Obama: I told bankers bonuses 'not acceptable'

[ProSense]

Obama: I told bankers bonuses 'not acceptable'

By John Poirier

WASHINGTON (Reuters) – President Barack Obama said on Sunday he told the chiefs of the biggest U.S. banks that bonuses are not acceptable while many Americans struggle to meet basic expenses in the midst of a severe recession.

Referring to a meeting Friday at the White House with the chief executives of banks that have received U.S. government bailout funds, Obama said bankers need to show some restraint from big bonuses during the financial crisis.

"That's just not acceptable," Obama said during an interview on CBS television's "Face the Nation."

He said he told the chief executives: "Show some restraint. Show that you get that this is a crisis and everybody has to make sacrifices."

Executive bonuses at troubled financial institutions, including insurer American International Group Inc, have sparked anger among U.S. lawmakers and the American public, who are outraged that the institutions doled out multimillion-dollar bonuses while receiving taxpayer funds instead of providing credit to individuals and small businesses.

Executives at AIG, which has received about $180 billion in taxpayer bailout money, were paid $165 million in bonuses. Many recipients of the bonuses have agreed to give the back. "Had we not seen some healthy expressions of anger, we wouldn't have gotten $50 million of those bonuses back." Obama said.

Attorneys general in New York, New Jersey and several other states are examining the AIG bonus matter.

link

[MercutioATC]

1. Oh, good...as long as he TOLD them...

...no need to actually put any LEGISLATIVE restrictions on the money...

:eyes:

[Deja Q]

2. Let's see what happens.

[MercutioATC]

5. Seems I heard a different President say that about Iraq...

That worked out well, didn't it?

[ProSense]

7. What I don't get is

why some people were against taxing the bonuses because of the contracts, but made such a hoopla about about legislation that would have prevented the bonuses.

The contract argument was bogus.

[MercutioATC]

10. Because the bonus tax was just another sloppily-written piece of legislation?

An AIG secretary makes $40k/year.

Her husband (working for, say, Boeing) makes $210k/year.

She works hard and gets a $1500 bonus...but she only gets to keep $150 of it because her family income is $250k/year.


If I separated airplanes like they write legislation, a lot of people would be dead.

[ProSense]

11. What?

The tax has nothing to do with AIG secretaries.

[MercutioATC]

12. It imposes a 90% tax on any bonus given to a person who has a family income over $250k.

...if they work for a company that took bailout money.

How does that not fit the scenario I presented?

[ProSense]

13. No it did not.

The income threshold was specific to the individual employee.

[MercutioATC]

14. Wrong

Www.Msnbc.msn.com/id/29771499/

[ProSense]

16. Actually, no

First of all the bonuses in question related to executive bonuses, which the companies claimed were part of their contracts. Second, the $165 million went to about 6,400 senior executives. Third, MSNBC's statement is awkwardly written. The actual text:

(b) TARP Bonus- For purposes of this section--

(1) IN GENERAL- The term `TARP bonus' means, with respect to any individual for any taxable year, the lesser of--

(A) the aggregate disqualified bonus payments received from covered TARP recipients during such taxable year, or

(B) the excess of--

(i) the adjusted gross income of the taxpayer for such taxable year, over

(ii) $250,000 ($125,000 in the case of a married individual filing a separate return).

[MercutioATC]

17. I don't see where that prevents taxing anybody who gets a bonus.

Perhaps I'm just misreading it. How does the secretary in my scenario not fall under the provisions of the tax?

[ProSense]

15. delete n/t

[DJ13]

3. If Warren Buffett owned 80% of AIG wouldnt we expect him to have a say in bonuses?

So why is it our government cant exercise the leverage they have to tell the company no?

I think the politicians (including President Obama) are just expressing their "outrage" because they see how pissed off the public is, but theres no will to upset their Wall Street buddies by really doing anything about them.

[CaliLiberal]

4. They should know bonuses aren't acceptable when a company is owned by

taxpayers

[MercutioATC]

9. Riiiiight...

Because trusting them to do the "right thing" in the absence of rules has worked so well in the past?

[Deja Q]

6. My take is this:

The President is giving AIG his daily briefing.

He concludes by saying: "Yesterday, 3 Brazilian dollars were given to you."

"OH NO!" the AIG executives exclaim. "That's terrible!"

They sit stunned at this display of emotion, nervously watching as the President sits, heads in their hands.

Finally, the President looks up and asks, "Need some more?"

Just kidding...



I think he has real plans to do something, if need be.

[Igel]

18. No, we wouldn't expect him to have a say in bonuses.

We'd expect him to be able to push for representation on the board, and to pressure the board members to pressure the CEO.

The board would look at the contracts and make their own decisions. Buffett might *want* to push the CEO around, he might even *try* to push the CEO around and, given how much of the stock he owned, he might succeed. But he would show at least minimal understanding.

Now, as far as government ownership goes, IIRC there are two problems with the parallel I drew. The first is that the government has preferred stock, which doesn't entitle them to a vote; the second is that their share of ownership via stock is far below the amount they loaned. Ah, you might say, "loaned"--does not a creditor have a say in the running of a company?

Yes, and no. Depends on the deal--and in that, Buffett, with greater wisdom and knowledge, probably wouldn't have made the mistake that academics and politicians made. If it's a loan that's made to you, does the bank have a say in how you run your affairs? Perhaps; depends on the deal. It also depends upon whether you are meeting the agreed-upon terms of the deal. But if the bank suddenly showed up and said, "Oops, we forgot to say that you couldn't eat out until you paid back the loan, but now that we know you're eating out we intend to stop it," you wouldn't be very happy.

The student store I was associated with had a rather large loan from the administration, one that had no strings attached. Then the student store essentially tanked and we were trying to resurrect its finances. We needed another loan, something like $4-5 million. We got it, and *it* had strings attached. Reasonable ones: E.g., we don't meet our recovery plan, we could have our board packed by administrators. We met the requirements, but still the administration from time to time tried to interfere. Our response: Take a hike. Of course, there was a catch: If we needed to go back for more, the *third* loan might have that attempted interference written into the deal. We didn't need a third loan, and paid off the second right on schedule. And sometimes there was political pressure, since, well, it was on a college campus. We usually ignored it because the reporters and the people in student government were ill-informed and looked strictly at short-term issues. I had no trouble telling them they were fools, and then demonstrating it in gory detail.

The politicians don't understand what they've gotten themselves into, they did something stupid with their power on Feb. 11 and were called out on it, and they needed to defend their stupidity and make sure they were on the right side of popular anger. There's a reason that politicians do a bad job, esp. in a democracy, with running businesses.

[rug]

8. But they accepted them.