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The Spectacle Blog
Either your brains or your signature will be on this resignation letter.
That’s what Treasury Secretary Timothy Geithner might as well be saying to the next corporate CEOs he intends to muscle out of their posts. Bloomberg reports Treasury’s highest-ranking tax evader said he is gearing up to turn senior management and boards of directors at banks that require “exceptional” assistance from the U.S. government into roadkill.
“If in the future, banks need exceptional assistance in order to get through this, then we will make sure that assistance comes,” while ensuring taxpayers are protected, Geithner said today in an interview on the CBS “Face the Nation” program. “Where that requires a change in management and the board, then we will do that.” […]
“Where we’ve had to do exceptional things,” the government has replaced management and boards of directors, Geithner said. […]
The Treasury secretary pledged to enforce congressional legislation that limits pay at companies receiving government loans. Geithner said the Obama administration has no intention of letting banks get around the rules.
“Our obligation is to apply the laws that Congress just passed,” he said. “We want the American taxpayer’s assistance going to generate greater lending, not providing excess compensation.” […]
Geithner seems to be referring to Rep. Alan Grayson’s (D-Florida) flagrantly unconstitutional, un-American compensation cap bill. This Mussolini-style corporatist legislation that would hand Geithner extensive control over salaries of employees who work for businesses that take in government bailout funds was approved by Barney Frank’s House Financial Services Committee last week on a 38 to 22 vote.
Neil Cavuto of Fox Business easily made Grayson look like a fool (it wasn’t hard, no doubt) last week as Grayson repeatedly ducked tough questions about the legislation. Of course, making fun of the clueless Geithner is no challenge either.
View all comments (41) | Leave a comment
More Blog Posts by Matthew Vadum
http://spectator.org/blog/2009/04/06/geithners-goons-plan-to-grease
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Pingback| 4.6.09 @ 1:20AM
Geithner’s Goons Plan to Grease More CEOs — But As For Me links to this page. Here’s an excerpt:
Bob| 4.6.09 @ 9:16AM
Vadum -- so let me get this straight. If you invest a significant amount of money in a company to keep it afloat, you should have no input into how that company is managed? Is that what you are saying? This is the same argument that management uses to say that shareholders should have no input into executive compensation. After all, shareholders are only the owners of the company. Isn't this what capitalism is all about -- the owners of a company making the decisions?
Personally, I am against the bailouts and believe the companies should go under. However, if we do bail them out, then we should have a say. Having been in senior management in Fortune 100 companies my entire career, I can vouch for the importance of changing top management in case of their failure. To give them bailout money and not change the guy at the top is malpractice.
So how many corporate executive positions in Fortune 100 companies have you held?
KevlarKevin| 4.6.09 @ 9:44AM
Sieg Heil, Bob! Government 'invests' in nothing. This is NOT capitalism you wanker. This is state capitalism which ISN'T capitalism at all.
Bill Bailey| 4.6.09 @ 9:47AM
Bob, how many corporate executive positions in Fortune 100 companies have you held? A**hole.
JP| 4.6.09 @ 10:06AM
Bob,
The bailouts shouldn't have occured in the 1st place. It appears the liberals wish to use the bailouts as revenge. It is so much fun to frogmarch CEOs before congressional committess and lecture and threaten them. GM's former CEO should never have begged for the money, and instead filed for Chapter 11.
Another thing to consider is talent. It will be no mean feat to turn around AIG and GM -perhaps both tasks are impossible in the long run. How much talent would this take? A CEO of any of these firms is resonsible for the investment of millions of shareholders, not to mention tens and hundreds of thousands of emloyees and thier families. In 1991-1992 IBM was in the same mess GM is in today (albeit without the UAW to contend with). IBM was losing market share and money hands over fist; its business model that served it well for many decades was broken beyond repair. And even as customers were demanding the newer client-server technology, IBM continued to churn out hundreds of obsolete mainframes that it couldn't sell. Lou Gerstner was hired to save IBM (very few thought he could do it). Within 2 years, Gerstner totally revamped, and re-modeled IBM to such a degree that it was totally unrecognizable from its former self. Gerstner not only saved the firm, but allowed it to compete against any IT service company anywhere in the world. He created hundreds of thousands of new jobs and hundreds of billions of dollars in new captialization (ie wealth) over the next decade.
