TARP: "I have Altered the Deal, Pray I do not Alter it Further"
This famous quote from Darth Vader in The Empire Strikes Back seems to encapsulate today’s news that the newest Lord of the Sith Darth Obama has had his apprentice Pay-Czar Feinberg issuing new compensation restrictions for the TARP recipients who received the most tax-payer funded bailout money. The pre-release buzz ahead of the official announcement tomorrow is that he is calling for a 90% reduction in wages and 50% reduction bonuses on the top executives at the “Seven Deadly Sinners“.
The Seven Deadly Sinners; General Motors, Chrysler, CitiGroup, Bank of America, AIG, GMAC, Chrysler Financial
Seems that if you work at a firm that got a bailout and the Government already fired or forced the retirement of all your CEOs and peers, has given the Unions a seat in Management in some cases and determined the products you will sell is now saying you are not going to get paid either. For the record there were no strings in the first iteration of TARP, then it had compensation limitations in the second iteration capping executive compensation, now even deeper cuts in pay are being applied retroactively. That is the real outrage in that this is mainly about companies that just restructured. I think to exit bankruptcy one would have to have re-negotiated all the employment contracts with these top executives, especially in the case of General Motors and Chrysler.
I said it earlier that TARP is like Catnip for Democrats and this latest announcement simply enforces that assertion. The Administration just cannot help themselves. To be fair Government has ownership stakes in the firms being targeted and as such have the right to limit compensation, they are targeting only a small group (top 25 Executives at each firm) what is really the issue to me is that they should have put those rules in place first not after the fact, and they did via TARP legislation limiting compensation in the second round, now they are changing the rules after the results of the game are known.
The Administration and Congress are just playing “Better Capitalism Through Central Planning” with tax-payer dollars because if these firms falter due to management miss steps due to the quality of retained people it is the tax-payer who will be sending in the funds.
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