Paulson agrees to address financial execs' pay in bailout bill

The White House is relenting on Congress' demands that financial company executives face restrictions on compensation -- particularly golden-parachute severance packages -- if their firms decide to sell bad mortgage loans to the government.

Treasury Secretary Henry M. Paulson, who on Tuesday balked at including pay limits in the proposed $700-billion financial-system bailout plan, changed his tune in testimony before the House Financial Services committee this afternoon.

"The American people are angry about executive compensation and rightfully so," Paulson said, according to Bloomberg News. "We must find a way to address this in the legislation, but without undermining the effectiveness of this program."

Before the Senate on Tuesday, Paulson had said: "In terms of the compensation issue, there’s a lot of things that need to be done there, but I would respectfully submit that we can’t do those as quickly as it takes to get this system up and running, because that’s what you care about."

Rep. Barney Frank (D-Mass.), chairman of the House Financial Services panel, has been pushing to make sure bank and brokerage execs can’t leave their firms with big payouts after putting toxic loans to the government.

"I don't want the federal taxpayer to be at risk for their bad debt and then the guy who incurred the debt gets tens of millions of dollars on the way out the door," Frank said on CBS' "Face the Nation" last weekend.

The Christian Science Monitor reported today that a draft of proposals by Frank's committee calls for "appropriate standards for executive compensation" at financial firms, as part of the bailout terms.

From the Monitor: "These include: a 'clawback' provision for bonuses based on earnings, gains, or other criteria that are later proved to be inaccurate; limits on incentives based on risks deemed 'inappropriate or excessive;' and limits on severance compensation to senior executives 'in the public interest.' "

Photo: Rep. Barney Frank (Charles Dharapak / Associated Press)

Comments

[Oil Trader]

Kind of a shame that this thing has gotten this political. The market is starting to act like it doesn't believe there will be a swift and effective resolution. It is so bad that Ron Paul is now involved in this mess!!! Oh god!

http://www.greenfaucet.com/hanlons-pub/a-bailout-hearing-airball-from-ron-paul/74925

[Sean K]

Oil Trader says "kind of a shame this thing has gotten so political". Are you nuts?! This is the very heart of the left/right divide. Maybe you were fooled into thinking the difference is about 'culture' issues like gay marriage and gun rights, but anyone with half a clue knows those are straw men built to distract the tiny brains of conservatives. This issue didn't GET political it IS inherently political. Conservatives, republicans and right wingers of all variety make radical free trade, complete lack of financial regulation and an acceptance of greed and malfeasance the main pillar of their party. This is the ultimate result. No one remembers because most of those who lived through the depression are dead. If this just GOT political to you, you weren't paying attention.

[jeff cook]

the trader and banker, ceo, politicans, all have played a part in this.BUT

why should joe and mary tax payer pay for their screw ups, the goverment not going to put those people back in the houses they foreclosed on. so why should we have to fix their greedy screw ups. with a BAIL OUT
of a slect few companys that will go right on making screwy business deals so they can pad there pockets.

[Ruth Ann King]

If the govt (Treasury) buys debt and commits to re-coop its cash; how do we get to the assumption that regular working people can be taxed for the money? Couldn't Congress stop any moves that would impact tax payers? Seems to me Congress has more power in this than realized. I see that the entire economy will be affected in many ways; but at least with the bail-out, we have hope of stabilization. Without the bail-out, disaster awaits with certainty. Or do many believe that won't happen? I do agree that exec compensation should be capped and the government should have an opportunity to make a profit on this deal, but the deal needed to be done yesterday, so to speak!

[Geri Randall]

This is the biggest scam ever.

The reason given for the bailout--to increase the availabilty of credit--makes no sense. Why not provide funds to SOUND, UNCORRUPT BANKS and let them make GOOD LOANS.? Instead of buying up the bad loans and "distressed" investments purchased by men who have made multi-millions because of their supposed "expertise." My proposal would cost the taxpayers nothing! We should let the crooks get their just deserts.

Why do we want to give money to companies who deliberately ripped people off with a Ponzi scheme? This is just another "steal from the poor and give to the rich" scheme!

[Paula Rose]

As the hearings were in progress today, did anyone else notice that the major indices were moving up and down in an orderly trading fashion? These failures aren't "news" and have been carefully orchestrated over the last 5 plus years. If I knew exactly what the outcome of such a complete lack of oversight, overlending, overleveraging, etc. would result in this exact scenario more than 3 years ago; how is it possible for those who were providing the funds for this extravaganza, bonanza, absolute free for all, to be shouting "Surprise" at the end of the party? And coming round with a dressed up Entitlement Program outlining "More for the Us, Less for You!" in favor of those who are caught with their pants down. and asking for the American Taxpayer to agree with, and cough up, for is simply outrageous. Do explain how the 700 B bailout will assist someone who is currently in foreclosure, is facing possible unemployment, and has no cash reserves will benefit? They haven't much left to lose; so Take 'Er Down Fast and Furiously, Boys!

[Cuja]

All these Republicans, like Campbell of Irvine, saying: "I believe in a free-market system and no govt intervention, but we should get on board with this $700 billion bail out this time." That's like an aetheist praying to god when the going gets tough. Both are hypocrites. The house of cards is falling and you don't fix it by putting up more cards. Let it fall and build a stronger house.

