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View Full Version : Economics Obama calls for more Communism - wants to regulate pay at banks and "other companies"


Taco John
03-22-2009, 11:23 AM
Administration seeks increase in oversight of executive pay
By Stephen Labaton Published: March 21, 2009

WASHINGTON: The Obama administration will call for increased oversight of executive pay at all banks, Wall Street firms and possibly other companies as part of a sweeping plan to overhaul financial regulation, government officials said.

The outlines of the plan are expected to be unveiled this week in preparation for President Barack Obama's first foreign summit meeting in early April.

Increasing oversight of executive pay has been under consideration for some time, but the decision was made in recent days as public fury over bonuses has spilled into the regulatory effort.

The officials said that the administration was still debating the details of its plan, including how broadly it should be applied and how far it could range beyond simple reporting requirements. Depending on the outcome of the discussions, the administration could seek to put the changes into effect through regulations rather than through legislation.

One proposal could impose greater requirements on the boards of companies to tie executive compensation more closely to corporate performance and to take other steps to assure that outsize bonuses are not paid before meeting financial goals.

The new rules will cover all financial institutions, including those not now covered by any pay rules because they are not receiving U.S. government bailout money. Officials say the rules could also be applied more broadly to publicly traded companies, which already report about some executive pay practices to the Securities and Exchange Commission. Last month, as part of the stimulus package, Congress barred top executives at large banks getting rescue money from receiving bonuses exceeding one-third of their annual pay.

Beyond the pay rules, officials said the regulatory plan is expected to call for a broad new role for the Federal Reserve to oversee large companies, including major hedge funds, whose problems could pose risks to the entire financial system.

It will propose that many kinds of derivatives and other exotic financial instruments that contributed to the crisis be traded on exchanges or through clearinghouses so they are more transparent and can be more tightly regulated. And to protect consumers, it will call for U.S. standards for mortgage lenders beyond what the Federal Reserve adopted last year, as well as more aggressive enforcement of the mortgage rules.

The plan is being put together in advance of the meeting of the Group of 20 industrialized and developing nations in London, which is expected to be dominated by the global financial crisis and discussions about better oversight of large financial companies whose problems could threaten to undermine international markets.

An important part of the plan still under debate is how to regulate the shadow banking system that Wall Street firms use to package and trade mortgage-backed securities, the so-called toxic assets held by many banks and blamed for the credit crisis.

Officials said the plan would also call for increasing the levels of capital that financial institutions need to hold to absorb possible losses. But in a sign of the fragility of the economic system officials said the administration would emphasize that those heightened standards should not be imposed now because they could discourage more lending. Rather, they would be put in place after the economy began to rebound.

"The argument some are making is that they don't want to be stepping on the gas pedal and the brake at the same time," said Morris Goldstein, a senior fellow at the Peterson Institute for International Economics and a former top official at the International Monetary Fund.

Administration officials are also debating how tightly to supervise hedge funds. A broad consensus has emerged among regulators and administration officials that hedge funds must be registered and more closely monitored, probably by the Securities and Exchange Commission. But officials have not decided how much the funds will have to disclose about their investments and trading practices.

A central aspect of the plan, which has already been announced by the administration, would give the government greater authority to take over and resolve problems at large, troubled companies that are not now regulated by Washington, like insurance companies and hedge funds.

That proposal would, for instance, make it easier for the government to cancel bonus contracts like those given to executives at the American International Group, which have stoked a political furor. Under the proposal, the Treasury secretary would have the authority to seize and wind down a struggling institution after consulting with the president and upon the recommendation of two-thirds of the Federal Reserve board.

Long before he became Treasury secretary, Timothy Geithner had sought broader authority for the government to resolve problems at financial institutions that were not under the supervision of bank regulators.

The government now has the power to take over only the banking unit that controls federally insured deposits of large troubled institutions, not the parent company, a limit that could pose problems if large financial conglomerates like Citigroup or Bank of America continued to spiral downward.

In unveiling the regulatory plan this week, President Barack Obama would signal to Europe that he intended to crack down on the risk-taking and other free-wheeling practices by the financial industry that resulted in the global economic meltdown.

France and Germany especially have suggested that the better response is not more government spending but tighter regulation.

The Obama administration has urged European nations to do more to restart their economies through financial stimulus. Obama is hoping that by showing a serious commitment to tighter regulation he can more easily persuade other countries to increase government spending and stimulate demand by consumers and businesses that would help pull the global economy out of a serious decline.

But the administration's efforts, especially on tighter regulation of hedge funds, are not expected to assuage some European countries. Moreover, the hedge fund industry has significant influence on Capitol Hill and has shown that it can defeat proposals it finds onerous.

While a growing number of hedge fund advisers have voluntarily agreed to register with the SEC, many of the most prominent ones are expected to oppose efforts to require them to provide what they consider proprietary information about their holdings and trading practices, even on a confidential basis.

From the outset of the Obama administration, officials and European leaders have disagreed over how much to limit pay. And Geithner has discouraged the administration from imposing across-the-board limits on compensation of all employees at troubled companies receiving U.S. government assistance and more burdensome pay restrictions at healthy institutions that the administration is trying to encourage to take government money so they can increase lending.

