As TARP director, Elizabeth Warren, said on Morning Joe" the arrogance of Wall Street and its coziness with our politicians has to stop.".. She was explaining the Obama's administration's plan to order companies that received huge government bailouts last year to sharply cut compensations on their highest-paid executives. The coziness may still be a factor because Goldman Sachs and J.P. Morgan were exempted because they paid back their TARP funds but technically they are still on the hook for other taxpayer bailouts. The remaining companies like Bank of America, AIG, Citigroup, General Motors, GMAC, Chrysler and Chrysler Financial will have cuts up to 90% in their total pay package for a period of one year. When questioned if this action would entice the remaining companies to pay off their TARP debt, Barney Frank said ""If they don't like it, they can give the money back." This all came at the same time Goldman Sach's international advisor; Brian Griffiths said "We have to tolerate the in equity as a way to achieve greater prosperity and opportunity for all.”… Not when you are using taxpayer's money to bail out your speculative schemes.
The House Financial Services Committee, recently approved (43-26) financial regulatory reform legislation that would require the comprehensive regulation of over-the-counter (OTC) derivatives like credit default swaps (CDS). The legislation sets a framework for the regulation of swap markets, dealers and major swap participants. It still has to go before the House for an up-and-down vote before it goes to the Senate. I'm sure the Wall Street lobbyist money will try to convince the lawmakers that these over-the-counter (OTC) derivatives do not need to go before a clearinghouse or federal oversight. Already Chairman of the Agriculture Committee Colin Peterson (D-MN) amended its bill to extend the exception to big banks and financial institutions. Huh? He seems to think that if a firm like Goldman Sachs enters into a contract with a company that's hedging against some kind of commercial risk (rising oil prices) they shouldn't have to publicly disclose that in a contract. Isn't that how we got into this predicament in the first place?
I think taxpayers are wasting their time worrying about the latest squabble between Fox and the administration, and who is quoting Chairman Mao and its significance, because, if we get Wall Street to stop acting like a Las Vegas slot machine (using taxpayer bailout money as their piggy bank) then people would start reinvesting in their 401(k) s and investing in small start up businesses. That is much more important. We would then see the unemployment figures start to drift down; increasing tax revenues will in turn lower the deficit and debt. The government has to follow suit by controlling spending.
I'm afraid Congress will not go far enough with their financial reforms. Although it would hurt the administration in the polls, I think they should listen to Former Fed Chairman Paul Volcker, by imposing stricter reforms, like repealing Glass-Steagall and start thinking about breaking up the top 10 banks and AIG. Chairman Volker did not worry about popularity, when he raised interest rates to 21% to stop inflation. Chairman Volcker is on the Obama financial advisory team, use him. We should never have institutions that are too big to fail. I thought President Obama should have temporarily nationalized the banks when he had the chance because it's obvious they don't think they are doing anything wrong. I know if he would have done that, the naysayers would have revolted even more than they did this past August.
http://www.nuwireinvestor.com/articles/finance-reform-moves-out-of-committee-in-house-53884.
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I don't think there is any evidence to prove that then Secretary-Treasury Hank Paulson, Fed Chairman Bernanke or President George W. Bush were lying about the world financial crises. Do you have a critical source, to back up your assumption?
Only the 175 top executives of the companies that have not paid their TARP debt will have to take a pay cut because of the excessive bonuses they were going to get.
Independent of the federal government the Federal Reserve has bought some the toxic assets but the reasons, and then Treasury Secretary Paulson changed his mind about buying the toxic acids, is not known. The TARP legislation did not make the necessary demands on the bailed out companies.
After all that commotion about the AIG executives giving back their large bonuses; it was forgotten and as of yet, no executive have given back their bonuses as promised.
That sounds silly, are you going to demand pay cuts on all 535 members of Congress or just those on the banking commission? Do we have a precedent for that? Do we need evidence of wrongdoing or we just cut their wages because of our hate for the federal government?
October 23, 2009 at 3:25 p.m.As to TARP,...
Not one single Toxic Assest has been bought out with TRAP money. The money was used for other things. No teeth were put into the bill to make sure the money was used. It was a pay off made up by DC scare tatics.
If the Wall Street guys should take the decrease in salary, then also should the DC guys. They lied just as much, if not more, that the others.
