same time effort means nothing without results. Plus, if they limit executive salary, they will just get it back in stock options, perks, bonuses, profit sharing, etc (unless Obama plans to limit those as well). Therefore, just capping executive salary seems more like a PR stunt rather than effective measure. If they REALLY want to go that route and make it effective, they need to start capping salary AND bonuses for executives AND non-executive staff across the board if they are concerned about bail out money being used inappropriately. Another option is mandating some sort of performance related clause where you get paid if you actually accomplish something good...but if improperly excused or overly aggressive those concepts can be a bit...well, you know...

I think there should be contingencies or mandates in place when it comes to government money (stating the obvious), but they to be more than skin deep...

 

I think there should have been more stipulations on the money but that is a no brainer. Like just using the money to assist failing accounts. I was against it from the get go. They got themselves into this mess by being greedy. I.E. lets lend this money to these people for this house that they cant afford because the market will go up andif they cant sell they will forclose we already got x number of years worth of payment from the home and new it will sell again for more money. the bailout money while being paid off by taxpayers was divied out with money that has no backing further weakening our economy. A little economics 101 from a crappy internet economist for ya.....

 

I think it is a bad idea. This will cause an exodus of talent from troubled firms recieveing funds from the feds to institutions who did not take TARP funds. The top talent already at troubled institutions needs to stay there to help guide them out of this mess, if the best people leave, we have 2nd tier people running already troubled institutions.

 

The money needed to be lent out to get credit flowing again. The only way housing values come back up is if people start buying. Credit was issued to freely for too long but credit in the hands of the right people, i.e. qualified borrowers, will get the housing market going again. House values need to begin to come back up before this mess will begin to straighten out because banks have forclosed on homes whose value is far less than the loan issued to purchase the house. The only way to recover the funds lost is to resell the houses as close to the value of the loans as possible.

 

i think the main fear is that the govt thinks 2nd tier folks are already heading up these firms. all the guys at the top between corporations and government all know each other. this wouldnt be happening if these guys were indeed top talent with good intentions. they had to lobby for the bailout and barely got it. no one is happy with mgmt (not the band) in these failing financial institutions right now.

 

Top tier people need to be in these positions, there are plenty of top tier people now, however they were overridden by those not as qualified due to greed. Not to mention it will be impossible to attract top tier talent to right the ship with such limitations in place.

 

If the "best" people were there in the first place they wouldn't be needing to get ANY TARP funds.

This kind of "talent" needs to be shown the door.... I think you could take a bum off the street give 'em a shower and sit him at a big desk without a phone and not have him do as much damage as some of these "top tier executives" have been doing...

Capping Publicly funded bailedout corporations at about 10-15 times their companies base salary doesn't seem all that out of line- hell most countries have executive pay structured that way already.

We're the only country in the entire world where "500X base" salaries are given to executives- and if the executives can't run the company above water- no way do they deserve anywhere near that level of compensation.

 

^ it seems like this is chicken vs egg argument. true, if truly top tier were in charge, they wouldnt necessarily be failing. now that there's a cap, top tier won't work there. makes sense. but they had to set an example at some point and a certain level. management seems like the best place to start.

 

If greedy executives and board members had listened to the top tier people in the first place this wouldnt have happened. These companies need stability, they need the retain their top tier talent. With this cap, the talent necessary to revive these companies will leave for greener pastures where they can make more money. Do you want the same nitwits who drove these companies into the ground at the helm trying to revive them? That makes the problem worse, not better. Think about it, if you had the ability to take a job paying $800K at a comapny who did not recieve TARP funds or you could earn $500K at a comapny that did, where would you go? Not to mention the fact that government has no business running a public corporation, last I checked we didnt live in communist Russia.

 

I think you are missing the point- greedy executives and board members ARE the "top tier" people.

The government has every right to run a company- once they buy them, at which time they are no longer the "public" entities they once were- which is pretty much what these bailouts amount to.

Companies that have genuine top tier talent are stable and don't need bailing out- anything else is dirty laundry that needs changing.

REWARDING FAILURE SETS UP DISASTER

Bailouts might be said to be there to avoid failure, but the whole thing is flawed because the very act of the bailout implies failure, failure is failure and once that is established the roots of the failure need to be pulled up and destroyed.


I still think we'd all be better off if no TARP money went to anyone and all of these "too big to fail" greed factories went belly up.

 

^ they should have started with the american car companies.

 

I think you are confusing top tier talent with management, they are not necessarily one and the same.

And we would not be better off if we were to have let these comanies fail. The ramifications would be extensive and our current recession might be looking a lot more like a depression right now.