Obama caps executive pay on Wall Street to $500,000. Let the bitching begin!

So the other day Obama put out word that he was putting a new rule in place for the remaining TARP funds to put an end to the Wall Street companies continuing to hand out big bonuses—upwards of $18 Billion so far—using taxpayer money in spite of the fact that they fucked up the financial markets. It’s a bit of a slap in the face that they’d come begging for money and then use it to reward the very people who got us in this mess to begin with. Now any company getting a bailout must cap their executive pay at $500,000 plus possible stock options, but the stock options can’t be sold until the firm pays back the government what it borrowed. Seems reasonable, doesn’t it?

Not if you’re a Wall Street executive it ain’t:

As news of the plan leaked last night, wealthy Wall Street went into panic mode, insisting that the caps would ruin the financial industry. It’s “a nightmare for any financial institution,” CNBC host Joe Kernen proclaimed this morning, while Fox Business host Alexis Glick said it was evidence of Obama being “a little anti-business.” Others insisted that the “draconian” caps would drive the “best and the brightest” away from Wall Street and that Obama’s anger over executive bonuses was misplaced:

That is pretty draconian — $500,000 is not a lot of money, particularly if there is no bonus.” [James F. Reda, founder and managing director of James F. Reda & Associates]

If I didn’t pay [bonuses], the people were going to go. … These people didn’t choose to cure cancer. These people didn’t choose to do public service work…These people chose to make money.” [Jack Welch, former CEO of General Electric]

The consequences of it are going to be a massive brain drain of senior talent from those companies that have taken TARP money to those companies that have not.” [Donald Straszheim, managing principal at Straszheim Global Advisor]

Companies that need the most talented people to fix their problems won’t be able to pay them.” [Jamie Dimon, JPMorgan Chase & Co. Chief Executive Officer]

Awwww! Poor fucking rich babies! How will they EVER survive on just $500,000?!?! Here’s an idea: Give me $500,000 and I’ll happily show you and I won’t even fuck up the economy in the process! Hell! I’ll be a one-man stimulus plan! You’d be amazed how much $500,000 a year would improve not only my quality of life, but my local economy to boot!

Cry me a fucking river.

35 thoughts on “Obama caps executive pay on Wall Street to $500,000. Let the bitching begin!

  1. Yea…no shit.  We could do a lot with 500k too…pay our student loans for one.  Not have to ration money for food for another.

    Dh made a point though…if it causes those ppl to leave maybe it is a good thing…they obviously didn’t do a good job to begin with.

  2. They mised the point.  It’s the most talented people that created the probelm with greed.  Perhaps the companies NEED a good dose of mediocraty.

  3. “$500,000 is not a lot of money” – I’m normally a calm and happy,peace-loving person but I could happily punch that man in the face for that comment – grrr

  4. Just as a counter-argument, I’m not that sure that 500K is a lot of money for some of these guys living in New York. I fully admit I don’t know exactly how much it takes to live and work in NYC, but I do know it’s substantially more than most places. And, in unintended consequences territory, maybe this might be a bit of extreme to punch the high end New York real estate market. I mean, these guys unload their pricey NYC apartments and no one else can afford to rent that might be many more millions of dollars not being spent in the city.

    I think it might be vastly more appropriate to freeze their salaries and cut them by a percentage. I’d appreciate a 500k salary as much any of the rest of you, but for some of these guys this just seems punitive, unless there’s an out where they can get paid in stock or something that gets them more invested in the company.

  5. This is a feel-good bill intended to make Obama’s Administration look good to the little guys, like everyone here.  I can’t believe with the state of the economy that this is the most pressing issue on the President’s to do list.  I’m disappointed.

  6. I’m reminded that in one of the last financial crises, we had to bail out the auto industry.  Lee Iacocca was then the head of Chrysler.  He took a 100% pay cut and worked for $1 a year until the company was on its feet again.  Didn’t seem to bother his bottom line.

    AND, if we lose all that “talent” on Wall St, we might actually see an improvement.

