Thursday, 22 October 2009

First they came for the executives: Democrat Senator Wants to Govern Salary of Employees at ALL Publicly Traded Companies

The Pay Czar has moved to cap salaries of executives at banks who received bailout funds.

Yes, the companies received government bailout money (not cool) and since they are getting taxpayers money logic would say the government gets a bit of a say in how things are done. This is part of the problem.

The bigger problem is that by capping salaries and/or benefits the government is removing part of the incentive for the "best and brightest" to stay at or to start working at these companies. Many can argue that if the best and brightest were actually there, the banks would not have gotten into to the trouble they did. That argument takes a very narrow view of the crisis and does not consider the multiple factors which led to it. However, even if you do believe that, what is clear is that the best and brightest in the free market will think twice before going to work at a company where the government can restrict their pay.

The biggest problem, and what should concern every American is what appears at the end of this report in the Wall Street Journal:

Sen. Charles Schumer (D., N.Y.) plans to press for legislation extending Mr. Feinberg's governance changes to all publicly traded companies.

Treasury officials decided to create a so-called pay czar after the furor over AIG paying bonuses in March. Edward Liddy, who was then CEO of AIG, told Treasury Secretary Timothy Geithner the company wouldn't make any payments without the Treasury Department's sign-off.

For several weeks, Mr. Geithner himself was making decisions such as whether a certain employee could collect a pension payment. "It was definitely not a good use of his time," recalls one government official.

Since bringing Mr. Feinberg to the Treasury Department, the Obama administration has largely stayed out of his business, preferring instead to let him make the controversial calls unlikely to please many people.

Mr. Feinberg has met with Mr. Geithner just twice and hasn't spoken with White House officials at all.

The hands-off approach is part of a move by the administration to avoid making the hard decisions confronting Mr. Feinberg, and to stave off criticism for what he ultimately decides. That hasn't stopped Mr. Feinberg from invoking the potential for political backlash, including from the White House, in negotiations, company officials say.

First they decided how much bankers could make....
Then they went back to reading about Chairman Mao.