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The Spectacle Blog
More Mussolini-style corporatism from Capitol Hill Democrats.
The House Financial Services Committee, chaired by Rep. Barney Frank (D-People’s Republic of Massachusetts), has approved legislation handing Treasury Secretary Timothy Geithner extensive control over salaries of employees who work for businesses that take in government bailout funds.
As Byron York of the Washington Examiner reports
[I]n a little-noticed move, the House Financial Services Committee, led by chairman Barney Frank, has approved a measure that would, in some key ways, go beyond the most draconian features of the original AIG bill. The new legislation, the “Pay for Performance Act of 2009,” would impose government controls on the pay of all employees — not just top executives — of companies that have received a capital investment from the U.S. government. It would, like the tax measure, be retroactive, changing the terms of compensation agreements already in place. And it would give Treasury Secretary Timothy Geithner extraordinary power to determine the pay of thousands of employees of American companies.
The purpose of the legislation is to “prohibit unreasonable and excessive compensation and compensation not based on performance standards,” according to the bill’s language. That includes regular pay, bonuses — everything — paid to employees of companies in whom the government has a capital stake, including those that have received funds through the Troubled Assets Relief Program, or TARP, as well as Fannie Mae and Freddie Mac.
The measure is not limited just to those firms that received the largest sums of money, or just to the top 25 or 50 executives of those companies. It applies to all employees of all companies involved, for as long as the government is invested. And it would not only apply going forward, but also retroactively to existing contracts and pay arrangements of institutions that have already received funds.
In addition, the bill gives Geithner the authority to decide what pay is “unreasonable” or “excessive.” And it directs the Treasury Department to come up with a method to evaluate “the performance of the individual executive or employee to whom the payment relates.”
The bill passed the Financial Services Committee last week, 38 to 22, on a nearly party-line vote. (All Democrats voted for it, and all Republicans, with the exception of Reps. Ed Royce of California and Walter Jones of North Carolina, voted against it.) […]
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More Blog Posts by Matthew Vadum
http://spectator.org/blog/2009/03/31/barney-frank-wants-the-governm
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Bob| 3.31.09 @ 2:49PM
So, Matthew, what is your point? The FDIC and bankruptcy courts have had this authority for decades. When the FDIC takes over a bank, that action cancels all contracts and the FDIC can renegotiate them. Chapter 11 allows judges to invalidate management contracts as well (which is retroactive, you know).
If, by way of TARP, the government provides capitalization, they should be allowed to do the same. By the way, virtually all banks taken over by the FDIC and companies handled by bankruptcy judges are private enterprises. To be consistent, you should be complaining about their right to void contracts as well. Right?????
Don't any of you guys think about what you are writing before you post it?
Pingback| 3.31.09 @ 3:00PM
Barney Frank Wants the Government to Set Your Salary — But As For Me links to this page. Here’s an excerpt:
Interested Conservative| 3.31.09 @ 3:02PM
Bob - I think is point is that TARP is neither the FDIC nor bankruptcy, as far as a legal authority, either by way of statute or case law.
Whether it is "Mussolini-style corporatism" is another question, but did you think of that when you opine "they should be allowed to do the same".
Where is "they should be allowed to do the same" legally permissible, as far as constitutionally flowing from the legislature or the executive?
james23| 3.31.09 @ 3:31PM
IC, bob is an Obama troll. His job is to post talking points for Benito Obamalini here and likely elsewhere.
Bob| 3.31.09 @ 3:32PM
Interested -- you make my point precisely. The FDIC and bankruptcy does exactly the same thing and the authorization comes from law. If Congress passes a law giving Treasury the authority, then it would be the same as the others. That's what Congress is doing in this case -- passing a law.
Crusader| 3.31.09 @ 3:50PM
Benito Obamalini---LOL!!!
IC, remember: DNFTT!!!!!
Interesyed Conservative| 3.31.09 @ 4:40PM
Crusader - I know, but it can be fun for a while.
Bob - Do you really want the Treasury to have the discretion you're arguing for? Did you read the linked article and the objections to giving that discretion? As an analogy, should we extend similar discretion to law enforcement areas, i.e. repeal the Miranda rule and assorted follow-on criteria? I thought a leaner, simpler government was preferable, wth the discretion resting with the market/individual/citizen as the case may be.
Bob| 3.31.09 @ 7:56PM
IC -- I wouldn't have done the bailout in the first place. But if the government basically owns the company, they have the responsibility of restructuring it. Management at these companies had their chance and should not be rewarded for taking our money. Criminal law is a different matter. These companies did not break the law, they were just greedy and short term.
And I agree with you about letting the market work. However, the market needs appropriate regulation which it did not have. For example, mortgage originators should have been required to keep some of the mortgages it originated rather than securitizing them. That way, they would have been more careful who they gave mortgages to. If they were required to keep a portion of what they sold, this problem would not have occurred in the first place. Furthermore, if you offer insurance like AIG, you should be required to keep reserves for claims as they do with life insurance. That would have reduced leverage and prevented much of the problem. You guys want to blame lawmakers for things like the CRA/Fannie/Freddie when the real problem was a lack of proper regulation in the first place.
Angel| 3.31.09 @ 8:13PM
IC, if we work together, maybe eventually we Conservatives can have some REAL discussions. Trolls don't act in good faith, and I am tired of the bomb throwers. It would be nice, wouldn't it?
lynnrockets| 4.1.09 @ 1:29AM
BarneyFrank is an awful little pig-man.
J| 4.1.09 @ 1:07PM
Bob, so you are really OK with a tax cheat deciding what your pay should be? Deciding if, in his opinion, that you make too much? Deciding that the contract you signed that outlined your duties, pay scale, promotions etc maybe 6 years ago was too generous and needs to be reworked so you make less and do more...and pay back the money you were already paid...and already paid taxes on? Are they going to return your tax money?...don't think so. Do you really want the people who vote themselves raises, have the best health care the government (your money) can buy "FOR LIFE", have the best retirement that your money can buy "FOR LIFE" to decide what you are allowed to make? I don't. Remember that these are the same folks who are bankrupting Social Security and then telling us that wew have to settle for less benifits or just pay more. Remind me...do the Senators & Congressman even pay social security taxes?
Pingback| 4.2.09 @ 12:58PM
Obama’s Approval Tanks, and More Good Stuff links to this page. Here’s an excerpt:
powerball numbers | 8.22.09 @ 9:35AM
The control of salaries in an industry ravaged by federal government regulation and intervention, for example forcing banks to make bad loans, and the use of AIG to insure even those that Fannie and Freddie could not stomach, is an accurate harbinger of what is going to happen to our doctors under health care. In ten years, if you need brain surgery, open heart surgery, cancer surgery, or just plain top rate trauma care for yourself or your loved one, you can expect the scalpel wielder to be limited in pay to no more than three times the minimum wage, all in the name of fairness, by the busy-body control freaks in Washington DC who enjoy an approval rating lower than Bush at his lowest.
okelou | 3.9.10 @ 9:23PM
You are doing a good job!keep it on