In announcing new rules on executive compensation at bailed-out financial firms, President Barack Obama didn’t pull any punches: The top executives aren’t worth the toxic assets they’re holding:
We all need to take responsibility. And this includes executives at major financial firms who turned to the American people, hat in hand, when they were in trouble, even as they paid themselves customary lavish bonuses. As I said last week, this is the height of irresponsibility. It's shameful. And that's exactly the kind of disregard of the costs and consequences of their actions that brought about this crisis: a culture of narrow self-interest and short-term gain at the expense of everything else.
Obama continued:
As part of the reforms we’re announcing today, top executives at firms receiving extraordinary help from U.S. taxpayers will have their compensation capped at $500,000 -- a fraction of the salaries that have been reported recently. And if these executives receive any additional compensation, it will come in the form of stock that can’t be paid up until taxpayers are paid back for their assistance.
Companies receiving federal aid are going to have to disclose publicly all the perks and luxuries bestowed upon senior executives, and provide an explanation to the taxpayers and to shareholders as to why these expenses are justified. And we’re putting a stop to these kinds of massive severance packages we’ve all read about with disgust; we’re taking the air out of golden parachutes.
Today, the Senate Committee on Banking, Housing and Urban Affairs will hold a hearing on the deeply troubling (Troubled Asset Relief Program TARP). The witnesses include Harvard Law Prof. Elizabeth Warren, chair of the Congressional Oversight Panel.
Warren is an outspoken critic of the “mess we’re in today”:
We kept deregulating and we’re now in the worst crisis since the Great Depression…Without the right regulations, markets push toward boom and bust. If done effectively, regulation can stop that. Instead of promoting speculation and financial gambling, and permitting swindles and fraud, good regulation has the power to channel investment into productive economic activity, to make markets safer and prevent these kinds of financial meltdowns.
Between Obama reining in executive pay and perks, and Warren pushing for smart regulations, they may just turn the greedy mothers out.
