The Federal pay czar announced that executives in companies that took bailout funds from the Troubled Asset Recovery Program should not receive the bonuses that were announced recently. And there are rumblings about extending government reach into the executive compensation at all publicly traded companies. That would be just fine with Harry Smith at CBS’s “Early Show.”
On Oct. 22, Smith interviewed Elizabeth Warren, the chairperson of the Congressional Oversight Panel – basically the government-mandated babysitter of companies that were bailed out by TARP funds.
“Guys, you can’t party on like it’s 2007,” said
And she believes the government will need to do whatever it takes to instill in them a change of heart:
You really begin to wonder what it's going to take to get the attention of the people in charge of these very large corporations. They have taken taxpayer money. Unemployment is now running at almost 10 percent. Millions of families are facing foreclosure on their homes. And yet the executives want to say I take your money when I make mistakes and I still want to compensate myself richly because I'm the one who's in charge of this big company. Being in charge also means being responsible. And I think what that really means is, you take the pain when you've had to turn to the taxpayer and asked them for their money for support.
Of course neither she nor the “Early Show’s” Harry Smith mentioned that these companies often hand out high-end bonuses because they’re legally bound to do so – it’s in their contract. Or that, since these companies are now operating with taxpayer funds, there’s a good argument to be made for attracting and paying the best executive talent to steward that money. But when there are greedy Wall Street types to berate, why engage rational arguments.
In fact, Smith cited Sen. Chuck Schumer, D-NY, and others who believe the government should expand its authority to limit compensation beyond just TARP recipients. “If we can do this with people that we bailed out,” he said, “why wouldn't we make these suggestions or make this law across the board and put a governor on compensation for everybody in private enterprise?”
Governed compensation and private enterprise in the same sentence seems to be a bit of an oxymoron, doesn’t it? But Elizabeth Warren didn’t rule it out.
“It reminds us that there is a compensation problem in American industry,” she replied, and suggested government needed to change laws that deal with how private enterprise pays its executives.