Blogs » Politcs Plus » President Obama cuts TARP executives pay.


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.