Firms Receiving U.S. Aid Face Pay Curbs

[question everything]

Source: WSJ

FEBRUARY 2, 2009
By DEBORAH SOLOMON

WASHINGTON -- The Obama administration, seeking to improve public perception of the $700 billion financial rescue, is expected to announce this week tougher executive-compensation restrictions for some firms that get government aid. Officials also are considering splitting off the Troubled Asset Relief Program from the Treasury and creating an independent entity, according to government officials. Some within the department think such a move could help improve the perception of the bailout, which has come under heavy criticism for being too secretive and not imposing enough rules and conditions on banks that get government aid.

(snip)

Wall Street has been anticipating the new administration's plans, including expecting President Barack Obama to ask Congress for more money. Many economists no longer expect the second half of the $700 billion, which Congress recently approved, to be enough to fix the ailing financial sector. Before it announces those plans, the administration is trying to lay the groundwork with politicians and the public, who have grown weary of bailing out banks. The administration, realizing the public is expecting quick action, seems poised to announce some of its efforts in stages.

Its first move appears aimed at bolstering public support for the financial bailout by applying tougher rules to banks that get a substantial amount of money. Chief executives of firms that receive "exceptional" aid will be banned from receiving any severance payments and they, along with the top 50 executives, will see their bonus pools shrink by about 40% from 2007 levels. It won't be easy to upend a compensation system that is woven into the fabric of the U.S. financial system. Many Wall Street employees work under employment contracts that can't be unwound. Defenders of the old system said it still is useful despite blowups that have made Wall Street look disconnected from political and financial reality. If the government imposes caps or other limits on compensation, some bankers worry that the most talented people will flee to firms that are less regulated.

(snip)

Still, the administration isn't expected to attach any new pay curbs to healthy banks that get money through the $250 billion Capital Purchase Program. That program, which has invested nearly $200 billion in more than 300 financial institutions, imposes some modest pay restrictions, including a ban on so-called golden-parachute severance payments for top executives.



Read more: http://online.wsj.com/article/SB123353535829037679.html

---

What talented people? The ones who drove their firms to the ground? And where will they go? Where else will they get such obscene bonuses?

[terisan]

1. Tell me: If we are taking on their toxic "assets" why are we paying any money to them?

This top tier of investment banks should disappear.

[47of74]

2. The "talented people?" Let them go to Hades as far as I am concerned

There's plenty of people who'll work for a decent wage who are a lot more talented then the scumbags who got us into this mess.

[aquart]

3. Yes. Let them try and find another job in the world they made.

[acmavm]

4. The only evidence of 'talent' that these people have shown is for shameless

self-promotion and criminal greed.

I think we've had more of that 'talent' than we need thank you.

[question everything]

5. And, I think, we can find a better talent, an honesty

among the currently unemployed.