What do you think Gerstner's talent is worth? If his efforts created, say $500 billion in new wealth for shareholders from 1994-2004, would he be entitled to .1 of 1% of that wealth creation (ie roughly $500 million)? Does anyone outside of business know what it is like to run a Fortune 100 firms?
I am speaking now of those executives who will be tasked to get GM and AIG back to health. Have you any idea what that will take? What talent is required? That kind of talent doesn't come cheap. And if you or Geitner think that these men or women will be willing to put thier reputations at risk for the same salary of a AAA baseball player, you are only fooling yourself? What kind of executive is willing to work 90 hour work weeks for $1 a year, and draw no bonuses or retention bonuses? If you were an ambitious 58 year old executive who was offered to run GM, AIG, or Oracle, which would you pick? The only thing the first 2 offer are numerous trips to Barney Frank's grandstanding lynch mobs.
It was liberals (Paulson, Schumer, Levy, Stabinow, et als) who demanded that taxpayers bail these firms out. Conservatives wanted to debate the bailouts, but liberals said that there was no time -that the crisis needed action immediately. Six months later, the crisis is worse, and the same libs want no to micro-manage these firms into the ground. For GM, Obama will not allow the UAW to lose out (I'm not sure how he will do that, but it is clear he wishes to keep the UAW benefits packages intact). For AIG, it will become the Left's puncing bag. Whenever thier poll numbers go down, Franks and Geitner can convene photo-op lecture sessions. Nothing is more satisfying to Class Warriors than seeing thier lawmakers chew them out.
Truth to Power| 4.6.09 @ 10:20AM
Bob is such the leftist troll. He can barely stick to his cover story for a paragraph before he shows his corporatist roots. What a dim-witted phony!
Bob| 4.6.09 @ 10:37AM
JP -- as I've stated before, I agree with almost everything you said. I've also said I didn't agree with the bailouts. Gerstner did a great job at IBM but the government did not bail out IBM. He is worth what the market will pay him and no one outside of the stakeholders in that company should decide what that is. However, when a company receives a bailout, it is no longer in that mode.
With regard to bailouts, it was Republicans in the names of George Bush and Hank Paulson who brought forth the plan. Please don't try to rewrite history here. However, their plans did have more support from Dems than Republicans. Remember that McCain also supported the bailouts.
Kevlar, a bailout is an investment as these are "loans". How can YOU be so dim-witted?
Bailey, over my career I held over a dozen executive positions in Fortune 100 companies. The people at AmSpec know my identity and can verify that fact. Next...
Truth -- I am a product of corporate America as well as small business America and am proud of it. You seem to be the phony here.
JP| 4.6.09 @ 11:53AM
Bob,
My main point is that Sec Geitner and Congress have made it virtually impossible for the goverment to attract talent to AIG or GM. My assumption that President Obama means what he says in that he does not wish to run either firm could be incorrect; by placing caps on executive pay, and by using committee meetings as a way to score populist points at the executives expense, Congress and Obama have chased away the very people who may be able to save AIG and GM. The President could have washed his hands of GM by fireing Waggoner and then throwing the corporation into bankruptcy; while this would have been cruel, it would have been the best way to save the ailing giant.
AIG is a totally different matter, as it owns or insures hundreds of billions of dollars of complex mortgage securities, and it needs a CEO who can deal with those toxic assets as well as pay off creditors(the taxpayers being #1 in line), change business models, and make the firm profitable again. How that can be done is anyone's guess. But Geitner isn't doing anyone a favor by appearing on Sunday television interviews threatening to fire more executives. His misques are costing investors quite a bit of change, and will slow the recovering of credit markets.
One should also remember, the Fed forced banks like BOA and Wells Fargo to accept TARP money against the wishes of thier CEOs. Both banks were solvent and making money. The VP for Operations at Wells Fargo St Louis tenedered his resignation last week after regulators at the Fed began investigating his compensation despite the fact that WF is in no way insolvent and is scheduled to pay back the $5 billion Fed loan this year. The VP later said he would quit before having some bureaucrats poke thier nose into something that is no concern of thiers. This is occuring all over the nation, and will eventually cause a talent drain here. Firms in India, Hong Kong, and Switzerland will gobble up this talent in no time.
The Federal Goverment is inacapable of running firms like AIG, and as events have bourne out, politics will always trump economics. Welcome to the Obama Recession.