Message to over-extended borrowers: take some personal responsibility. You are to blame as well for taking out loans on way more money than you can afford, or lying about your income on a loan application. Why should other taxpayers help you when you, like the Wall Street firms, gambled and lost. You need to be foreclosed on so that real estate prices can come down to meet wages. Nobody forced you to take that loan. You were just greedy. Just like those guys on Wall Street.

[martin]

If MCCaine wanted Hillarys' votes HE should have picked HILLARY!!!

STOP THE DRILL AND BURN policy and let's spend that trillion dollars infrastructure.

We just can't keep paying for that ENDLESS WAR.

[Gervase]

"The appropriate standard for executive compensation" for those financial firms should be jail and confiscation of their assets. Greenspan and the Treasury Secretaries should be also indicted for doing nothing to control this obvious voracious greed.

[Real Bailout]

I'm against the $85 BILLION bailout of AIG. Instead, I'm in favor of giving $85,000,000,000 to America in a "We Deserve It" dividend. To make the math simple, let's assume there are 200,000,000 bona fide U.S. citizens, aged 18+.
Our population is about 301 million counting every man, woman and child. So, 200,000,000 might be a fair stab at adults 18 and up. Now, divide 200 million, 18+ adults into $85 billion - that equals $425,000.00 each! Yes, my plan is to give that $425,000 to every adult as a "We Deserve It" dividend.
Of course, it would NOT be tax free. So, let's assume a tax rate of 30%. Everyone would pay $127,500.00 in taxes. That sends $25.5 billion right back to Uncle Sam! It also means that every adult 18+ has $297,500.00 in their pocket. A husband and wife would have $595,000.00!
What would you do with $297,500.00 to $595,000.00?
Pay off your mortgage - housing crisis solved.
Repay college loans - what a great boost to new grads.
Put away money for college - it'll really be there.
Save in a bank - create money to loan to entrepreneurs.
Buy a new car - create jobs .
Invest in the market - capital drives growth.
Pay for your parent's medical insurance - health care improves.
Enable deadbeat parents to come clean - or else.
Remember this is for every adult U.S. citizen, 18 and older (including the folks who lost their jobs at Lehmann Brothers and every other company that is cutting back) and of course, for those serving in our Armed Forces.
If we're going to re-distribute wealth let's really do it! Instead of trickling out a puny $1,000.00 "economic incentive".
If we're going to do an $85 billion bailout, let's bail out every adult U.S. citizen!
As for AIG - liquidate it.
Sell off its parts.
Let American General go back to being American General.
Sell off the real estate.
Let the private sector bargain hunters cut it up and clean it up.
We deserve the money and AIG doesn't. Sure it's a crazy idea, but can you imagine the coast-to-coast block party?!
How do you spell Economic Boom? W-e D-e-s-e-r-v-e I-t d-i-v-i-d-e-n-d! I trust my fellow adult Americans to know how to use the $85 Billion "We Deserve It" dividend more than do the 'geniuses' at AIG or in Washington, D.C..
And remember, my plan only really costs $59.5 billion because $25.5 billion is returned instantly in taxes to Uncle Sam.
Good idea? I think so.

[Terry S. Huckeba]

Here is an idea, let us get the government to lend money they dont have to corporations that lended money they dont have to a people who agreed to pay high interest rates, then let us turn around and charge the people for money we didnt have to lend, and in turn, make them pay three times for it.

Or, madatory cuts to out of control credit card interest rates which will ease the taxpayer burden and make this bailout possible. Meanwhile, cut all exectuive pensions and fire whomever is responsbile.

[Maggie%20Knowles]

Cuja wrote:
"All these Republicans, like Campbell of Irvine, saying: "I believe in a free-market system and no govt intervention, but we should get on board with this $700 billion bail out this time." That's like an aetheist praying to god when the going gets tough. Both are hypocrites."
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~LOL!!! :)

[Tim]

Why do we bailout these financial institutions when we could have use the 700B to give out loans with regulations and to people who can repay the loans? One company goes down 10 others will prop up.

It is the nature of doing business, if you made good business decisions you reap the reward, if you made a bad choice you should shoulder the loss. Our economy is not base solely on financial institutes. The government can use that 700B and start making loans to revive the economy without having to buy bad debts from greedy banks who wanted to make big profit by giving out loans for cut throat interests. The banks freely giving out $$ to people who can't and couldn't not even afford the loan they borrow. At the end, the banks calculated and dealt the cards wrong end up losing $$ and they crying that the economy is screwed unless we the taxpayer have to help giving $$ to save them.

Lets ask them (the bankers, financial institutes) to share part of all the profits that they made all these years with the American people and then we can consider of sharing loss.

We should all vote out all the congressman, congresswoman, all senators that sitting on their fat asses all this time chose to do nothing while all this madness going on, and they are now readily giving the taxpayer $$ to the rich to save them from losing more. Why do we put these MORONs in office to control out fate?

PEOPLE! lets save our country from being rape by all the corrupt politicians and the greedy rich.