    SG

  7. AND, if we lose all that “talent” on Wall St, we might actually see an improvement.
    Exactly.

  8. if they are so worried about losing people to low salaries and lack of bonuses, then how about not taking our money?

    it is, however, very telling what jack welch says: these people chose to make money. and i believe there are two telling assumptions that can be made with that statement:

    1) they are there to MAKE money – not necessarily create something of value.

    2) they are there to make money for themselves, not necessarily make money for their company or the investors.

  9. MM, the cap allows for compensation in stock options in addition to the 500K. The only catch on the stocks is they can’t be sold until the company pays back the loan to the government.

  10. OH NO!
    “I only have 500,000 a year to live of off!”
    Come on, I live in a tent half of the year…as part of my job. I’m sure they can get rid of their gold toilets for the betterment of the country.

  11. All I’m saying is that you can’t exactly live in a tent in Manhattan and hitting salaries this significantly might have unwanted effects in the rest of New York’s economy. I’m all for selling off the gold toilets, but I’m not sure you’re going to be able to new hire people at 500k when their rent on a fairly modest (except in location) apartment might actually be more than that. I could be wrong about New York prices though – it’s possible that the economy’s already so bad off that the banks are already ditching repossessed NYC real estate at fire sale prices.

  12. Well actually, there are a lot of people living in tents in Manhattan.

    http://www.thevillager.com/villager_76/atentcityofone.html

    And the only reason rents are so high in NYC is because there are suckers born every minute who don’t know the value of a buck.

    $500K is being generous, if people can’t survive and prosper with that kind of money, we should put a bullet in their brains and put them out of our misery.

    And if they don’t want to cap the salaries, well, they can give back the money and stop asking for handouts.

    Remember the old saying: “Beggars can’t be choosers.” Time all these fat cats get reacquainted with the notion.

    Oh, and what is this “talent” they’re speaking of? The ability to swindle people out of their hard earned money?  tongue rolleye

  13. Even 500k is too much…many other jobs with even more responsibility don’t pay 500k like heads of hospitals, school districts, etc. these fat cats need to come down to earth..problem is that they have a lot of foot soldiers who buy into their ideology…unfortunately for the believers their ideology is a scam…

  14. I should make it clear that I only deleted the comments because they were comment spam, not because they were conservative.

  15. That’s it though – if you’ve got a guy you want to hire with three houses who might actually, you know, turn things around but he’s got three expensive houses? Well fuck your company, you don’t stand a chance of hiring the guy because you’re forced to only hire people who think 500K a year is this phenomenal amount of money. And I’m not saying it isn’t a lot of money, but perception is key and if you’re forcing companies to become less than competitive with the other companies, when they’re already kind of fucked by the executives before, you’re not spending taxpayer money on a company you want to become healthy again. Instead you’re simply propping up a walking corpse of a company with the Treasury while forcing anyone who might actually want to get ahead of that enforced salary into another job. If we’re going to do that we might as well buy the companies outright as the Federal Government and nationalize them entirely so that at least the companies and their employees would have the government as an explicit shelter.

  16. There is a bunch of historical studies showing this giant disparity in exec pay in a phenom of the last 20 or so years…the compensation needs to tied to the long term health and stability of a company not just its short term fortunes..I don’t know the answer but under the current model we are just bending over and asking for it…

  17. I do not generallly support the idea of caps on compensation.  By and large, the best and the brightest gravitate toward higher paying jobs. That said, it is ridiculous what some executives are making.

    Now, if Obama would stop trying to reward those that enhanced their compensation by not paying their taxes.

  18. Wait, we didn’t have brilliant managers in the days before 300x salaries, 1000x bonuses?  These companies want a taxpayer bailout and then their execs have to be told that buying jets with the money is a bad idea.  Maybe they need to drive those idiots away, and attract somebody who is more interested in the game than in the three houses.

  19. MM, there’s a very simple solution to the problem of companies that don’t want to limit their execs to 500K a year: Don’t touch the TARP money. It’s not like they HAVE to.

