CEO Bailout & Salaies Vis-à-Vis Average Worker Under Them

CEO Salaries and Bennies: A Reflection of Greed at Taxpayer Expense

(Photo by Spencer Platt/Getty)

CEO's Surrounded by All That Green
(and it ain't grass either)

What Do Workers Think Their CEO Earns
(ha.... think again)

Major Update on the following topic — segment from MSNBC (Chris Matthews/HARDBALL) (about 7 minutes) (click here).

Original Post:  I was not greatly opposed to the initial TARP and then TARP II or the Bailouts that followed in light of and on top of near total economic meltdown of the country, but I had serious doubts nevertheless. A short review or preface relating to this story is warranted and is taken from my reading and recollection:

Q: How did we get here? Panic arrived via Treasury Secy Hank Paulson and Wall Street to President Bush and then to Congress with these words: “We need a stimulus to stop a NEAR TOTAL MELTDOWN (stated in September 2008).” His proposed bill went from 3 pages to over 400 pages, and from over $700 billion to over $800 billion as the Senate upped their part of the ante based on: 

The failure and collapse of Bear-Stearns; Fannie Mae-Freddie Mac; Lehman Bros; AIG; Merrill Lynch; Washington Mutual; Wachovia, then AUTO bailouts and failures and near failures all over Wall Street, plus closures of over 100 banks. Whew!!!

Where did all that come from? In part, the housing bubble scandal – then foreclosures – aided by CEO salaries – off-shore hideouts for billions, and now: job losses - debt and deficit spending to new records, more and more foreign borrowing (mostly from China). It has stopped somewhat, but job growth remain unstable – slow but not as fast as people need – things are and remain quite volatile, unstable, and uncertain and that has bred the anger and the steps taken (not for them per se, but that one side of the political aisle says IT’S NOT WORKING. A second whew!!!

However, not merely loans backed by Freddie and Fannie caused the problems ... more like those banks and mortgage companies and others who cleverly bundled them, passed them along after they made huge profits – and that kept that chain alive ... or pyramid if you like.

Those in government and those who were supposed to be watching (SEC, oversight committees, et al) forgot to consider or even include a strong anti-greed clause the rules for what was going on – and underneath it all, a lot was going on – an earthquake followed by a huge Tsunami was forming. That is what we face today: all the debris that came down around us is now being washed out to a huge red sea (red as in red ink) and it’s taking a lot of folks with it.

All that was lacking in this mess was people jumping out of Wall Street windows. They had no safety net in 1929 – but, they do today: the American taxpayer, who takes it in the shorts again. 

How is all that related to the story linked above that has this headline:

Report: Treasury approved "excessive" pay at bailed-out firms

From the story, in part, verbatim:

The Treasury Department approved “excessive compensation” for top corporate executives while their companies were still on the hook for the taxpayer-funded bailout, the bailout’s official watchdog SIGTARP said Wednesday, going against the pay limits that the White House had previously set.

Under the bailout legislation that Congress passed during the financial crisis, firms that received taxpayer-funded bailout money were subject to certain limits on executive compensation. In early 2009, the White House took additional steps to restrict executive pay for bailed-out firms, limiting executive pay to $500,000. Treasury went too far in making exceptions to those new rules for top-earning employees at General Motors and Ally Financial, the bailout’s Special Inspector General concluded in a new report. 

President Obama originally announced the executive pay restrictions with great fanfare, vowing to prevent “executives being rewarded for failure.” At the time, the Treasury Department said that compensation in the form of stocks couldn’t be paid out until after the company had repaid the government for the bailout money.  

However, it was up to Treasury to enforce the rules, and TARP’s watchdog says that officials were too lenient in making exceptions to the rules at GM and Ally. 

So, here we are today: Allowing or at least accepting the fact that CEO's who caused this mess to once again get back on the proverbial gravy train, or it seems to buy and hold the majority of stock in that train.  

A lot of folks worried about this – now those fears are right in our face. I am sure more will come out on this. Stay tuned.