U.S. Senate votes to ban executive bonuses (at banks that take taxpayer $$$ - past and future)

[UpInArms]

Source: Reuters

WASHINGTON, Feb 5 (Reuters) - The U.S. Senate voted on Thursday to ban bonuses for top executives at banks or companies receiving taxpayer money from the Treasury Department's $700 billion bailout fund.

The move came a day after President Barack Obama set a $500,000 cap on executive pay and imposed other restrictions on companies that receive money from the Treasury Department's Troubled Asset Relief Program, or TARP.

On a voice vote, the Senate approved its measure as an amendment to an unrelated $900 billion economic stimulus package headed toward anticipated passage.

Obama's rules are not retroactive, but Sen. Christopher Dodd of Connecticut, chairman of the Banking Committee, said his proposal would affect all recipients of TARP money, past and future.

Specifically, Dodd's amendment would take the following actions involving companies that have received TARP money:

* Ban bonuses for the 25 most highly paid employees.

Read more: http://www.reuters.com/article/bondsNews/idUSN0540541220090206

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:applause:

[GoesTo11]

1. This is a good start

[jody]

2. I wish congress would also ban campaign donations from any of those same companies. n/t

[KakistocracyHater]

3. I'll say it again-get rid of ceo positions forever

they are not needed, they do not help the company OR the shareholders-EXCEPT FOR A TINY FEW, & they COST TOO MUCH. Reward failure, you'll get more of it. Absolute immunity: how long before ALL the top 1% demands this?

[nyc 4 Biden]

4. Get rid of the CEO position?

I'd have to respectfully disagree with that one.

IMHO you need someone at the helm.

Don't get me wrong, I am firmly against overpaying individuals whose only right to the position is rooted in cronyism and whose only loyalties are to him/herself and whomever gave him/her that position.

CEO's who earned the job because of their capabilities and whose loyalty is to the shareholder, employees, society are fine with me.

[KakistocracyHater]

5. create a test then to find the competent

getting a degree(which SOME wealthy families merely purchase) is not proof of competence.

[nyc 4 Biden]

8. Competency in my minds simply means showing you can do the job successfully.

It has nothing to do with degrees or connections or pedigree.

[unblock]

6. it's not a given that you need a single person at the helm, regardless of the size of a company

it's the capitalist equivalent of putting all your eggs in one basket. obviously that one person can do many things efficiently and there is significant upside potential. but equally obviously, of late, there is also significant DOWNside potential. one unfortunate ceo decision can sink a HUGE conglomerate, e.g., overpaying for a big acquisition.

creating a model where a division-level ceo's have wide authority over their division, but the conglomerate level is run by more by committee (which could task projects to individuals if need be), is just one example of a model that would limit the "need" for exorbitant concentrated pay while reducing downside risk.


by the way, no ceo "earns" the job. they aren't hired for their skills, although they come in handy. skllls are for workers, and ceos can hire workers with whatever skills are needed. no, ceos get the job because they've convinced the board of directors that they can deliver big profits. this is done through a history of successful outcomes, most of which are based on well-placed connections. the only "skills" needed are an ability to travel in elite circles and convince well-heeled people to make deals.

[KakistocracyHater]

9. exactly what I have been saying, only you call it

a 'commitee' & I called it 'by the board', ceos are WAY outmoded, this is the 21st C, we need new models, certainly the "endless expansion" economic model is little more than a rosy view of an explosion, with the 'bubble' part being the final result. Living quarter-by-quarter, "meeting expectations" is more a paper trick today, & it is threatening to take many nations down with them. Civilization is too big to be allowed to fall/fail, corporations have come & gone, but without the mega-capacity to organize-what only governments can do, you have 5% wealthy, everyone else.....p00r. Wealthy men care first about their own families, governments need to be regularly "weeded" of trust-slugs because their ffamily comes first, simple Human nature. Make it a status symbol for a nation to have certain things: safe water, the 'best' railservices, 'best' schools-this is what works, but it takes alot of cajoling & sticking to a big picture & longer terms than 1 decade in planning.

[unblock]

10. the typical corporate board is very ill-equipped to have anything to do with running a corporation

they can hire or fire a ceo or pressure him to do a couple of big strategic things, but virtually all board members have absolutely nothing to do with day-to-day operations and often know very little about the company itself.

i'm talking more of an operating committee of senior executives who are all full-time employees, though perhaps there's room for a hybrid where some committee members are board of director members or outside officers.

[KakistocracyHater]

11. ah, I see, it has degraded then, it's worse than I

thought-how silly of me to think that the board hired to find a good leader/ceo is a competent group. Nepotism-yuck!

What I find most frustrating is the passivity of it all, how very dependent people are on others to provide jobs for them. I'm reading about "gleaners" in France, people who go to the markets after they shut down & gather imperfect veggies & other foods. It looked the same to my eyes when in CA 500 people showed up for 50 jobs; in Africa somewhere(can't recall, it was on BBC) the men would walk for days searching everywhere for jobs, past crumbling houses, unpaved streets....Private enterprise will not meet the needs of a nation, they're not in it for cities, they're in it for the money; I wonder if any at the top in government even realize anymore? Everything has just narrowed & flatlined-just families, like Thatcher said, no nations anymore.......

[No Elephants]

12. Depends upon the person. My firm once got hired by a man

who had very limited talents.

1/ He knew how to find the best people for a job.

2/ He knew how to get their best work out of those he hired.

3/ He knew how to use those he hired to best advantage.

4/ He knew his own limitations.



In every other respect, he was a total boob. Showed up to high powered meetings in rumpled suits, spent the meetings chewing on styrofoam cups and spitting out the pieces, etc. No sense of humor or wit. Not many other people skills. Not especially book smart.

Still, I'd put him at the head of a company in a heartbeat.

He specialized in turning around financially distressed companies and he did it very well, even though he knew little or nothing about the underlying businesses in which the companies were engaged. (The skills of the advisors he hired had to include the ability to explain things to him in words of three or fewer syllables.)

[unblock]

13. sure, it's possible to succeed despite a flawed system

given the model of one-man-makes-all-the-final-decisions, you do want certain traits and skills in that role.
but the model itself is flawed when one bad decision can sink an otherwise viable or even thriving company, and there's no real check against that one person making that one bad decision.

these days are proving that one imprudent financial decision a few years ago or even more recently can put a company into bankruptcy today when it can't refinance. it likely would create an environment where systemic risks like that are frowned upon, e.g., each division gets its own financing, so you don't have a giant amount maturing at any one time when refinancing might be challenging.

[No Elephants]

15. The characteristics of the man I described are not the typical characteristics

of the company heads that I ever met (especially "knew his own limitations").

[Romulox]

7. This contradicts what I read in Bloomberg yesterday.

The rules, created in response to growing public anger about the record bonuses the financial industry doled out last year, will apply only to top executives at companies that need “exceptional” assistance in the future. The limits aren’t retroactive, meaning firms that have already taken government money won’t be subject to the restrictions unless they have to come back for more.
http://www.bloomberg.com/apps/news?pid=washingtonstory&sid=azVLk.22AkLI

[ohio2007]

14. Didn't the senate vote themselves a pay raise ? nt