Do you really think we live in a free market? Seriously. When the government and big corporations import millions of immigrants to do jobs that Americans supposedly wonât do? When the Fed can print money out thin out that benefits the rich? The poorâs cost of living is continuously rising meanwhile their wages are falling. You know Iâm a big Ron Paul supporter, but free market people conviently forget the other side of the story. What happens when the free market gets abused? Credit card companyâs tripling interest rates on people who have perfect payment history. Whatâs the free market solution to health insurance going up 15%? Are people getting raises to make up for this? We now privatize the profits and Socialize the losses. Is this the kind of free market that we want?
Quote from ByLoSellHi:
Just for balance.
If after reading this, you can't either see how the taxpayer needs some sort of protection against corrupt boards' of directors in cahoots with CEOs, than you will never get it.
This is bullshit.
I'm all for keeping government out of the affairs of viable entities, and even broken ones, but when those entities take massive amounts of taxpayer dollars and pull bullshit like this, my blood boils.
http://www.elitetrader.com/vb/showthread.php?s=&threadid=166680
Thursday, June 11, 2009
Bank execs still cash in on the way out
Despite efforts from the government to limit executive compensation, many banks are still paying out huge sums to departing CEOs. Steve Henn reports in collaboration with the investigative newsroom ProPublica.
http://marketplace.publicradio.org/display/web/2009/06/11/pm_tarp_comp/
Kai Ryssdal: Before the administration's big announcement yesterday about its latest idea for executive compensation reform, its third try at it by the way, Congress had already spoken. Laws are already in effect that limit golden parachutes for banks that accept federal aid. But that hasn't stopped a lot of banks from paying huge sums to executives who are on their way out the door. Marketplace's Steve Henn reports now in a collaboration with the investigative newsroom ProPublica.
STEVE HENN: Mac Whittle built the bank, the Southern Financial Group, from the ground up. He founded it in the 80s and then bet heavily on the Florida real-estate market during the boom.
When the bust hit, large shareholders like Jack McMullen saw their stock investments collapse.
JACK McMullen: It went from $25 a share down to a low of I think about 65 cents.
McMullen says he lost more than a million dollars. And by late October it was obvious to him Southern Financial needed government aid to survive. The same day the bank applied for to the Troubled Asset Relief Program it also moved up the retirement date for Whittle, its CEO.
McMullen: They sent him out the door with $17 million.
Investors like McMullen were furious. If Whittle had stayed on after the bank accepted federal aid, his golden parachute would have been considerably smaller.
But despite TARP's ban on lavish severance packages, big payments for departing executives have continued.
Paul Hodgson is at the Corporate Library, a consulting firm that tracks executive compensation.
PAUL Hodgson: Almost as soon as these regulations came out, there were concerns that companies would immediately employ consultants to try and find a way around it.
In February Congress tightened the screws, banning all severance payments for top executives, and yesterday the administration issued new rules. But many banks already found ways around the ban.
Associated Banc Corp, based in the upper Midwest, took half a billion dollars in federal aid last fall. Then this May it paid its chief operating officer, Lisa Binder, $1.6 million to leave. But don't call it a golden parachute. Instead, Binder signed an agreement not to compete against the bank. The Corporate Library's Hodgson calls that cheating.
Hodgson: This is obviously a move on their part to somehow get around semantically the clause in the TARP regulations that prohibits payment for doing nothing.
In Virginia, Hampton Roads Bancshares took more than $80 million in federal aid, then paid it's departing CEO Jack Gibson $1.3 million. The bank's also paying for Gibson's car and his golf club membership.
But this deal wasn't a severance either. According to the bank, it's a three-year consulting contract with a twist. Gibson was paid entirely upfront. And the bank says the Treasury Department signed off on the deal.
JAMES Reda: The consulting agreement is a tried and true way of not calling something a severance.
James Reda is a New York based compensation expert. He says sometimes it's worth it to keep a former-CEO on the payroll but...
Reda: My experience has been that after about six or seven months, he or she runs out of things to do and it kinda becomes a sham at that point.
Starting this week Kenneth Feinberg, a prominent Washington lawyer, will begin serving as the so-called special master for executive compensation for TARP. Gene Sperling is an economist and advisor to Treasury Secretary Tim Geithner. He says Fienberg will have considerable power.
GENE Sperling: He will have the authority to review the compensation plans for the companies who we have described as receiving exceptional assistance.
Companies like AIG and GM. But more than 500 banks that have received TARP money are not going to be supervised by Fienberg.
In the past six months more than half-a-dozen of those banks have paid executives to leave. One bank bought its former CEO's house, others have offered to defer guaranteed payments. And it's unclear if Treasury can or will do anything to get this money back.
In Washington, I'm Steve Henn for Marketplace.