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February 4, 2009

President Obama Plans Salary Limits For Bailout Recipients

Obama Commerce Secretary  Most Divinity Schools/Seminaries do not accept Pell Grants (financial aid from the federal government available to students) because they do not want the government to tell them how to administrate their schools.  The thinking is, if you don’t want government interference in your business, then manage your business well so you don’t have to beg the government for money.

Like the rest of us, President Obama has been watching the way that  banks who received ‘exceptional assistance’ have been conducting business as usual — as if they they’re in the black with a trillion dollar profit.  There has been no apparent curbing of spending even though they borrowed billions from us the United States taxpayers.  Even while they lay off employees the executives of these banks are spending money flippantly and frivolously.

President Obama has decided that since the executives are not being responsible and seemingly cannot manage themselves he will intervene and implement a series of pay curbs including a strict new limit on executive salaries at these institutions.  Under the new rules, companies like Citigroup that received “exceptional assistance” from taxpayers may not pay any top executive more than $500,000 a year.  Any additional compensation would have to be in restricted stocks that cannot be sold until the companies pay back the money they borrowed from the government.

In addition all banks receiving help will face tougher restrictions, including requirements that shareholders have a say on compensation, and will face tougher disclosure rules on items such as aviation services, holiday parties and golden parachutes.

Institutions that are financially healthy — and receive more generally available government funds — can waive these requirements if their shareholders vote to do so, according to the plan.

“The American people understand we’ve got a big hole that we’ve got to dig ourselves out of, but they don’t like the idea that people are digging a bigger hole even as they’re being asked to fill it up,” Obama said.

Congress also was furious, with Senator Claire McCaskill, (D-Missouri) introduced legislation to cap compensation at bailed-out companies to no more than the salary of the U.S. president.

President Obama’s annual salary is $400,000.

“We have a bunch of idiots on Wall Street that are kicking sand in the face of the American taxpayer,” an enraged McCaskill said on the floor of the Senate on Friday. “They don’t get it. These people are idiots. You can’t use taxpayer money to pay out $18 billion in bonuses.”

Yeah!  Our government is standing up for its citizens!

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7 Comments »

  1. Our failing financial institutions have gone to the government hat in hand begging for money. Now with fresh hand outs they seem to feel they can do with the money as they please. This includes the same wasteful spending and pay. Now, “We the people” are all part owners so they do have to listen to us as voiced through our elected officials. I was opposed to bailing these companies out because, like many, I was concerned the government would be wasting our money. The government should ideally let the market take care of itself. If you are going to ask the government to intervene however, you have to understand you are going all in.

    Comment by federalistblogs — February 4, 2009 @ 11:23 am | Reply

  2. Limiting salaries is a first step to interfering in the operations of a private business. So this is a tough one for me. But asking for and receiving handouts from the Federal Government comes with some implied responsibilities. When those responsiblities are flouted by those who receive the handouts, there are consequences. With a heavy heart and a watchful eye, I nust agree with the Senator and the President. Greed seems to have replaced responsibility. As a result voluntary compliance must be replaced with mandatory regulations. But let’s be careful not to step too far into a very dangerous area.

    Comment by Art Berkowitz — February 4, 2009 @ 5:00 pm | Reply

    • Art I agree with you 100%.

      I am comfortable with this new rule since it only affects those that borrowed billions like Citigroup, Wells Fargo, etc.

      This does not apply to any other business and will become null and void once they pay back the money.

      If these corporate beggars had been responsible this would not have come to pass.

      Cheers!

      Comment by Paulette — February 4, 2009 @ 5:21 pm | Reply

  3. Cheers. I like this article a lot! Very well-written. 🙂

    Comment by Imee — February 9, 2009 @ 7:54 am | Reply

    • Hi Imee – thanks very much! Welcome and we hope to see you back soon.

      Comment by Paulette — February 9, 2009 @ 10:56 am | Reply

  4. According to news, there’s still $328 billion dollars left in the fund that hasn’t been spent from the $700 billion bank bailout plan. That amount will surely be heading for a debate at the congress on how the remaining money be spent in the near future.

    Comment by marvin — July 13, 2009 @ 12:16 am | Reply


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