We knew something like this was coming and it's probably not the last of the formerly unthinkable assaults looming ahead.
From the Washington Examiner
[...]Some days I think my head will just explode and some days I'd welcome it.
But now, in a little-noticed move, the House Financial Services Committee, led by chairman Barney Frank, has approved a measure that would, in some key ways, go beyond the most draconian features of the original AIG bill. The new legislation, the "Pay for Performance Act of 2009," would impose government controls on the pay of all employees -- not just top executives -- of companies that have received a capital investment from the U.S. government. It would, like the tax measure, be retroactive, changing the terms of compensation agreements already in place. And it would give Treasury Secretary Timothy Geithner extraordinary power to determine the pay of thousands of employees of American companies.
[...]
In addition, the bill gives Geithner the authority to decide what pay is "unreasonable" or "excessive." And it directs the Treasury Department to come up with a method to evaluate "the performance of the individual executive or employee to whom the payment relates."
The bill passed the Financial Services Committee last week, 38 to 22, on a nearly party-line vote. (All Democrats voted for it, and all Republicans, with the exception of Reps. Ed Royce of California and Walter Jones of North Carolina, voted against it.)
[...]
Rep. Alan Grayson, the Florida Democrat who wrote the bill, told me its basic message is "you should not get rich off public money, ...
"This bill will show which Republicans are so much on the take from the financial services industry that they're willing to actually bless compensation that has no bearing on performance and is excessive and unreasonable," Grayson said. "We'll find out who are the people who understand that the public's money needs to be protected, and who are the people who simply want to suck up to their patrons on Wall Street."
[...]
8 comments:
I'm pretty ambivalent about this.
On the one hand, government meddling is a serious encroachment on economic freedom.
On the other hand, company stakeholders get a say in compensation. The government (i.e. the taxpayer) is now a stakeholder. My feeling is that a substantial majority of taxpayers want to limit executive compensation. That may be foolish in terms of productivity and ROI, but if that's what the owners want then that's what they should get.
The government (i.e. the taxpayer) is now a stakeholder. This is my main objection. The camel's nose under the tent so to speak.
I think it's a net positive and another example of idiots like Frank not thinking through his own actions. Let this be the law — will it not strongly discourage all businesses from taking government investment? I also can't wait for the first collision between this and a union at one of the companies.
Union members won't be affected, they serve a higher god.
Companies will make decisions, not based on risking their own capital, but based on Uncle Sap stepping in.
Susan's Husband,
The problem is that the government seems to get to decide when to step in - the companies have no choice but to take the investment.
I also agree with erp. No way will the government make the union members experience any pain. Otherwise, they would've (should've) just done a government backed chapter 11 bankruptcy.
The problem is that the government seems to get to decide when to step in - the companies have no choice but to take the investment.
That is true of banks, the point being to not allow who took government bailouts to affect confidence in individual banks.
The main goal of the government money was to inject liquidity into the system so as to free up credit markets.
Here is a perfect example of unintended consequences. Banks had to take the money, but they don't have to keep it. Because of the heavy handed meddling, banks are paying the money back as soon as possible.
Thereby removing liquidity from the credit markets ...
If we amended the constitution to require that Congressmen be detectably sentient two days out of five, Barney Frank would never make the cut.
It's the voters who need to be sentient, but that's an idea whose time has come and gone.
I saw this quote here, “Give me control of a nation’s money supply and I care not who makes its laws.” — Mayer Amschel Rothschild.
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