Bob| 4.6.09 @ 12:25PM
JP -- AIG was the last company I worked at before I retired. The only person that could effectively manage AIG was Hank Greenberg. AIG has over 600 division around the world. Hank knew every one of these. It was a very decentralized organization. Liddy is the wrong guy to run the company. He knows about insurance in the U.S. but knows little about international insurance, which is very different, and knows even less about finance. Hank was not a finance guy and I think he made a mistake in always assuming high bond ratings and thus the need for capital reserves. When the bond ratings dropped, then AIG's contracts required higher levels of reserves. But he was a master at running the insurance side of the business. His great strength internationally was that he know most of the leaders of the countries around the world. AIG was the only majority owned insurance company in China, for example.
With regard to the talent, I don't think you'll see a lot of talent leave in the profitable divisions. Most of the talent has specialized skills and the market is not that good right now. Besides, they are still getting their salaries. Remember that in GM and AIG, people are mostly paid by salary. It is the investment houses and hedge funds that are paid low salaries and high bonuses.
Matthew Vadum | 4.6.09 @ 1:02PM
It's funny, Bob, how you fall back on this ad hominem: "So how many corporate executive positions in Fortune 100 companies have you held?"
No rational person would say an incompetent CEO shouldn't be fired, but it does not follow from this that (i) the government should own chunks of companies and (ii) that the government should be firing the CEO of companies.
Nor does the fact, assuming it's true, that you worked in senior corporate management somewhere mean that you have any particular insights on the Obama regime's incipient Fascism that are worth listening to.
Angel| 4.6.09 @ 2:14PM
To what degree has destructive government intrusion,(onerous regulations, restrictions, over the top union benefits, etc.) contributed to the financial problems of these companies? I can't believe incompetent management is the ONLY culprit. Talk about CEO incompetence: Immelt has driven GE into the ground, why hasn't he been fired? Instead, Team Obama has rewarded GE with billions of dollars of tax-payer money. Payback for NBC/MSNBC's sycophantic Obama coverage? Government corruption is at the core of this financial debacle.
Bob| 4.6.09 @ 3:07PM
Matthew, it seems as if you can't read properly. I said I was against ALL of the bailouts. But if the bailouts do occur, we have the right and responsibility of removing the CEO. Where my experience, and your lack thereof, comes into play is that I know the effect of the CEO being fired. It sends the message through the corporation that they should review all of their strategies. I've been through that process a couple of times. Have you?
Regarding Obama Fascism, do you even understand the definition of "fascism"? If that is your definition, then we were under Republican fascism when Republicans controlled Congress and the White House.
The primary reason it isn't fascism is that we have elections here. If Obama fails, he will be replaced. You are counting on that, aren't you? By the way, asking you how much you knew about corporate America was not an ad hominem attack because there is a relationship between replacing a CEO and having large corporate experience. If I said that you only came up with this because you are a Limbaugh "dittohead" and couldn't think on your own, that would be an ad hominem attack.
So let me get this straight. You don't know the definitions of fascism and ad hominem attacks. With you, it seems, there is no reason for ad hominem attacks....
By the way, if you think I am lying about my background, please send me an email and I'll give you a link to my professional web site. Some of your cohorts here already know who I am. I just don't want my email published since I will get a lot of spam from the whackos here.
I'm a strong fiscal conservative, believe in limited government, and also believe in analysis over ideology. I do lean strongly left on social issues, however. I object strongly to so-called conservatives like you making undisciplined nonsensical comments as it demeans true conservatism to the realm of idiots.
Bob| 4.6.09 @ 3:25PM
Angel, it seems as if you don't understand the GE loan guarantees. This is NOT a bailout. GE was given no money. GE Capital is in competition with other banks and savings and loans. Given the tight credit market, the FDIC guarantees the loans of GE's competitors, and thus these competitors can borrow money at lower rates. If GE didn't get these guarantees, their loan business would dry up because they would have to charge higher interest. It was not the Obama administration that gave out these guarantees -- it was the FDIC. Therefore, since no money was given to GE, the government has no ethical interest in who the CEO of GE is.
All of this said, I agree that government intrusion should be kept to a minimum. They should only provide laws regulating financial stability. I'm against all intrusion dealing with government INCENTIVES like the CRA, ethanol subsidies, special tax breaks, etc. There is a difference.