The bankers started doing what the Congress demanded they do. That is all there is to it. If you blame the Reps you also have to blame the Dems. If you blame the bankers you also have to blame the Congress.
October 23, 2009 at 2:10 p.m.Mike..."Why should my words surprise you, in my profile and in many posts I said I am not about ideology, people try to place me where they think I belong but they don't know me."
I guess I should have placed a :) after my question.
October 23, 2009 at 11:58 a.m.Waywardwind
Why should my words surprise you, in my profile and in many posts I said I am not about ideology, people try to place me where they think I belong but they don't know me.
As you will know I am retired and invested in the market, why would I want too many government regulations impeding the growth of the companies I am invested in? I'm sure you know we don't have a true free market because even though the Federal Reserve is an independent body, a true free market cannot have government intervention.I do not have suicidal tendencies.
As I said in my other blog, I am not fully convinced that those that did not want to regulate the credit default swaps or any other scheme had cynical motives. The SEC simply did not understand them and those at the highest level of government did not want to be responsible for being the ones to bring down financial boom of the 90s…. This is where those with the mindset that the markets will self correct were proven wrong.. Alan Greenspan and Larry Summers have admitted that they were wrong…. Now that we know pretty much what happen, the politicians that want to let Wall Street continue with these practices may indeed be in the pocket of the Wall Street lobbyist.
U.S. Constitution: Article I
Clause 18. Necessary and Proper Clause is what some White House sources were quoting yesterday… but it's completely hypocritical to fault this administration for violating the Constitution when it comes to the 175 executives; when those crying unconstitutional today, remained silent when the Emergency Economic Stabilization act of 2008 was passed.. It is my understanding since I am not a lawyer nor do I profess to be one ,that are now relying on article 1, section 2 clause 1 designating authority to the Secretary of Treasury to do what it takes in case of an emergency economic crisis… That act was passed in 2008 without any constitutional complaints.
Remember when Congress wanted to attach a 90% income tax on the bonuses of the AIG executives… A few of us said that was unconstitutional because of the bill of attainder clause. It seems we were right…. I'm pretty sure one or two of the 175 executives will challenge the constitutionality of the “Pay Czar’s decision… It will be interesting to see the outcome.
As for your last statement, I have listed some Democrats (in blogs and postings) that might be in the line of fire of a quid quo pro charge… Greed does not wear a party label.
October 23, 2009 at 11:19 a.m.As for the constitution, they do not believe in it...the rules for the house is "we do as we like"....As for the paper the constitution is written on, we know what they would use it for if they could......doormat, cat litter box, etc. Only REAL AMERICANS believe in the constitution. Not all, but most of those on the hill are there to take what they can from the American people and laugh as they leave with what they want.....the others cannot survive and slowly throw in the towel from pressure from within.
October 23, 2009 at 1:39 a.m.I am absolutely disgusted with the White House staff and our limp president....who thinks he is God himself and can do whatever he wants.....NOW when is the president going to give up 90% of his pay so he too can spread the wealth....Only in America can this president come in take over everything, yet do nothing prosperous, pass no bills, etc. All he can do is run around as if he is still campaigning and not even give our American Soldiers the backup that they need in Afghanistan, in the meantime talks with the election officials of that country...so where is his real interest them/us??????? Never in my wildest dream would I have ever thought we would get such a limp president who is so errogant, yet so inexperienced, and then tries to think he is God himself......I could go on, but I just have to vent when I hear all the disgusting, communistic/socialistic garbage our country is slowly sliding into.
October 23, 2009 at 1:31 a.m.#1 problem.
Congress had NO RIGHT to give the money in the first place according to The Constitution by which they took an oath to uphold. And ANY president the same.
I don't know why so many people are blaming the Wall Street thugs when it is the congress, and has been the congress for many a year that have been playing games with our money. That is where the bulk of anger and vengence should be concentrated.
October 22, 2009 at 10:35 p.m.Mike..."Repealing the Gramm-Leach-Bliley Act and re-implementing the Glass-Steagall Act of 1933 would take care of that problem... Investment firms should be able to engage in risky speculative schemes but not banks."
