Then, President Obama announced rules to cap annual compensation for executives receiving government aid at $500,000. His plan allowed companies to award stock to executives that could be redeemed once the government investment was repaid.
Next, we heard that the $400,000 pay cap was not going to survive the Congressional comprise on the stimulus bill. After all, "comprise" in Congress and "bipartisanship" often mean everybody just agree to give Big Capital whatever it wants.
Now, we get good news that Senate Democrats inserted a provision in the stimulus bill--over the objections of the Obama administration--that will impose restrictions on executive bonuses at all 359 banks that have received government aid:
"The restriction with the most bite would bar top executives from receiving bonuses exceeding one-third of their annual pay. Any bonus would have to be in the form of long-term incentives, like restricted stock, which could not be cashed out until the TARP money was repaid in full."Speaking of the new restrictions on executive bonuses, a lobbyist for the financial services firms said, "This is a big deal. This is a problem." Really? A problem for whom exactly?
But yes, it is a big deal. From WaPo:
Bonuses make up much of financial executives' take-home pay, so the new rules could significantly diminish their compensation. For example, Goldman Sachs chief executive Lloyd Blankfein made $68.5 million in 2007 -- a Wall Street record -- but $67.9 million of that was in bonus and other incentive pay that analysts said would be subject to the new rules.
It's disappointing to hear that the Obama administration was warning Congressional Dems that this measure would cause a "brain drain" in the financial industry. Huh? Are you guys saying that if we don't subsidize Wall Street bonuses with taxpayer money, then all the really smart people who got us into this situation will leave? I'm shaking. In. My boots.
Disappointing, but not surprising, when you consider that two of the economic heavyweights in the administration are Larry Summers and Tim Geithner, both of whom hail from the center-right neoliberal school. It will be interesting to see how the coming months and years change these guys. It's not the 1990s anymore. The "privatize everything" movement is dead, and "the era of big government is over" is over. My prediction is that Larry and Tim will eventually 1) evolve into progressives, 2) be overpowered by progressive elements in the administration, or 3) lose their jobs.
It's a new era. If common sense says public money should not fund obscene pay, then let's not fund it. There is no holy commandment saying we have to renounce any public control of our economy. There is no secret law in the universe that says democratic principles cannot be applied to money. We don't have to do what rich people tell us that "free markets" require. We can do what we want.
PS... I am publishing this post sitting on a bus on the way to New York. My question is this: How are there Internets on this bus!? Are the tubes invisible? In the air?