    Instead they can just figure out what they need to cut out on their own—say the $18 billion in bonuses they paid out after getting tax payer money—to keep from going under while still paying outrageous salaries to their greedy execs who apparently can’t keep the company from making bad decisions. Don’t want to limit salaries? Then go it alone and take the risk of going under. That’s what they’re supposedly all about anyway, isn’t it? Taking risks?

  20. And Consi…

    Now, if Obama would stop trying to reward those that enhanced their compensation by not paying their taxes.

    Yeah, cause ya know how that never happened under the Bush Administration… oh wait, it did.

  21. That’s what they’re supposedly all about anyway, isn’t it? Taking risks?

    No. They’re all about making money.

    If you attach a poison pill like this to the TARP money then I’m very afraid that you’ll get exactly what you’re talking about: Companies that need the bailout not taking it because not taking the money dooms the longterm viability of the company in a way that firing everyone in the US and moving everything to India doesn’t.

    I’m definitely not saying that CEO salaries shouldn’t be addressed, and specifically in ways like Jim was suggesting that tie their salaries to the fortunes of the company, but this just seems like a kick in the balls sort of punishment for failure at the top rather than a leg up handout for to keep the bottom financed and operating smoothly. Worse, it’s not even directing the kick in the balls at the people who’ve offended you – those guys will just quit their jobs and take another high paying job somewhere else.

    The company’s stuck with whoever sucked at their other job that they can’t afford not to take the lower paying job. Maybe a few of them luck out and find some dumbass willing to give up their salary and perception as an ambitious go-getter by staying with the crippled company, but I think what you’ll get instead is a cycle where anyone who does anything like a good job with the company immediately leaving them because they can get paid more elsewhere.

    Simplistic statements like “Gosh, that’s a lot of money!” implying that the salaries are unreasonable miss the point. The fact is these people are paid this much and more, and forcing companies already crippled by the poor economy to choose between varying levels of crippling them further, by either not taking money to meet their debt obligations or becoming less than competitive in their labor practices, misses the point of giving these guys the money in the first place. That isn’t to salt the earth of CEO compensation, but to give companies real, short-term assistance so they stay viable, stay in the country, and so that the thousands of workers they employ who have absolutely nothing to do with CEO pay have jobs.

  22. MM writes..

    No. They’re all about making money.

    Yes, and that seems to be a big part of the problem. Making themselves money at whatever cost to the company they’re working at. Let the fuckers quit and go ruin another company until people wise up and stop hiring the fuckers.

    If you attach a poison pill like this to the TARP money then I’m very afraid that you’ll get exactly what you’re talking about: Companies that need the bailout not taking it because not taking the money dooms the longterm viability of the company in a way that firing everyone in the US and moving everything to India doesn’t.

    Yeah, cause keeping the asshats that got them in trouble in the first place seems like such a better strategy. Sure, that makes a lot of sense to me. No, wait, it doesn’t.

    Has a single person at any of the companies in trouble been fired over the fuck up they caused? Not that I’ve read. And yet they want to pay them bonuses for being fuck ups? Using tax payer money?

    Let the fuckers fail then ‘cause they’re obviously too obtuse to survive.

    Worse, it’s not even directing the kick in the balls at the people who’ve offended you – those guys will just quit their jobs and take another high paying job somewhere else.

    Interestingly enough the article Lordklegg linked to addresses that idea:

    Critics of the Obama Administration’s plan to cap salaries insist that top corporate officers will leave for better paying jobs. I would love to see that interview.

    “Well, Mr. Franklin, I see you invested very heavily in worthless assets at your last firm and that it is now insolvent. What do you think you can do for ABC Company?”

    Sign me up to be a fly on that wall.

    The company’s stuck with whoever sucked at their other job that they can’t afford not to take the lower paying job. Maybe a few of them luck out and find some dumbass willing to give up their salary and perception as an ambitious go-getter by staying with the crippled company, but I think what you’ll get instead is a cycle where anyone who does anything like a good job with the company immediately leaving them because they can get paid more elsewhere.

    Seems to me that if they were so great at their jobs the company wouldn’t be in the mess it’s currently in.