Last week, Ben Bernanke, the Federal Reserve chairman, also called on regulators to supervise executive pay at banks more closely to avoid "compensation practices that can create mismatches between the rewards and risks borne by institutions or their managers." In advance of Obama's trip to the economic meeting, which begins on April 2, Geithner will describe the regulatory plan when he appears before Congress on Thursday.

Much of the plan would require the approval of Congress, where divisions are already forming over how best to overhaul financial industry oversight.

Representative Barney Frank, the Massachusetts Democrat who heads the House Financial Services Committee, said he believed that giving the government new authority to take over troubled companies could be adopted by the House relatively quickly, particularly after the furor over the AIG bonuses.

"This would give the government the same powers that you would get as if the company were in bankruptcy," Frank said in an interview shortly after meeting with Geithner on the plan.

But Frank and other lawmakers said other elements of the plan could take more time, like expanding the authority of the Federal Reserve to become a systemic regulator.

In a hearing on Thursday, Senator Christopher Dodd, the Connecticut Democrat who heads the banking committee, expressed skepticism about that proposal.

"Whether or not those vast powers will reside at the Fed remains an open question," he said, pointing out that the Federal Reserve had failed to apply tough oversight of the companies it now regulates.

http://www.iht.com/articles/2009/03/22/america/22regulate.php

Taco John
03-22-2009, 11:24 AM
It's such a shame that the Republicans let the NY Times pick their canidate this last time around. It would have been great to have a real opposition candidate to challenge this goof ball.

HonestChieffan
03-22-2009, 11:31 AM
Pretty frightening.

banyon
03-22-2009, 11:43 AM
Pretty frightening.

. (http://www.chiefsplanet.com/BB/showthread.php?t=204571)

Thats a bit of an over reaction.

wild1
03-22-2009, 12:00 PM
haven't you guys heard about the $100 million AIG is spending?

RINGLEADER
03-22-2009, 12:01 PM
Never waste a good crisis.

wild1
03-22-2009, 12:04 PM
speaking of communism, have you heard his Young Pioneers ideas?

stevieray
03-22-2009, 12:27 PM
I find it amusing how he went on TV and stated the 250k limit was needed...then turned around and got a 500k advance for something he hasn't accomplished yet.

wazu
03-22-2009, 12:36 PM
I find it amusing how he went on TV and stated the 250k limit was needed...then turned around and got a 500k advance for something he hasn't accomplished yet.

The rules that are applied to workers seldom apply to high-ranking Politburo members.

Count Zarth
03-22-2009, 01:24 PM
I find it amusing how he went on TV and stated the 250k limit was needed...then turned around and got a 500k advance for something he hasn't accomplished yet.

Um, do you not see the difference?

munkey
03-22-2009, 01:51 PM
haven't you guys heard about the $100 million AIG is spending?


I personally don't give a rats ass what AIG is spending...It's more than obvious that our current administration didn't do it's homework when it came to this company. It will be interesting to see "exactly" what they knew and did not know about the bonuses.

This is no different than pork spending and now for some reason people are paying attention to it.

I find it ironic actually...

RINGLEADER
03-22-2009, 02:18 PM
I personally don't give a rats ass what AIG is spending...It's more than obvious that our current administration didn't do it's homework when it came to this company. It will be interesting to see "exactly" what they knew and did not know about the bonuses.

This is no different than pork spending and now for some reason people are paying attention to it.

I find it ironic actually...

Obama's treasury dept tells Dodd to put in language. Dodd denies it, then says he did do it because treasury told him to. Treasury claims it was Dodd's doing. Dodd claims that treasury made him do it. Obama comes out to take responsiblity after saying no one should look at him because he inherited the problem.

And everyone nods knowingly about how Obama is so smart.

Let's put another trillion on the bonfire!

RINGLEADER
03-22-2009, 02:22 PM
The rules that are applied to workers seldom apply to high-ranking Politburo members.

It's wrong to talk this way.

***SPRAYER
03-22-2009, 03:03 PM
http://econc10.bu.edu/economic_systems/NatIdentity/EE/Romania/CEAUSESC.html

RINGLEADER
03-22-2009, 03:28 PM
http://econc10.bu.edu/economic_systems/NatIdentity/EE/Romania/CEAUSESC.html

I have a friend who was actually Mayor of Bucharest for a few hours. All because she stood up and rallied the crowds after the existing mayor got on a stand and started offering higher pay and more freedoms. She told me she got up and told him to leave or he would be killed by the mob. He left, they needed a mayor, and she substituted until someone with some political background could take over.