Gee, Mike, I agree with you completely. I don't expect it to happen, but it should. Congress has too many critters who have been bought by the money from corporate executives for us to expect Glass-Steagall to be re-instated. You do understand, I hope, that I'm including BOTH republican AND democrats as the critters who have been bought.
October 22, 2009 at 7:44 p.m.Mike..."Waywardwind
I am surprised that you do not know about the …. U.S. Constitution: Article I
Clause 18. Necessary and Proper Clause"
Don't be surprised; I'm familier with it. That last clause, beginning: "To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers,..." refers to the first 17 clauses which are very specific. Nothing there about the government taking over businesses. It continues: "...and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof." Perhaps I'm just dense, but I haven't found anywhere in the Constitution where it grants authority to the federal government to do what the Observer was referring to.
Indeed, I believe that the Tenth Amendment would prohibit the president from doing what he is doing. Since the Constitution is mute on the issue -- that is, Article I, section 8 does not say that the taking over of business is reserved to the federal government and neither does the Constitution prohibit that power to the states, the power of the federal government to take over business does not exist under the Constitution.IMHO
October 22, 2009 at 7:33 p.m."Despite what others think,we have a legislative process, where the speaker introduces the bills for an up or down vote,if passed, the president gets to sign or veto it..."
Reeehhheeeaaaallllyyyyy....
I guess that's why H.R. 1207 (299 co-sponsors) has been voted...OK...I understand it all now.
October 22, 2009 at 6:54 p.m.Mike..."There is nothing wrong with being a conservative or a capitalist, in fact it is quite admirable"
Who are you and what have you done with Mike???
"but what these executives continue to do is legal but not ethical."
What they're doing is legal because the "business executives" have bought congress critters to get special interest bills passed and bought presidents who sign them into law. There is an incestuous relationship between corporate officers and politicians. The politicians couldn't survive without the money the execs pay them and the execs couldn't do what they do without laws that allow them to get away with their skulduggery.
October 22, 2009 at 6:41 p.m.I might add (for the record)that I believe in Tom Friedman's idea that we will only go to alternative fuels when we are pushed.. He said innovators for the next battery technology will only be motivated if the gas prices remain high. He also said that it was the Japanese model of keeping gas prices high while producing low mileage vehicles... It propelled them to the number one seller of automobiles and they don't depend as much as we do on Middle East oil... Nothing to do with cap-and-trade.
Congress will determine the outcome of cap-and-trade legislation, so all the Goldman Sachs former employees in the administration do not get to vote.... Despite what others think,we have a legislative process, where the speaker introduces the bills for an up or down vote,if passed, the president gets to sign or veto it...
October 22, 2009 at 5:57 p.m.That's why I said "the as yet to be released bill".
October 22, 2009 at 5:46 p.m.President Obama received the most campaign contribution from Goldman Sachs, that is well known, Treasury Secretary Tim Geithner,and financial advisor Larry Summers all came from Goldman Sachs...Now if you can connect the dots to a quid pro quo, have at it.
Cap-and -trade legislation and will be discussed sometime next year, a lot of time for talking points, and partisan stats before it becomes a reality or as rumored , dead on arrival... I can already see Rick Berman,Tim Phillips, and Dick Armey repainting the lobbyist vans for the next set of town hall meetings protesting Cap-and- trade.
October 22, 2009 at 5:42 p.m.That would be a start Mike.
A even better way to implement the C&T policy that is not really based on any credible science, (that's another argument), is to eliminate the Trade part and call it what it is, a tax. Businesses pay x amount of tax for each ton of carbon emissions released.
That would be much closer to what you yourself have advocated, raise the gasoline tax to a level where gasoline costs $4.50 a gallon.
The trade part of cap and trade is why Goldman Sachs itself is already lobbying for the as yet to be released bill. Of course now that a few of GS former employees are part of the administrations financial team can't hurt, can it? ( Not really a question, don't bother answering).
October 22, 2009 at 5:26 p.m.Legion357
October 22, 2009 at 5:11 p.m.Repealing the Gramm-Leach-Bliley Act and re-implementing the Glass-Steagall Act of 1933 would take care of that problem... Investment firms should be able to engage in risky speculative schemes but not banks.
I can certainly understand the negative sentiment towrd executives. However, I will ask again: who is the anger best directed at, the execs or the politicians that made this unholy alliance possible? We should also be careful not to base our judgments on the specific action, but rather the merit of the action itself. Consider this...