    Simplistic statements like “Gosh, that’s a lot of money!” implying that the salaries are unreasonable miss the point. The fact is these people are paid this much and more, and forcing companies already crippled by the poor economy to choose between varying levels of crippling them further, by either not taking money to meet their debt obligations or becoming less than competitive in their labor practices, misses the point of giving these guys the money in the first place. That isn’t to salt the earth of CEO compensation, but to give companies real, short-term assistance so they stay viable, stay in the country, and so that the thousands of workers they employ who have absolutely nothing to do with CEO pay have jobs.

    So in other words there should be no negative consequences for the folks who fucked up the company badly enough that it has to ask for taxpayer funds to keep afloat because if we dare to punish them for their incompetence—or naked greed—they’ll pack up their ball and go play someplace else?

    If I did something so stupid that it brought my company to the brink of bankruptcy do you seriously think I would be allowed to hold onto my friggin’ JOB let alone an outrageous salary?

    If they don’t like it then let the fuckers fail.

  23. I thought this was interesting. Apparently Donald Trump thinks the pay caps are appropriate:

    Larry King: Is Obama right or wrong to go after these executives with salary caps?

    Donald Trump: Well, I think he’s absolutely right. Billions of dollars is being given to banks and others. You know, once you start using taxpayer money, it’s a whole new game. So I absolutely think he’s right.

    Granted Trump isn’t exactly known for his own business acumen, but he’s managed to survive this long without going tits up.

  24. If I did something so stupid that it brought my company to the brink of bankruptcy do you seriously think I would be allowed to hold onto my friggin’ JOB let alone an outrageous salary?

    Are you seriously suggesting that the economy is in such great shape that the only way a company could be brought to the brink of bankruptcy is mismanagement these days? That’s part of the problem with the economy in the first place: You could be doing everything right and still get gut punched by a credit crisis and deflation. You know, a handful of people claimed to have their crystal balls out and have seen this coming, but honestly I think most of that’s as credible as the religious whackos with their efforts in prophecy and fortune telling.

    Donald Trump thinks the pay caps are appropriate.

    Trump is in real estate. Land doesn’t go out of business, and if high end companies go out of business and have to sell their assets he’s in the position of buying their property on the cheap and waiting it out. The only problem he has is in short term lack of buyers and trying to figure out who has money to loan him. His hotels are doing poorly, but they’re franchised out so there’s probably more people owing him money than the other way around.

    Look, I know you guys have the vengeful urge to get back at these guys, but I think it would probably be saner for you all to just grab a pistol and pop a few of them rather than try to ruin the value of employment in these sorts of large companies. I’ve got the feeling that if we continue down this path we’re not only going to not make anything of value in the country any longer, we’re not going to have anyone handling money either. We’ll be stuck as nothing but consumers, picking our asses and wondering why the rest of the world has come out of the economic crisis and all the good jobs are overseas.

  25. I think it would probably be saner for you all to just grab a pistol and pop a few of them rather than try to ruin the value of employment in these sorts of large companies.

    Um… no, that wouldn’t be saner.  And yes, I think mismanagement is a strong suspect when a bank goes under.

  26. Ya know, if they would look at hiring outside the already-making-millions-screwing-up-other-companies “talent” pool, I’m sure they’d find plenty of intelligent, talented people with great new ideas who could turn the companies around to be healthy and profitable – and be THRILLED to make $500,000 in a year – or in 10 years. 

    If you keep going to the same poisoned well, you’re never going to get better.

  27. This is bullshit. Not only is Obama significantly raising taxes to nearly 50%, he’s now capping exec salaries! He’s the anti-capitalist. Many people have worked extremely hard to get to where they’re at today. And now they have a capped salary. So why bother trying to improve when you know you won’t be making any more money? Yeah there are corrupt and greedy execs, but there are also honest and hard working ones who deserve that money for what they contribute to the company. Why doesn’t Obama cap salaries for non-profits like CollegeBoard (pres gets $650,000), the company that grades the SAT(CEO makes over $930,000), and non-profit hospitals (one hospital paid the director $16.7MILLION)?!

    Fuck you Obama, you’ve ruined capitalism, you’ve ruined many peoples lives with your stupid healthcare plan and mega high taxes.

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