Europe Cuts Executive Pay Packages, If They Can Understand It So Should We

In case you haven't seen it, the New York Times wrote a ridiculous article this past Thursday about how hard it is soooo hard to live on half a million dollars in Manhattan. They concluded that with all the "necessary" expenses, a salary of $1.6 million is far more agreeable. If you get the urge to knock them the %$#& out, don't worry, you aren't alone. As much as the majority of the wealthy in America bitch and moan about Obama's decision to cap salaries of bailed out institutions, our friends on the other side of the pond clearly get it that we are in a big mess and that everyone needs to get together to help solve this crisis, even if the rich have to take a pay cut.

From (ironically) The NY Times:

“There’s no opposition to giving bonuses or high pay to people who are successful,” said Mr. Bolkestein, now a professor at the universities of Delft and Leiden in the Netherlands. “But there should be no extra money for people who have failed.”

And, in some cases, no jobs. Royal Bank of Scotland Group fired seven nonexecutive directors Friday as part of a restructuring agreement with the British government, which pumped in about $30 billion to rescue the bank.

On Friday, European governments were encouraged to follow the example of the United States by limiting executive pay at companies receiving government aid.

“The commission very much welcomes this kind of limit placed on the pay and bonuses of executives,” a European Commission spokesman, Jonathan Todd, was quoted as saying by Reuters. Such restrictions could be an extra incentive for banks to repay state bailouts.

Restrictions on financial institutions vary, from a ban on all bonuses to capping severance pay packages. It is smart and sensible for the behavior of executives to be held in check. As the article notes, many countries in Europe and the banks themselves are becoming more responsible with their money and what they are paying their employees in light of their bad business practices in recent years. I am sure there a few that protest over there as they do here, but in Europe overall, there is more seriousness in actually getting these banks to act responsibly in light of what is happening to the world economy.

Wall St. Flips Out Over Obama's Proposed Executive Pay Cap

Barack Obama made the announcement today that top executives at companies receiving TARP money must cap their salaries at half a million dollars. While that is a sum more than 99% of Americans would love to claim as their own, those that make more are steamed that Obama could try to enact such a thing. Just take a look at what they had to say in reaction to it.

From ThinkProgress:

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]

Yes Mr. Welch, they did choose to go out and make money, but the problem is that they lost much more than they could have possibly hoped to take home. Their reckless handling of the economy has resulted in more than two trillion lost in pensions alone. The world economy has been rocked by their callous greed. Judging by the reaction of these tycoons to Obama, that callousness has not worn off despite having billions in TARP money coming their way. Alexis Glick can claim Obama is anti-business all she wants, but the evidence of who has been ruining countless business is not pointing in Obama's direction. These scoundrels should be happy to make half a million in salary, because in a just world, we'd have already demanded they billions upon billions in salary and bonuses they've taken in only a few short years.

Foxes Invited To Henhouse Robbery Investigation, Less Fences Recommended

I got to admit, listening to the "bigwigs" of the financial industry is quite comical. They'd actually be funny sideshow freaks if it weren't for that fact that they have helped to destroy our national economy. Their ridiculous amount of greed has given the few at the top millions upon millions while the majority of us suffer. Now that the crisis is deepening with no end in sight, the Wall Street Journal and the Partnership for New York City decided to get the politicians and the principals of the big financial companies to come up with ideas. Needless to say, nothing much got done.

From The NY Times:

There were differences of opinions, but all seemed to agree that now was not the time to raise taxes or impose new regulations on their businesses.

The chief executives who spoke at the meeting, which was organized by the Partnership for New York City and The Wall Street Journal, were also reluctant about predicting that New York would remain the world’s financial hub after this crisis runs its course.

James L. Dimon, the chief executive of JPMorgan Chase, said high taxes discourage companies from hiring here. “New York tries to tax everything we do around the world,” he said. “If you have a choice where you put a job, it will not be here. That’s a terrible thing to say.”

A terrible thing here is that Dimon and others like him get to say anything at all, save for "Guilty as charged" or a cowardly "Not Guilty" when the judge asks them how they plead for their crimes against our country and its economy. These men are criminals, they have no right to decide on where to go from here. This is caused by their malfeasance and lack of regulation that the politicians in Albany (but mostly Washington) legislated for their financial contributors. Now the foxes are crying "not me" while looking fully fattened by their greed of the last ten years or more.

Bailing Out Rich Financial Firms Doesn't Make Sense, So Follow The Money

"Follow the money" has almost become a cliché in Washington and for how business is done in our capitol. The reason is because like most clichés, there is a fundamental truth between money and politics and the outcome of legislation when the two are added together. Take yesterday's bailout bill for example, it was a close vote and not political party had little to do with whether one Congresscritter voted for it or didn't. If anything, it was the leadership of both majority and minority that were for it and the legislators lower down the totem poll voted nay.

Answering why that may be, OpenSecrets has an idea:

WASHINGTON -- Members of the House of Representatives who supported bailing out the financial sector with $700 billion in taxpayer money have received 51 percent more in campaign contributions from the finance, insurance and real estate sector in their congressional careers than those who opposed the emergency legislation, the nonpartisan Center for Responsive Politics calculated following the 228-205 vote on Monday that defeated the House bill.

Examining campaign contributions from the industries that were most eager to see the Emergency Economic Stabilization Act of 2008 passed, the Center found that the gap between lawmakers who supported the bailout and those who successfully opposed it was especially wide among House Democrats.

In this election cycle, Democrats backing Treasury Secretary Henry Paulson's proposal have collected 78 percent more from the finance, insurance and real estate (or FIRE) sector than those in their caucus who opposed it and, over time, 88 percent more. In dollar figures, the 140 Democrats who supported the bailout proposal have received $792,744 over their careers from the FIRE sector and $188,572 in this cycle, on average. The 95 Democrats who voted against the bill have received $420,686 over their careers and $105,878 in the 2007-2008 cycle. (CRP's campaign finance data goes back to the 1990 election cycle, or the calendar year 1989.)

The 65 Republicans who backed the bill have collected $1,078,533 from the finance sector in their careers and an average of $185,461 toward this election. The 133 Republicans who led the opposition to the bailout have collected, on average, $705,297 over their careers in Congress and $150,381 in this election cycle alone. That translates into a difference of about 23 percent in this cycle and 53 percent over time.

If you head over there to the full article, the nifty graphs show that Republicans got more whether they voted yea or nay based on the natural affinity for Wall Street over in the GOP. Yet the strongest correlation is the money, not partisan identification. The true problem in Washington is the money, hands down. The Center for Responsive Politics does an excellent job of highlighting the discrepancies and should elicit the public to question their representatives on their vote and why they received so much money from the financial sector.

Now while persuadable politicians are a problem, they are merely a symptom of the much larger systemic ailment we endure. If we were able to clean up the system so that money were given from a public account, politicians would be held more accountable by the people and not the industries that fuel their campaigns and cushy retirement gigs. If you live in Arizona or Maine you know what I'm talking about at the state and local level, imagine how much better things would get if we could develop a similar system nation-wide. There are plans in development to go Federal, but they need all of our support, if we do not push our legislators to action, it'll never happen, because it is in their interest to stay elected and ultimately an informed citizenry (with clean elections) wrests power from corporate America and gives it back to the people.