Thread: Feds may limit execs' pay at banks that get aid...

http://news.yahoo.com/s/ap/20090203/.../obama_bailout

WASHINGTON – The Obama administration is tackling the bailout of the battered financial sector on two tracks: overhauling how the government spends the money while devising new executive compensation restrictions for banks that get it.

Administration officials said the pay limits could be announced this week, but said the more complicated task of setting up a new framework for rescuing the nation's ailing banks would have to wait until early next week.

President Barack Obama, in a grim assessment of the financial industry, said Monday he would probably need more money to bail out troubled institutions to ease a suffocating credit crunch. Still, he added, "some banks won't make it."

The Treasury Department is expected to announce new rules that limit executive pay for companies that receive "exceptional assistance" under the bailout program.

Obama reacted angrily last week to reports that banks gave more than $18 billion of bonuses at a time when they were relying on taxpayer money for their survival.

Administration officials say rules under consideration would prohibit institutions receiving "exceptional assistance" from giving severance payments to their top 55 executives. Their bonus pools would be reduced by about 40 percent from the 2007 level. Such companies would include Citigroup Inc., insurance giant American International Group Inc. and automakers General Motors Corp. and Chrysler LLC, all of whom received bailouts under the Bush administration.

In the Senate, Republican leader Mitch McConnell, R-Ky., urged the administration to proceed with caution.

"I think we're all appalled by these — some of these executive salary arrangements and bonus arrangements and perks and all the rest," he said. "On the other hand, I really don't want the government to take over these businesses and start telling them everything about what they can do. Then you truly have nationalized the business."

Neither Obama nor other administration officials said how much a renewed rescue plan might cost. It is possible that additional help could come from the Federal Reserve, not from Congress.

Still, Obama's acknowledgment reinforced what many economists and bank industry officials have speculated for weeks.

"We can expect that we're going to have to do more to shore up the financial system," Obama said in an interview with NBC News that aired Monday.

Treasury Secretary Timothy Geithner plans to announce a new framework for rescuing the financial sector in a speech next week. The plans will focus on how to use the remaining $350 billion in the $700 billion Troubled Asset Relief Program that Congress approved last fall. It will include new programs aimed at helping homeowners stave off foreclosure, and efforts to stabilize the banking sector.

Officials are considering setting up a government-run "bad bank" to take on the bad debts and investments of financial institutions. In addition, the Treasury could seek help from the Federal Reserve and the Federal Deposit Insurance Corp. to provide banks with guarantees against losses on assets backed by residential and commercial real estate loans, as it did with Citigroup in November.

"We're going to have to wring out some of these bad assets," Obama said.

Meanwhile, Senate Republicans sought to ease the clogged credit market by proposing to give banks an incentive to make loans at rates between 4 percent and 4.5 percent. They offered the plan as part of an alternative to a Democratic economic recovery proposal.

Actually...if our government has to step in and give you tax payer money so you can still show up to work the next morning...then the government should have every right in how you spend that money.

Why not? Banks do that to corporations all of the time - they have auditors show up on a monthly basis if it doesn't look like you are making your projections. They will hold meetings wasting valuable work time because they want answers...they will also pull the business right out from under you and sell it for a profit if you can't meet your end of the bargain.

So why can't the banks look at the government as one big bank that they have to report to?

It's mind bottling (You know, when things are so crazy it gets your thoughts all trapped, like in a bottle? ) to me that the government admitted there should have been some regulation going on when this crisis started happening...and then they didn't instill any sort of regulation when they handed over billions of dollars.

Of course they were going to continue business as usual! They have no one telling them what to do!

I would have no problem with the nationalization of the banks

Originally Posted by LALALALALALAFONTAINE

You must really have liked George W. Bush's TARP plan and must really hate the Constitution.

Which group of people do you support the mass murder of?

where in the constitution does it say that the government can't nationalize a bank?

Originally Posted by LALALALALALAFONTAINE

Where does it say it can? The Constitution restricts the government, not the people. What it is permitted to do is enumerated in the Constitution, and further restrictions on it (like taking property without due process in the 5th amendment - typical of the socialist approach of nationalization) in the BOR.

http://www.law.cornell.edu/constitut....html#section8

So are you a nationalist in favor or socialization, a socialist in favor of nationalization, or a national socialist?

if we were to go with what your'e saying then there would be no ability to regulate anything beyond words written by men who pooped in buckets. I am a person who beleives that the consitutioon is a living breathing thing that evolves as teh people evolve. So while there is nothing specifically in the constitution that gives them the power to nationalize the banks, I think they might be able to do so under the interstate commerce clause.

Though if we were to take a struicter approach I think you'll find in article 1 section 8

"To regulate Commerce with foreign Nations, and among the several States, and with Indian Tribes."

If you were to combine that with the necessary and proper clause of article 1 section 8 clause 18 of the constitution:

The Congress shall have Power - To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof.

You have the power given to the government to nationalize the banking industry. If you were to go throught he commerce clause cases you'd be surprised at what the government can and cannot do using the commerce clause.

So to answer your question, I'm a citizen who is fed up with my tax dollars going to a failinginsutry that refuses to have any transparency, and seems more than willing to continue downt he same destructive path that got us here in the first place.

Originally Posted by Emocoremakesmecry

...I'm a citizen who is fed up with my tax dollars going to a failinginsutry that refuses to have any transparency, and seems more than willing to continue downt he same destructive path that got us here in the first place.