Not sure how true it was but I always thought it was a fun story. She definitely was there when it all happened. And the resulting influx of capitalism made her wealthy until the subsequent influx of mobsters offered her the choice of a) giving them her business and leaving the country or b) keeping her business and being riddled with bullets like her partner. She chose a).

wild1
03-22-2009, 03:37 PM
you think this is bad - well, you know Obama is going to come back and ask for another 800 billion before the summer is out

RINGLEADER
03-22-2009, 04:00 PM
It is scary to see leading Democrats calling for restrictions on executive pay for workers at companies that didn't take taxpayer money (and actually believe what they're saying). I think, on Obama's level, this is more of a red herring but to hear morons like Barney Frank propose not only caps on executive pay but also make idiotic proposals for two-way bonus structures (where people pay money back if the company doesn't do well) just go to show what you get when people who don't understand how to run a company try to run a company. Or, worse yet, when politicians who are governed by public sentiment (as they should be) try to impose their political needs on the operations of firms in the private sector.

wild1
03-22-2009, 04:11 PM
i wonder, what if my company became distressed by the end of the year. will they eventually try to tell them they can't pay my bonus, even though i am not an executive?

this isn't like teaching business courses in college or writing about business in some college newsletter. these companies have to make decisions in real life in a live fire environment. these idiots in congress have never run a business, they are all academics, and yet they think they know what is best for businesses.

I guess we know Barney Frank can run a business since he had a good thing going with his male prostitutes, but as for the others...

patteeu
03-22-2009, 04:30 PM
Um, do you not see the difference?

Yeah, the AIG executives did their work before getting paid.

wild1
03-22-2009, 04:59 PM
speaking of, i heard that fannie and freddie are due to pay some big bonuses soon. i bet congress just acts surprised

did they try to recover any of the bonsues they paid to the former executive leadership of those sinking ships?

Direckshun
03-22-2009, 05:02 PM
http://raptureponies.files.wordpress.com/2009/03/raptor.jpg?w=468&h=701

RINGLEADER
03-22-2009, 05:10 PM
http://raptureponies.files.wordpress.com/2009/03/raptor.jpg?w=468&h=701

Not relevant but ROFL nonetheless.

***SPRAYER
03-22-2009, 05:15 PM
<object width="425" height="344"><param name="movie" value="http://www.youtube.com/v/FolMM0_Nfmo&hl=en&fs=1"></param><param name="allowFullScreen" value="true"></param><param name="allowscriptaccess" value="always"></param><embed src="http://www.youtube.com/v/FolMM0_Nfmo&hl=en&fs=1" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" width="425" height="344"></embed></object>

2bikemike
03-22-2009, 05:29 PM
I think we should limit the pay of congress. Especially when we throw the bastards out.

RINGLEADER
03-22-2009, 05:34 PM
I think we should limit the pay of congress. Especially when we throw the bastards out.

They're always quick to question the merits of others.

This morning when Charlie Rangel was asked very simple questions he went on and on and on about all the reasons the acquisations against him couldn't be proven -- not whether he did something that warranted the investigation.

Throw another trillion on the fire.

mikey23545
03-22-2009, 05:41 PM
"Chains you can believe in."

J Diddy
03-22-2009, 05:46 PM
"Chains you can believe in."

I wish you ducktaped your fingers to your nose.

BucEyedPea
03-22-2009, 06:14 PM
The rules that are applied to workers seldom apply to high-ranking Politburo members.

Perfectly brilliant.

BucEyedPea
03-22-2009, 06:18 PM
First it'll be more wages. Next it will be price controls. Rationing will follow.

SBK
03-22-2009, 07:15 PM
"Chains you can believe in."

:clap:

SBK
03-22-2009, 07:16 PM
Kotter, why don't you tell us why this is a great thing for the looters of America?

Saul Good
03-22-2009, 07:22 PM
haven't you guys heard about the $100 million AIG is spending?I heard Rush didn't wash his hands with soap after using the men's room. He only rinsed and dried his hands by wiping them on his pants.

RINGLEADER
03-22-2009, 07:40 PM
First it'll be more wages. Next it will be price controls. Rationing will follow.

I guess the next big story is Obama laughing at prices about the economy on 60 minutes. Egads.

BTW, BEP, why do you have Rock Newman as your avatar?

Hydrae
03-22-2009, 08:26 PM
Beyond the pay rules, officials said the regulatory plan is expected to call for a broad new role for the Federal Reserve to oversee large companies, including major hedge funds, whose problems could pose risks to the entire financial system.

This is the scariest thing in this article. How much of our country are we planning on giving to this private organization?

BucEyedPea
03-22-2009, 08:46 PM
I guess the next big story is Obama laughing at prices about the economy on 60 minutes. Egads.

BTW, BEP, why do you have Rock Newman as your avatar?

Who's that?

Whoever he is, he's not on my avy. It's Karl Marx. He's been canonized the patron saint of the economy.:D

alanm
03-22-2009, 10:19 PM
It is scary to see leading Democrats calling for restrictions on executive pay for workers at companies that didn't take taxpayer money (and actually believe what they're saying). I think, on Obama's level, this is more of a red herring but to hear morons like Barney Frank propose not only caps on executive pay but also make idiotic proposals for two-way bonus structures (where people pay money back if the company doesn't do well) just go to show what you get when people who don't HAVE A F*CKING CLUE ON HOW TO RUN THE COUNTRY try to run a company. Or, worse yet, when politicians who are governed by public sentiment (as they should be) try to impose their political needs on the operations of firms in the private sector.
Fixed your post.