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Old 02-04-2009
 
#1
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Default Obama's Pay Cap

This is the most ignorant policy conceivable. The $500,000 pay cap on banks that receive TARP money will result in the greatest talent going elsewhere. In these times you want to pay high amounts for true talent to right these sinking ships.

This policy shows astounding economic ignorance, and will result in the complete destruction of all these entities.

I predict this policy will get revoked because likely no one will want to work there. And if it doesn't, it will merely ensure completely incompetent people are running these entities.

This is what happens when governments interfere: completely and utter stupidity. Do they not realize there just might be unintended consequences of their far reaching policies?
 
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And according to this proper, and generally received meaning of the word, a free man, is he, that in those things, which by his strength and wit he is able to do, is not hindered to doe what he has a will to."

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Old 02-04-2009
 
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Default

Quote:
Originally Posted by Kaizen
The $500,000 pay cap on banks that receive TARP money will result in the greatest talent going elsewhere.
They're obviously not that great if they need TARP money. And it's not like the government is forcing the banks to take the money. They can either take the money with strings attached or try to manage on their own without it.
 
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Old 02-04-2009
 
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Default

I actually see a silver lining in Obama's pay caps- While we shouldn't be giving money away to bad banks in the first place (how about giving it to the good banks instead, who are being dragged down?), Obama's pay caps ensure that TARP recipients are destroyed beyond recognition, as opposed to being propped up forever.
 
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Old 02-04-2009
 
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Default

Quote:
Originally Posted by Kaizen
This is the most ignorant policy conceivable. The $500,000 pay cap on banks that receive TARP money will result in the greatest talent going elsewhere. In these times you want to pay high amounts for true talent to right these sinking ships.
Randall Stephenson, John Mackey, and Edward Liddy, just to name a few, would disagree. There are numerous CEO's eager and willing to take top spots for $1 salaries in the name of a challenge..... and of course some back end compensation.

Quote:
Under Obama's plan, any executive of a company accepting federal aid will be able to increase their $500,000 basic pay through the award of shares but they will not be able to cash these in until all taxpayer funds have been paid back.
http://www.guardian.co.uk/business/2...ank-salary-cap

Given that this is "taxpayer money," I see no problem dictating salaries. A talented executive could turn a company around, reaping shares of the company as they progress, and in the end they have the potential to cash in for their earnest work. Once a company has dipped in to taxpayer funds, there should absolutely be accountability to the people. Of course, companies that were managed properly have no reason to be concerned.
 
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Old 02-04-2009
 
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Default

Quote:
Originally Posted by Kaizen View Post
This is the most ignorant policy conceivable. The $500,000 pay cap on banks that receive TARP money will result in the greatest talent going elsewhere. In these times you want to pay high amounts for true talent to right these sinking ships.

This policy shows astounding economic ignorance, and will result in the complete destruction of all these entities.

I predict this policy will get revoked because likely no one will want to work there. And if it doesn't, it will merely ensure completely incompetent people are running these entities.

This is what happens when governments interfere: completely and utter stupidity. Do they not realize there just might be unintended consequences of their far reaching policies?
Because the prior policy of giving multi-million dollar bonuses for driving the company into the ground was so successful, right?

Think about how often CEO's are rewarded for failure. There is something wrong with the current system, I think it has to do with the structure. CEO's and board members are friends and look out for each other. They will give "severance packages" to CEO's they essentially had to get rid of (but not fire!), why on Earth does a CEO who fucked the company up deserve a severence package? Where is the logic, which economic law states that failure should be rewarded?

Here is my one issue with capitalism and why I broke away several years ago, it assumes hyper-rationality on the part of people when in reality I've learned that most people are ignorant or downright stupid -- we are the exception, not the rule --. You might say "investors will see the failing policies and not invest in those companies" but thats not what happens at all, especially if the information is not well known (ignornace) by most people. The theory breaks down at this point because it's garbage in, garbage out. To assume that most people are rational is irrational and contradicts our observations.
 
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Old 02-04-2009
 
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Quote:
Originally Posted by The Hawaiian View Post
Because the prior policy of giving multi-million dollar bonuses for driving the company into the ground was so successful, right?