Do you have the same feelings for professional athletes, many of whom have their offices (stadiums) constructed with taxpayer dollars?
What about farmers? The federal government gives many billions to farmers every year, many of whom are wealthy. Should we limit how large a house they reside in? Should we not allow them to have luxuries like hunting leases, fishing cabins, recreational vehicles, vacation homes?
If you are going to be peeved about the current situation based on the idea that they received tax dollars, then you need to be honest in your assessments of other beneficiaries of the same system.
October 22, 2009 at 4:58 p.m.This is about TARP executives compensation pay and really nothing to do with derivatives....The Frontline special called" Warning",showed where a group called ""Presidents Working Group” took the power away from the director of the Commodities Futures Trading Commission to regulate derivatives in the early 90s....Congress is working on it but as I've said in a previous post, the lobbyist will not let it see the light of day...IMO
October 22, 2009 at 4:57 p.m.Never fear, all the investment firms and banks that deal with derivatives are licking their chops waiting and hoping cap and trade passes.
A brand spanking new derivative market that they can make billions off of, at only us little consumers expense.
October 22, 2009 at 4:39 p.m.There is nothing wrong with being a conservative or a capitalist, in fact it is quite admirable but what these executives continue to do is legal but not ethical. and they certainly were not following free market principles. They were given ample time to clean up their act but chose not to. If they are going to act like spoiled brats, and should be treated that way,” Send them to their room without supper.”..Since it is only for 12 months,makes them ask for permission to use the corporate jet,and other small stipulations amounts a token punishment.
October 22, 2009 at 4:23 p.m.This comment was removed by the user.
October 22, 2009 at 4:18 p.m.I make no bones about being a conservative by nature and I believe in capitalism, but I must agree with Suzy on this one. Once these folks took taxpayer (bailout) money the rules changed for them. They set the wheels in motion by being greedy and irresponsible if not down right criminalistic. I agree with BO on this one and I think a public flogging might have well been added for emphasis.
October 22, 2009 at 4:01 p.m.The tyoical remark of the statist. As the city is engulfed in flames, they will always proclaim "If we had not taken your money, property, and freedom, the city would have burned sooner."
October 22, 2009 at 2:27 p.m.Do you mean Article 1, Section 8?
"To make all laws which shall be necessary and proper for carrying into execution the foregoing powers and all other powers vested by this Constitution in the government of the United States or in any department or office thereof."
Only people that don't understand "shall not be infringed" would argue with "powers vested by this Constitution".
October 22, 2009 at 2:23 p.m.People seem to forget the day Secretary of Treasury Paulson and Fed Chairman Bernanke gave Congress a three-page proposition, to pass this legislation or sit back and watch this economy go down in flames..Although Lehman Brothers and Bear Stearns were allowed to fail,it is now known that Morgan Stanley, Goldman Sachs and GE were fixing to go next.... The constitutionality of the back room deals like Bank of America and Merrill Lynch are overlooked by many because of their geniune hate for this president... Was it just a coincidence that we bailed out an insurance company (AIG) that the federal government does not have any jurisdiction over or did they take part of that bailout money and pay back Goldman Sachs... Treasury Secretary Paulson was a former CEO of Goldman Sachs.
October 22, 2009 at 2:20 p.m.Working within the Constitution? I'm glad I have a young heart and lungs. If not, the harsh laughter would have done me in.
October 22, 2009 at 2:14 p.m.Waywardwind
I am surprised that you do not know about the …. U.S. Constitution: Article I
Clause 18. Necessary and Proper Clause
Unlike when President Bush's signing statements that stated that he did not have to abide by laws passed by Congress, President Obama and his administration are working within the Constitution….
October 22, 2009 at 2:08 p.m.But if the Executive's pay is cut then there is an incentive for the companies to pay back the taxpayers so the pay scale will no longer be limited. I have a real hard time understanding how the taxpayers being reimbursed (after saving the money boy's bacon) is in anyway a bad thing.
October 22, 2009 at 2:07 p.m.Dollysdad
I agree completely, allow me to reiterate, by emphasizing the word “temporary” like the F.D.I.C and when he completely takes over a bank, straightened out the books, and turns it back over to free enterprise….. I'm merely saying that these bankers just don't get it.
