Sunday, March 22, 2009

Obama to Propose Government Oversight of Executive Pay   [Andy McCarthy]

Welcome to the U.S.S.A. 

"The Obama administration will call for increased oversight of executive pay at all banks, Wall Street firms and possibly other companies as part of a sweeping plan to overhaul financial regulation," according to government officials who spoke to the New York Times (emphasis added). The paper's report is here. It elaborates:

The officials said that the administration was still debating the details of its plan, including how broadly it should be applied and how far it could go beyond simple reporting requirements. Depending on the outcome of the discussions, the administration could seek to put the changes into effect through regulations rather than through legislation.

One proposal could impose greater requirements on company boards to tie executive compensation more closely to corporate performance and to take other steps to ensure that compensation was aligned with the financial interest of the company.

Is there any evidence, since the government began nationalizing swaths of the economy last autumn, that Washington has a clue about what causes positive corporate performance or about what is in the financial interest of a business enterprise? Yet the more value the Obama administration and the Democrat Congress destroy — their demagoguery and fiscally insane policies eviscerating the very tax base needed to pay for their exploding liabilities — the more control they get.

In addition, and among other things, the Obama plan, in order "to protect consumers ... will call for federal standards for mortgage lenders beyond what the Federal Reserve adopted last year, as well as more aggressive enforcement of the mortgage rules." There appears to be not the slightest reflection, in the plan or the Times story, that federal standards for mortgage lenders, and the aggressive enforcement thereof, are what caused the meltdown in the first place.

And here's the best part: As the Wall Street Journal reported on Saturday, Treasury Secretary Geithner is going to try to turn the page tomorrow from his various misleading statements on the AIG bonuses by unveiling, at long last, his strategy for ridding the financial system of the so-called toxic assets responsible for seizing up the credit markets. Let's ignore for the moment that, at least based on the initial reports, the government still has not solved the problem of how these assets should be valued before yet another trillion or more taxpayer dollars are put at risk. To have the slightest prayer of succeeding, Geithner's program will require the close cooperation of private enterprise. But based on the last two months, what private business in its right mind would trust this government or willingly collaborate with it? Even now, relatively healthy financial institutions that took the TARP money are desperate to return it and get out from under Big Brother's thumb.

03/22 09:26 AMShare