Think about how often CEO's are rewarded for failure. There is something wrong with the current system, I think it has to do with the structure. CEO's and board members are friends and look out for each other. They will give "severance packages" to CEO's they essentially had to get rid of (but not fire!), why on Earth does a CEO who fucked the company up deserve a severence package? Where is the logic, which economic law states that failure should be rewarded?

Here is my one issue with capitalism and why I broke away several years ago, it assumes hyper-rationality on the part of people when in reality I've learned that most people are ignorant or downright stupid -- we are the exception, not the rule --. You might say "investors will see the failing policies and not invest in those companies" but thats not what happens at all, especially if the information is not well known (ignornace) by most people. The theory breaks down at this point because it's garbage in, garbage out. To assume that most people are rational is irrational and contradicts our observations.
Fortune 500 CEO's didn't get to where they are because they were irrational. However, have you ever heard of the Peter Principle?
 
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Old 02-04-2009
 
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Default

Quote:
Originally Posted by JT
They're obviously not that great if they need TARP money. And it's not like the government is forcing the banks to take the money. They can either take the money with strings attached or try to manage on their own without it.
Quote:
Originally Posted by Lackey
Given that this is "taxpayer money," I see no problem dictating salaries.
Moot. The question is: will it work? If you want to give power to the government to dictate salaries as though its some "principled" position, that's your perogative. I'm talking specifically about the result of this policy.

Quote:
Originally Posted by Lackey
Randall Stephenson, John Mackey, and Edward Liddy, just to name a few, would disagree. There are numerous CEO's eager and willing to take top spots for $1 salaries in the name of a challenge..... and of course some back end compensation.
1. These men chose to do this. Which says something about their expectations and their tolerance.
2. They have major vested interests in these companies through equity ownership and retention benefits.

This situation of a salary "cap" is a forced situation. I applaud the will of men to take up a challenge and chose to take a $1 salary in a symbolic effort to turn a company around. But this is ultimately done because benefits will present themselves in the future. This pay cap and terrible share compensation problem make every single fortune 500 business in America a superior place to work. When trying to attract talent to a fledgling business, is a salary cap as opposed to a market based cap a superior proposal? Of course not. It will simply cause those capable of running the business, who garner very high wages in the marketplace, to simply pass them up for businesses that pay an applicable rate given their capability and productivity.

Quote:
Originally Posted by The Hawaiian
Think about how often CEO's are rewarded for failure. There is something wrong with the current system, I think it has to do with the structure. CEO's and board members are friends and look out for each other. They will give "severance packages" to CEO's they essentially had to get rid of (but not fire!), why on Earth does a CEO who fucked the company up deserve a severence package? Where is the logic, which economic law states that failure should be rewarded?
The modern corporate structure is not capitalistic. Accounting standards, SEC, SarOx, blah blah are all government regulated. Even down to the issue of basic corporate law, it is completely government regulated. Their compensation and lack of accountability is created by the false sense of security the government places on firms. The market is ruthless to incompetence/incapability if left to its own devices.

The great failure is the SEC, which offloads the costs of policing public firms from the exchanges themselves to the government. Without the SEC (which is a major consequence of the inflation-industrial complex), the exchanges themselves would be competing for business with other exchanges, leading them to provide the best product available - which is highly transparent firms whereas accurate forecasts and judgements can be made about their business activities.

Quote:
Originally Posted by The Hawaiian
Here is my one issue with capitalism and why I broke away several years ago, it assumes hyper-rationality on the part of people when in reality I've learned that most people are ignorant or downright stupid -- we are the exception, not the rule --. You might say "investors will see the failing policies and not invest in those companies" but thats not what happens at all, especially if the information is not well known (ignornace) by most people. The theory breaks down at this point because it's garbage in, garbage out. To assume that most people are rational is irrational and contradicts our observations.
All capitalism (true capitalism) ensures is that those who cause injustice will be punished.

Quote:
Originally Posted by Pizza
I actually see a silver lining in Obama's pay caps- While we shouldn't be giving money away to bad banks in the first place (how about giving it to the good banks instead, who are being dragged down?), Obama's pay caps ensure that TARP recipients are destroyed beyond recognition, as opposed to being propped up forever.
I couldn't agree more. This policy ensures the tax payers money is poorly invested. Imagine you are a large investor buying a firm, do you want to a CEO coming into a "punished" position or a position of large incentive? It's quite simple really. This is outrageous policy.
 
