Sunday, February 1, 2009

The Cap Executive Officer Pay Act of 2009

by Pa Rock
Pissed-Off Taxpayer

The American Congress, traditionally the bane of the poor and those without influence, has been given a once-in-a-generation opportunity to repair its reputation of greed, corruption, and general indifference to the true needs of the country and the people whom it is supposed to serve. This past Friday one of the Senate's junior members rose and proposed something so daring and radical that it swept past surprised lawmakers, lobbyists, and other defenders of the status quo and made its way into public view. Claire McCaskill of Missouri introduced a piece of legislation that a friend of mine aptly refers to as a "Maximum Wage" bill. She has, with one bold stroke, captured the anger of America's little guys and crafted it into a political bomb.

Here's how it has worked over the years. Those with money and privilege stayed busy preaching about the greatness of America, a country where anyone could become rich and any boy could grow up to be President. That was the "talk," but the "walk" was a much different story.

The rich, in point of fact, have expended a great deal of effort demonizing the poor as shiftless welfare cheats and criminals. When some observers pointed out that America's corporations were receiving a far greater share of government welfare than the poorest among us, they were shouted down as being un-American. And on those rare occasions when one of our "betters" was caught red-handed and convicted of a crime, he or she was sent to a country club prison where they were protected from coming into contact with common criminals. F. Scott Fitzgerald informed us that the rich were different from you and me. That was our lot and we shouldn't question it or rock the boat.

Today, as America teeters on the edge of what could easily be a depression as devastating as the one that submerged the country and the world in the 1920's and 1930's, the national government is trying to be proactive in averting the worst possible scenarios. President Bush, under the guidance of Treasury Secretary Paulson, threw billions of dollars into failing banks, not bothering to load the free money up with any pesky controls or accountability. America's bankers took the money and immediately put it to work: paying bonuses to the executives that had run the banks into the ground!

So here's what Senator McCaskill told her colleagues on Friday. (The emphasis is mine.)

"There are a lot of things we need in this country right now. We need jobs. We need something to stimulate our economy. We need certainty in the credit market, but probably more than anything, what we need in this country right now is confidence, confidence that we can face down these problems and move forward like America has always done. And what do we have instead of confidence? Everyone I work for is mad. You know, anger can be constructive if we channel it. And I’m here today to say it's time that we channel this anger and change the law. We don't need anger. We have a bunch of idiots on Wall Street that are kicking sand in the face of the American taxpayer. My colleague just talked about some of them.

"Let me review. These financial institutions on the brink of extinction come to the American taxpayer for hundreds and billions of dollars at the very same time they think they're going to buy a $50 million corporate jet. They're going to pay out $18 billion in bonuses. They paid an average of $2.6 million to every executive at the first 116 banks that got taxpayer money under TARP. Let me say that again. An average of $2.6 million in executive pay to the folks at the first 116 banks that got money from the taxpayers. They don't get it. These people are idiots. You can't use taxpayer money to pay out $18 billion in bonuses. Merrill Lynch is unbelievable. They saved $3 billion to $4 billion from the pot of money that was going to Bank of America. The sale is going to close the first week in January. They always gave bonuses in January. You know what these sneaky guys did? They decided to give their bonuses in December before Bank of America took over - paid out $3 billion to $4 billion in bonuses in December and that quarter Merrill Lynch lost $21 billion. What planet are these people on? What could they be thinking about?

"So here's what this bill's going to do. This is called the Cap Executive Officer Pay Act of 2009, and it's very simple. Going forward if you want taxpayers to help you survive, if you want the people at your financial institution to have a job tomorrow, then you're going to have to limit everyone's pay at your company to the same salary that the President of the United States makes. Is that so unreasonable? It’s eight times the median household income in the United States of America. $400,000 a year. I don't think that sounds like a bad deal. Should these people be making more than the President of the United States? Now, really? Should they? They should not be making more than the President of the United States. So every executive going forward cannot make more than $400,000 a year. And they would have to limit that executive compensation for everyone in their company until they pay back every dime to the taxpayers. Now once they're off the public dole, once the taxpayers aren't footing the bill, then it's not as much our business what they get paid. But right now they're on the hook to us. And they owe us something other than a fancy waste basket and $50 million jet. They owe us some common sense. And if any of them think it's a hardship to take the salary of the President of the United States, I dare them to say so out loud right now. Because that's not going to instill confidence.

"What is going to instill confidence for the men and women in these companies to realize that everyone in this country needs to tighten their belts. It's time for everyone to realize that we must have our financial institutions survive, but not with a culture that thinks it's okay to kick the taxpayer in the shins while they drink champagne and fly in fancy jets. It doesn't work. Not in the United States of America. I ask my colleagues to sign on to this bill. I think it makes sense. We should have done it in the first place, but I don't think any of us thought these guys were this stupid. I don't think any of us would believe that they would take billions of dollars of bonuses while their institutions were literally days from being wiped out. But they did. And we've learned our lesson. And so I hope all my colleagues will sign on this bill. I hope that we can get it passed quickly so that from this day forward the President of the United States will make the same amount of money as the executives at these companies that owe the taxpayers hundreds and hundreds of billions of dollars."

In an earlier post I suggested that the time has come to consider nationalizing the banks that are unable to make it on their own. If legislation cannot be enacted that gives the public some control over its money and the shameless actions of America's uber-bankers, I have now come to the conclusion that we would be better served by bulldozing the failed banks and eating their corporate officers!

It would be a small return on our investment, but better than nothing at all!

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