For example, I am for a flat tax that includes social security and medicare. Let everyone pay the same rate and take away all of the special deductions of the wealthy. I'm for eliminating the corporate income tax and replacing it with a consumption tax which would provide the proper incentives for job creation, exports, and locating companies in this country.
Furthermore, it was the lack of government regulation of hedge funds and AIG financial products that was the main cause of this problem. If AIG and investment houses had been required to carry the capital reserves required of banks and insurance companies, then this blow-up would not have occurred because leverage would have been limited. I agree that the CRA pushed in the opposite direction, but it isn't the amount of regulation, it is the appropriateness of the regulation.
Matthew Vadum | 4.6.09 @ 3:50PM
Bob, the economic policy being discussed here is corporatist (i.e. Fascist) in nature. I never said America was turning into a full-blown Fascist state but its economic policy certainly bears a striking resemblance to one as industry is given orders by the government and its corporate heads are being ousted by government fiat. America is turning into what Mark Levin (and others) lately been calling a "soft tyranny." Anyway, I don't argue with ignoramuses who rely primarily on insults and ad hominems to make their points. Cheerio.
Bob| 4.6.09 @ 4:22PM
Matthew, corporatism and fascism are very different theories. The fact that you don't understand the difference between the two is quite telling. We are a lot less corporatist today than we were a century ago when monopolies were rampant. The main proponents of corporatism historically have been Republicans and their strong alliance with big business. This is less true today given the move of Republicans to social conservatism and anti-intellectualism. Democrats now have the upper hand with corporations. Obviously, our system of lobbyists contribute to this factor.
I don't see any more tyranny today than we have experienced at other times in our past. Instead of making spurious statements, can you support this contention? If you want to lower the effect of corporatism, then you would support campaign finance reform, right?
When you talk about "goons" and "greasing CEO's" and "highest ranking tax evader", I wouldn't talk about insults and ad hominem attacks. Again, I don't like the bailouts. But what you and Levin seem to not understand, is that we are not ousting the CEO's of any company that does not have a bailout. Again, if the government is an owner in the company, whether it be through stock or warrants, they have a right to membership on the board and thus a say over who runs the company. If you don't believe that, then you don't believe in capitalism.
Ta-ta for now....
Matthew Vadum | 4.6.09 @ 7:15PM
See http://spectator.org/blog/2009/03/29/a-whiff-of-fascism-from-obamas
Strict government control over businesses is the essence of Fascism, or more precisely, Mussolini-style corporatism. As Mussolini said, "Fascism should more appropriately be called corporatism because it is a merger of state and corporate power." Corporatism boils down to this: government tells industry (and labor) what to do and they do it for the supposed good of the country.
MT| 4.6.09 @ 8:10PM
Government meddling caused a lot of the problems that led to the need for a bailout. Fire the politicians.
Ran| 4.6.09 @ 8:41PM
Mr Vadum,
Thanks for the great posts. Since our confused friend Bob obviously hasn't the time to read Jonah Goldberg's latest, he may instead be interested in a brace of recent short articles by historian Michael Ledeen:
We Are All Fascists Now
and
We’re All Fascists Now II: American Tyranny.
"[Corporatism] and fascism are very different theories." LOL!! Reminds one of the toffeed frosh at the back of the class. Seriously, apart from the unintended comedy, the errors highlight teachable opportunities.
Basil Plumley| 4.6.09 @ 8:58PM
Hey Ran,
Do you ever get the feeling that Bob isn't who he says he is?
He is becoming quite the entertainer; or a hysterical facsimile of one.
The "different theories" line is pretty funny.
Ran| 4.6.09 @ 9:57PM
Basil, old man, the guy's autohagiography is a wonderful break from reality.
ruth| 4.6.09 @ 10:42PM
Does Bob know he amuses you?
Ran| 4.6.09 @ 10:49PM
Don't know, don't care, Ruth. [ I never get past the first line.] That Bob's lies and nonsense serve a greater useful purpose is all that matters.
ruth| 4.6.09 @ 11:26PM
I prefer to know when people are laughing AT me.
