Greedy Executive Pay Gets a Scolding and Not Much Else

Where have we seen this before? The White House has a lot of talk. Then a pay czar is appointed. After some period, a damning report is issued. Then we have the public scolding, while legislation, policy and amendments are ignored and defeated, often by the very same administration.

Any action on the latest outrage du jour? Nah.

Such is the the Obama administration's pay czar's report. To be fair, the Pay Czar was given no power to actually get the ill gotten gains back. He also was limited to institutions who received TARP funds, not the real bail out going on at the Federal Reserve.

The Special Master for TARP Executive Compensation, Kenneth R. Feinberg, a.k.a. Pay Czar, was chartered to monitor executive compensation of bailed out financial firms. This covered 419 banks who received TARP funds. 17 of those banks handed out ill-advised executive compensation tallying $1.6 billion dollars. $1.6 billion dollars equals 26,666 $60,000 a year salaries. In other words, to feed the executive pig, 26,666 people went without a job.

The Special Master did not determine that any payments were "inconsistent with the purposes of [Section 111 of the Emergency Economic Stabilization Act of 2008] or the TARP or were otherwise contrary to the public interest." The Special Master had no authority whatsoever to force repayments from employees or companies.

The justification to not get the money back is 90% of the $1.6 billion was from banks which repaid TARP.

Of the $1.7 billion in payments identified by the Special Master, more than 90% were made by firms that fully repaid, or were taken into consideration in the Special Master's determinations regarding "exceptional assistance recipients."

That's nice. Uh, what about the trillions in bail out funds coming from the Federal Reserve?

What's interesting is while the main stream media duplicates the same article headline that somehow this is a scolding and a blast on Wall Street, the real Wall Street Press, sees it for what it is, an empty aw shucks.

The Wall Street Journal, calls the report a whimper:

If you were seeking further signs that that Washington’s war with Wall Street may be coming to an end, look no further than Kenneth Feinberg’s just-released report on bonus payouts at TARP banks.

In a word: Boooring.

The barebones news release from the Obama Administration’s Pay Czar avoids the kinds of juicy , headline making details that Wall Street has come to dread. Feinberg’s latest report names no names executives earning billions of dollars on the taxpayers’ dime. It doesn’t even cite any specific banks. Instead, it is a from-the-helicopter view of Wall Street’s pay practices.

Barron's, the bastion of warm fuzzies for the investor class, title their coverage, Goldman et. al Walk Scot-Free From Feinberg Review.

Ain't that right and no wonder with a former Goldman Sachs lobbyist as Treasury Secretary Geithner's chief of staff, whose previous job was lobbying against any legislation reining in executive compensation.

Bloomberg, went crazy with sarcasm quotation marks in Feinberg Says Companies Should Adjust Pay Policies for `Crisis', which outlines the accomplishments or lack thereof on restructuring executive compensation in the United States.

So, here we are, with millions of Americans desperate for income, for jobs, while the exact same system which brought the economy to it's knees goes on unabated.

We've had plenty of exceptional proposals and expert recommendations to restructure executive compensation and corporate governance. It's only the United States economy on the line. So, of course, we get a public scolding and a whimper.

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Comments

I think part of the pay

I think part of the pay czar's function was to finish off the auto companies. Notice they had to abide by restrained executive compensation rules, while at the same time Obama was saying we cannot hurt the banks ability to attract the best talent (i.e. gamblers) by limiting their executive compensation. So GM can't hire good executives and engineers to help fix their company because Obama says they need to adhere to some rules in exchange for the gov't saving 2 million jobs and 3 million pensioners. But you lose 8 million jobs gambling with taxpayer money and they get rewarded.

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Auto Bail out, executive pay

I didn't see any auto companies on the CEO excessive pay list beyond Ford was on there. AIG was on one of the lists.

But GM no. Of all of the bail outs, the GM bail out seems to be the most successful. Now they labor arbitrage, offshore outsource and so on, but on the scale of things, last I heard they are turning the company around....

Now Citigroup, on the other hand....I mean they seriously did offshore outsource jobs under the cover of financial Armageddon...

just like so many tech companies did under the dot con bust excuse.

Nobody is paying engineers excessively, it's executives...the engineers are the ones who invent, do the work, do the design and it seems to me they are being poo pooed financially, in spite of the strong dependencies on the success or failure of a company...

except for those building flash trading platforms and algorithms, they are paying their geeks what they are worth, unlike Silicon valley.

(not that this is too great for the markets or investors, but on pay scale, they are paying the STEM people (these are the R&D/design people vs. I.T. who they are offshore outsourcing their jobs on), much more than what you can get in Silicon valley.

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