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And according to this proper, and generally received meaning of the word, a free man, is he, that in those things, which by his strength and wit he is able to do, is not hindered to doe what he has a will to."

- Thomas Hobbes, Leviathan.

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Old 02-04-2009
 
#8
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Originally Posted by Kaizen View Post
1. These men chose to do this. Which says something about their expectations and their tolerance.
Don't you suppose that men would choose to accept similar challenges, even in the face of added regulation? There are many Lee Iacocca's of the world that have gads of money and might be willing or even eager to take the reins of Citibank just to add it to their resume. Much like an actor might perform in a low budget independent film for the prestige of it all. Obviously I'm being somewhat optimistic, but I don't see it to be unthinkable at all.

Quote:
2. They have major vested interests in these companies through equity ownership and retention benefits.
And under this "plan" these CEO's may take the difference in shares of the company, which I suspect would be an even larger incentive. To use the film analogy again, some very capable actors have chosen to take a share of the gross as opposed to a flat salary based on their faith in the project.

Quote:
This situation of a salary "cap" is a forced situation.
I take issue with this. While these companies are most assuredly in dire straits, were the government not available to them as a funding source, they would ultimately collapse or be swallowed by another. It's a bit circular to claim that they have no choice in the matter, yet from a purely capitalistic perspective one could say that they should never accept public funding to begin with. Which brings us back to the same conclusion; collapse.

Quote:
It will simply cause those capable of running the business, who garner very high wages in the marketplace, to simply pass them up for businesses that pay an applicable rate given their capability and productivity.
While in theory this may be very accurate, I believe that the unique nature of this crisis would tend to stand that logic on its ears. We are no longer in an economy that trades CEO's like baseball cards. There is a lock down of sorts and people with the skills to succeed are playing it safe where they can. Besides, who is going to offer a generous compensation package to an executive that tanked their last company?
 
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Old 02-04-2009
 
#9
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Default

Quote:
I couldn't agree more. This policy ensures the tax payers money is poorly invested. Imagine you are a large investor buying a firm, do you want to a CEO coming into a "punished" position or a position of large incentive? It's quite simple really. This is outrageous policy.
I want a CEO who's sole interest is getting the company into a position where they don't need this bailout anymore where they are financially stable, making safe decisions with the money the taxpayers give them and not blowing a large chunk of it on a CEO's salary.

Think about it this way, if a company gets 50 million in the bailout and they pay the CEO 500,000 dollars thats 1% of the total TAXPAYER MONEY that the company receives. If a typical CEO can make multimillion dollars in a major corporation does it not make perfect sense that they should take a cut in a time of crisis? Everyone is taking pay cuts or facing major layoffs. It's pretty two-faced for a CEO to announce layoffs in a firm and then toss himself a salary increase.

What we need right now are not people who are in it for the money but in this to help ease the country (and the world) out of this slump. If they are in it for the money they have the wrong motivation from the get-go. And let's be fair 500,000 and a ton of stock options when they have hit rock bottom is great incentive to improve the company and drive those share prices up. Because let's face it... they only have one way to go or the company goes under.
 
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Old 02-04-2009
 
#10
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Default

I think this might be Obama's best move yet. Some people will claim zomg! fascism! communism! but seriously why the fuck would anyone object to this?
 
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Old 02-04-2009
 
#11
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Default Re: Obama's Pay Cap

anyone who does it for the money isn't talented, if you can get people for that, what you're not looking for is talent
 
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Old 02-04-2009
 
#12
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Default Re: Obama's Pay Cap

Quote:
Originally Posted by Deidara View Post
anyone who does it for the money isn't talented, if you can get people for that, what you're not looking for is talent
Actually your wage has everything to do with your talent.
 
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Old 02-04-2009
 
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Default Re: Obama's Pay Cap

Really? i wouldn't think so
 
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Old 02-04-2009
 
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Default Re: Obama's Pay Cap

A higher wage(in the market) means that some person/company values you enough to give up a larger portion of their money than others to make sure you stay there. Yes there are some other qualities that can contribute to why they value you more, but ultimately it is your effectiveness at your position that will determine your wage
 
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Old 02-05-2009
 
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Default Re: Obama's Pay Cap

talking like this ins't going to get us anywhere, i already said that i didn't think talent was effectiveness
 
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