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Thread: Always looking out for the little guy: Bush pushed executive pay loophole in bailout

  1. #1
    Friend of Gossip Rocks! buttmunch's Avatar
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    Default Always looking out for the little guy: Bush pushed executive pay loophole in bailout

    Congress wanted to guarantee that the $700 billion financial bailout would limit the eye-popping pay of Wall Street executives, so lawmakers included a mechanism for reviewing executive compensation and penalizing firms that break the rules.

    But at the last minute, the Bush administration insisted on a one-sentence change to the provision, congressional aides said. The change stipulated that the penalty would apply only to firms that received bailout funds by selling troubled assets to the government in an auction, which was the way the Treasury Department had said it planned to use the money.

    Now, however, the small change looks more like a giant loophole, according to lawmakers and legal experts. In a reversal, the Bush administration has not used auctions for any of the $335 billion committed so far from the rescue package, nor does it plan to use them in the future. Lawmakers and legal experts say the change has effectively repealed the only enforcement mechanism in the law dealing with lavish pay for top executives.

    "The flimsy executive-compensation restrictions in the original bill are now all but gone," said Sen. Charles E. Grassley (Iowa), ranking Republican on of the Senate Finance Committee.

    The modification reflects how the rapidly shifting nature of the crisis and the government's response to it have led to unexpected results that are just now beginning to be understood. The Government Accountability Office, the investigative arm of Congress, issued a critical report this month about the financial industry rescue package that said it was unclear how the Treasury would determine whether banks were following the executive-compensation rules.
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    Michele A. Davis, spokeswoman for the Treasury, said the agency is working to develop a policy for how it will enforce the executive-compensation rules. She would not say when the guidance would be issued or what penalties it might impose. But she said the companies promised to follow the rules in contracts with the department.

    The final legislation contained unprecedented restrictions on executive compensation for firms accepting money from the bailout fund. The rules limited incentives that encourage top executives to take excessive risks, provided for the recovery of bonuses based on earnings that never materialize and prohibited "golden parachute" severance pay. But several analysts said that perhaps the most effective provision was the ban on companies deducting more than $500,000 a year from their taxable income for compensation paid to their top five executives.

    That tax provision, which amended the Internal Revenue Code, was the only part of the law that contained an explicit enforcement mechanism. The provision means the IRS must review the pay of those executives as part of its normal review of tax filings. If a company does not comply, the IRS can impose a tax penalty. The law did not create an enforcement mechanism for reviewing the other restrictions on executive pay.

    If a firm violates the executive-compensation limits, department officials said, the Treasury could seek damages, go to court to force compliance, or even rescind the contracts and recover the bailout money. "We therefore have all the remedies available to us for a breach of contract," Davis wrote in an e-mail.

    Legal experts said those efforts could be complicated if the Treasury outlines the penalties after companies have received bailout money. David M. Lynn, former chief counsel of the Securities and Exchange Commission's division of corporation finance, said courts have sometimes placed limits on the government's ability to impose penalties if there was no fair warning.
    Limits on Executive Pay May Prove Toothless - washingtonpost.com

    My goodness. I for one am shocked SHOCKED that Bushie didn't want his buddies to actually get the pay they deserved, rather than what they wanted.
    'Those who sacrifice liberty for security deserve neither.' Ben Franklin

    "When fascism comes to America, it will be wrapped in the flag and carrying the cross."
    --Sinclair Lewis

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    Elite Member kingcap72's Avatar
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    And then he wonders why people throw their shoes at him.

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    Friend of Gossip Rocks! buttmunch's Avatar
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    Exactly.
    'Those who sacrifice liberty for security deserve neither.' Ben Franklin

    "When fascism comes to America, it will be wrapped in the flag and carrying the cross."
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    Elite Member Grimmlok's Avatar
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    Why didn't congress stop him? Oh right, cuz they don't want to.

    Would someone PLEASE remove Pelosi and Reid.. they are the 2 most useless fuckheads to ever grace that legislative body.
    I am from the American CIA and I have a radio in my head. I am going to kill you.

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    Elite Member witchcurlgirl's Avatar
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    Quote Originally Posted by Grimmlok View Post
    Why didn't congress stop him? Oh right, cuz they don't want to.
    Yes, that's the $64,000 question......and the correct answer.

    We know Bush is what he is....but people need to open their eyes and understand the role that Congress played.
    It's no longer a dog whistle, it's a fucking trombone


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    Friend of Gossip Rocks! buttmunch's Avatar
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    And here's more on the same subject. I can't believe anyone would get pissed about saving autoworker's jobs but can't find it in them to scream from the rooftops about how the Bushies managed to ream teh taxpayer so their buddies can keep the second house in the Hamptons. Dicks.



    Compare and contrast - I'm sure the Senate's southern caucus is as upset about this as they are about auto workers making $28 an hour:

    Congress wanted to guarantee that the $700 billion financial bailout would limit the eye-popping pay of Wall Street executives, so lawmakers included a mechanism for reviewing executive compensation and penalizing firms that break the rules.

    But at the last minute, the Bush administration insisted on a one-sentence change to the provision, congressional aides said. The change stipulated that the penalty would apply only to firms that received bailout funds by selling troubled assets to the government in an auction, which was the way the Treasury Department had said it planned to use the money.

    Now, however, the small change looks more like a giant loophole, according to lawmakers and legal experts. In a reversal, the Bush administration has not used auctions for any of the $335 billion committed so far from the rescue package, nor does it plan to use them in the future. Lawmakers and legal experts say the change has effectively repealed the only enforcement mechanism in the law dealing with lavish pay for top executives.

    At least we've laid one myth to rest. It's never been that BushCo is incompetent. Clearly, they're very focused and directed when it comes to the economic privilege of the upper classes.
    Crooks and Liars
    'Those who sacrifice liberty for security deserve neither.' Ben Franklin

    "When fascism comes to America, it will be wrapped in the flag and carrying the cross."
    --Sinclair Lewis

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