Bailout Watch 549: Feds to Crack Down On ChryCo, GM Exec Pay

by Robert Farago

Published: June 8th, 2009

bailout watch 549 feds to crack down on chryco gm exec pay

Don’t worry Detroit: you’re not being singled out for “special” federal supervision (perish the thought). The New York Times reports that Congress is taking control of the pay and compensation for all beneficiaries of federal largesse who’ve double-dipped into the taxpayer’s purse. “The Obama administration plans to require banks and corporations that have received two rounds of federal bailouts to submit any major executive pay changes for approval by a new federal official who will monitor compensation, according to two government officials.” A Pay Czar! Heads-up, bosses, meet the new boss of bosses: Kenneth Feinberg. You may remember Mr. Feinberg as the 9/11 victims’ compensating lawyer originally tipped to be Obama’s Car Czar—a job so big the Prez eventually gave it to Wall Street insider Steve Rattner and 24 of his closest friends. Anyway, there’s an important (if not exactly auto-oriented) dynamic in play here . . .

Goldman Sachs, JPMorgan Chase and a handful of others have worked to rid themselves of their ties to the government in order to shed restrictions on pay that they say put them at a competitive disadvantage.

But under the administration’s new plans, even companies that repay the taxpayer money will not escape some form of oversight on their compensation structure.

Tin hat time. Is that why Uncle Sam was so reluctant to take back the bailout bucks? OK, this is scary.

Treasury Secretary Timothy F. Geithner plans to testify on compensation on June 18, and that may be when he outlines the principles for the entire industry. Those principles will be permanent: when bailed-out companies return the government money, they will still have to follow those principles.

The days of Chrysler and GM executive tough-snuffling are over. Or are they? Chrysler has already figured out a way to pay its suits as Fiat employees. And if GM can’t find a loophole somewhere, well, they wouldn’t be GM would they?

Robert Farago

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Robert Schwartz on Jun 08, 2009

I think this a great idea, anything that makes sure that GM and Fiatsler fail sooner, rather than later, will eventually save us money.

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U mad scientist on Jun 09, 2009
Unless the SEC is proactive and makes effective shareholder democracy a reality then the opportunity cost of investing time and money in persuing specifically an engineering or science education will just not be cost effective. Is this what we want ? We're currently resorted to importing all of our talent. Seems to work ok, especially at suppressing the price/wages of that talent. - 1) On people making more than $250,000. $338 billion - Bush tax cuts expire $179 billlion - eliminate itemized deduction $118 billion - capital gains tax hike Excuse me while I look for the world's smallest violin. Number 3 makes no sense. I thought obama was going to bring about financial Armageddon. Where exactly are they getting their capital gains? I demand an investigation into this suspicious figure. - $17 billion - Reinstate Superfund taxes $210 billion - international enforcement, reform deferral, other tax reform $4 billion - information reporting for rental payments $5.3 billion - excise tax on Gulf of Mexico oil and gas $3.4 billion - repeal expensing of tangible drilling costs $62 million - repeal deduction for tertiary injectants $49 million - repeal passive loss exception for working interests in oil and natural gas properties $13 billion - repeal manufacturing tax deduction for oil and natural gas companies $1 billion - increase to 7 years geological and geophysical amortization period for independent producers Isn't this the stuff the corporate subsidies and tax loopholes that free market balanced budget "conservatives" usually rant about? Aren't you glad the gov is out of the business of distorting the market? I mean, you can't be serious bringing in such self-humiliating arguments. This has to be a trick.

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