Bob| 4.7.09 @ 9:30AM
Matthew, do you know anything about business? Strict government control over business? You've got to be either kidding or non-thinking. Take a look at these company's annual reports for the last several years. Tell me how their market/business strategy has changed? Changing a CEO does not change corporate strategy. That's because strategy is a result of capital invested over a number of years. You alarmists know so little about running a large business enterprise.
You might say they are changing strategy with GM. However, it was GM who decided which brands need to be closed and will decide which dealers to close. The government does not run that business.
Do you really belong in the non-thinking, lemming infested, non-contributory realm of Ran, Ruth, and Basil or can you think and analyze for yourself? These guys contribute nothing to thought or society. Is the same true for you?
ruth| 4.7.09 @ 4:37PM
Sure, squishy--we don't offer anything to thought. At least we know where we stand regarding our political philosophy. You've got no place to hang your hat, Bob. You're an exile who stands for nothing.
Bob| 4.7.09 @ 4:45PM
Ruthie the Right Wing Lemming -- My political philosophy is not squishy at all. I am a strong fiscal conservative and a strong social libertarian. That's where I hang my hat. It seems that you must belong to a group and not think for yourself. Too bad.
ruth| 4.7.09 @ 5:38PM
So, you admit it; you don't belong to this group. I believe your position on abortion is selfish and immoral: What is it about 'Right to Life' that you don't understand? My beliefs are my own, I just think everyone should get the same chance to live. That's not a lemming mentality, Bob--that's principled independence.
Bob| 4.7.09 @ 7:45PM
Ruthie, if you believe exactly the same as all of the others in your group, you are either a lemming or have been brainwashed. It is not principled to tell me what I should believe. I believe it is far more principled to let people make their own decisions than to force your religious beliefs down our throats. I call that "fascism".
ruth| 4.7.09 @ 9:11PM
No, dummy--I've had the same beliefs since I was a teenager. I've always loved babies and children, and I just couldn't imagine a mom killing her own baby. I couldn't imagine ever hurting one of my own. My empathy for the vulnerable is not a lemming-like quality--it's a Christ-like quality. If you can't understand that--it's your problem.
ruth| 4.7.09 @ 9:13PM
Since when has it ever been someone's personal choice to kill another? Five black-robed goons made that decision--that's fascism.
Basil Plumley| 4.7.09 @ 9:40PM
Bob, you colossal jewel of ignorance, do you even understand what the term "fascism" means?
A hint-you practice it in your posts and then accuse others what you are guilty of. Of course, the true concepts of Christianity are lost on you.
There is no one on this board who is proseltyzing you. Yet, when Ranger Bob becomes threatened by a girl, you toss about the F-word without a care about correct usage. Besides poor manners and poorer reading comprehension, it appears Harvard never taught you any command of the English language.
ruth| 4.7.09 @ 11:38PM
In Bob's book, a woman who loves the innocent preborn is no different than the vicious Benito Mussolini. There's a special place in hell for sick b@stards like you, Blob. Hope you enjoy your stay.
ruth| 4.7.09 @ 11:46PM
And your mother never taught you kindness or chivalry, either. Maybe Bob's a chick.
Bob| 4.8.09 @ 10:00AM
Basil, I thought you were going to ignore me. Well, the liar strikes again.
You should learn the definition of "fascism" -- it advocates a one-party state. You are advocating the beliefs of Christianity for all of us in a country that is supposed to have freedom when it comes to religion. I don't doubt that Ruth's and your beliefs are sincere. But even benevolent fascism is still fascism.
ruth| 4.8.09 @ 10:16AM
I state MY beliefs, Bob; that's Freedom of Speech, not fascism. Fascism is when five black robes decide who lives and who dies. Put it to a vote, don't leave it to tryanny of the judiciary. Liar.
Bob| 4.8.09 @ 11:06AM
So, Ruthie, you don't advocate that this country adopt some of your Christian beliefs in things like abortion and gay marriage? If the legislature, as they just did in Vermont, says that gay marriage should be legal, you are just fine with that. Right? What if the majority of people thought that poor people should not be allowed to vote? Would you support that?
Yes, you state YOUR beliefs, and want the country to adopt those specific beliefs. Yes, that is fascism.
ruth| 4.8.09 @ 5:13PM
Why are you so afraid of the people, Bob? We live in a Republic; let the people vote through their representatives. You are the fascist if you support tyranny of the judiciary. Judges have no right to make law--that's the province of the legislature.