Last month out of the blue ,my broker, called me and told me that a bank in which I had a IRA account in defaulted, but not to worry since F.D.I.C ,guaranteed my funds…Call that Socialism if you want.
October 22, 2009 at 1:53 p.m.These are "just" the companies that took the bailout money.. They had a option. Turn it down, or take it. They took it, so naturally, there should be some kind of controls on what they can do with it.
October 22, 2009 at 1:15 p.m.When you borrow money to build a house, you cannot buy something else with it, can you?
dollysdad,
You definitely have your thinking cap on. I share your sentiments regarding the people who took the TARP money. but who should you be most angry with - them or the US President and Congress that defied the Constitution in passing the legislation that appropriated the TARP funds?
October 22, 2009 at 12:55 p.m.Observer..."Could someone please point out the provision in the Constitution that gives the Executive Office of the President the legal authority to do this?"
Don't hold yer breath! That bunch that is bringing us so much "change we can believe in" has never read the Constitution. I just THOUGHT former president Bush had a thing about ignoring the Constitution. Bush was a piker compared to BO.
October 22, 2009 at 12:54 p.m.I have zero sympathy for the jerks who took taxpayer money due to their own excesses, mismanagement, and out right theft. The old saying "the squeaky wheel gets the grease, but that wheel gets rode hard" is only too true.
Unlike our sponsor, I wish the whole lot of them had been allowed to bail themselves out. I would expect Mike to think "nationalization" of any industry to be "good" (how's that working for Hugo Chavez?) given his socialist leanings.
The spooky thing is, once the executive branch over reachs it's power unchecked, those powers then expand into full scale control. How long before every profession, business, or occupation has it's compensation controled by Uncle Sam?
October 22, 2009 at 12:41 p.m.When they came for the executives, I said nothing...for I was not an executive...
When they went after Fox News, I said nothing...for I did not work for Fox News...
When they went after the energy companies, I said nothing...for I did not work in the energy industry...
When they went after the radio talk-show host, I said nothing...for I did not listen to the radio...
I think you can see where I am going with this. Sooner or later, this all-encompassing tyrranical administration will get around to coming after someone or something you hold dear.
October 22, 2009 at 12:19 p.m.I'm wondering why these top company officials expect the taxpayers to pay their wages? They didn't do their jobs (violated their contracts), so they don't deserve what's stipulated in their contracts.
October 22, 2009 at 12:10 p.m.The bailout was not given to support salaries and lavish lifestyles of top officials.
I'm not sure what the taxpayer's thoughts are but if the news organizations and taxpayers would put more pressure on the politicians to reform the financial markets, we would be much better off...
I'm on record saying that Rahm Emanuel and David Axlerod were wrong for sending out Ms Dunn to do the dirty work... That's what lower-level appointees do but it's just a distraction...I cannot name one administration that loved the press.
I respect the opinions of Dr. Christina Romer and this is not the first time she has been critical of the administration fiscal policies... As I have said before, you get 10 different economist in the same room and you will get about 10 different answers....She also said "Given the precarious nature of the economy, now was not the time to raise taxes or cut government spending and inflation that is too low is a greater worry right now that inflation that is too high....She's intelligent, a straight shooter and to my knowledge her position is not in jeopardy.
October 22, 2009 at 11:59 a.m.I am sure Benito Mussolini, Adolph Hitler, Joseph Stalin and others would feel right at home with this situation, as I am sure they felt they also had the right to decide how much someone/anyone would be paid. It starts with the "highest-paid executives", but where does it end? Do we really want politicians who have never held an honest job in their lives having the power to decide how much anyone in this country will be paid? Could someone please point out the provision in the Constitution that gives the Executive Office of the President the legal authority to do this?
October 22, 2009 at 11:49 a.m.I didn't realize taxpayers were worrying about the squabble between BO and FOX News. It's BO and his dumb*** communications director who keeps whining about FOX News, Limbaugh, Hannity, Beck, etc.
What do you think about BO's chief economic advisor coming out today and saying we have seen the best the stimuls package has to offer? Guess she won't be around the White House much longer.
October 22, 2009 at 11:36 a.m.