var json_comments = new Array("
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henrygates
October 19, 2009 3:58 PM
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I say we make him pay the bailout money back by doing community service.

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3 replies
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swintronix
October 19, 2009 7:35 PM
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@henrygates: good thing the bailout money is a loan, and BAC is paying interest on it until the govt allows them to pay it back.

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Coelacanth
October 19, 2009 4:04 PM
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@henrygates: He'd never be able to pay back the government, at minimum wage!

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H3ion
October 19, 2009 3:58 PM
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When your severance/retirement package exceeds $50 million, a couple of million is pocket change. It's nice PR but as a hit in the pocketbook it's negligible.

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4 replies
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bravo369
October 20, 2009 2:34 AM
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@H3ion: Everyone deserves to be paid however what bugs me, especially with these new bank and credit card reforms is the companies saying they need to institute new fees to maintain the level of profits they were earning in the past. If they stopped giving their ceo's and other executives 50 million dollars then they will maintain those profits.

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rushevents
October 19, 2009 7:45 PM
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@H3ion: Isn't ANYBODY out there a bit worried that the government can mandate who does and does not get paid just because of a government loan?

That would be like them saying since you only got a \"C\" average at college on your government-backed student loan that you have to take a job as a low level clerk no matter what else you might be able to do.

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H3ion
October 19, 2009 7:58 PM
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@rushevents: Actually, it bothers me less than I thought it might. When I had a scholarship, there were clear conditions. I had to maintain a certain GPA; I had to take so many credits a semester. My choice was pretty clear. Take the scholarship and abide by the conditions or don't take the scholarship, fund everything myself, and have more freedom. That's really the same thing here. If you want the federal (or NGO or foundation) money, there are strings attached. If you don't want the strings, don't take the money. Seems pretty fair.

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DollaValueLIFO
October 19, 2009 7:54 PM
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@rushevents: I don't know your e-mail address, so here's a handy link:


[lmgtfy.com]

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ThyGuy
October 19, 2009 3:59 PM
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Excellent. They want a bonus? Earn it.

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bloggerX
October 19, 2009 4:02 PM
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Yeah! That's how it's done!

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ncboxer
October 19, 2009 4:03 PM
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I know his retirement is obscene, but how can the gov't take back money he has already earned this year? No matter how badly he earned it.... To me it sounds dangerous that the gov't is allowed to do this.

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ARP
October 19, 2009 6:43 PM
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@ncboxer: Possibly, but I think they're asking him to forfeit his bonus. If he wants to exercise his contractual rights and keep it, he's free to do so. But good luck being on the board or an officier of any public company in the future.

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ludwigk
October 19, 2009 5:28 PM
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@ncboxer: The operative theory would be that Lewis did NOT in fact \"earn\" his salary, due to the horrible performance of the company over the past year.

If you assume that he did earn it, then this would certainly seem troubling.

Is the government over-stepping its bounds? Given that all this economic turmoil + bailout + pay czar stuff is really new, and possibly unprecedented, that could be a difficult matter to determine, but I do think it's important to keep asking that question, since it may not be immediately clear if, and or when, an over-step has taken place.

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Amish Undercover
October 19, 2009 4:25 PM
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@ncboxer: I think the argument is that the government saved the company, e.g. Bank of America would have gone bankrupt and been unable to pay him if it wasn't for the government, and this arguably justifies re-evaluating bonuses for the folks who would have sunk the company (and not gotten their bonuses in bankruptcy) if it were not for the bailout.

If the government starts doing this with companies it didn't save from bankruptcy, then I will become very concerned.

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Falcon5768
October 19, 2009 4:21 PM
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@ncboxer: Technically the government PAID his salary this year.

They are one of the largest shareholders of BoA thanks to the bailout, and have full rights to withhold his salary for fucking up.

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humphrmi
October 19, 2009 6:17 PM
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@Falcon5768: Actually, technically the US government owns preferred stock, which pays larger dividends and is non-voting.

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treimel
October 19, 2009 5:11 PM
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@Falcon5768:
No, they don't. The man has a contract, and nobody, including the government, has the right to unilaterally change his agreed compensation. That's why they had to \"push\" him to give it back--they hadn't (at present) the authority to do it if push came to shove.

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Trai_Dep
October 19, 2009 6:54 PM
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@treimel: Re: sanctity of contracts.
So all those airline workers whose pensions were raided, and the UAW workers who were crucified. Same thing?
Or is sanctity only for those few that destroyed the global economy and stole trillions in 401K contributions from us all?

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treimel
October 19, 2009 7:57 PM
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@Trai_Dep:


Are you *seriously* going to talk about UAW members as folks who have done poorly vis a vis employment contracts? Really? As to the airline workers--no, I tend to agree there. \"Destroyed the global economy.\" Now, that might be a *bit* of an exaggeration. Weimar Germany, Bolivia in the 70s, Somalia--these are failed economies. The US? not so much.

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DollaValueLIFO
October 19, 2009 8:19 PM
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@treimel: In comparison, the UAW has done *seriously* worse than failed executives like Carly Fiorina, Ken Lewis, etc.


And stop with the \"contracts\" and \"rule of law\" defense. BoA was at the Fed, lubed up, and bent over in that pretty red, white, and blue number that Hank Paulson requested. If you want Billions (that's with a B, for those keeping score) in funds to remain solvent, you forfeit any real defense of any \"bonus\".

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smonkey
October 20, 2009 6:18 PM
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@DollaValueLIFO: um actualy no. BoA was stable and Paulson said we need you to take over a few of the failing banks...We'll give you the money to do it.

Paulson also stated it was not negotiable.

there was an wonderful frontline documentary about it.

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treimel
October 20, 2009 1:12 PM
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@DollaValueLIFO:


Comparing UAW members to executives? Yeah, that's an apples to apples comparison. Also, it's a real contract--the scare quotes are absurd.

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ncboxer
October 19, 2009 5:06 PM
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@Falcon5768: I work for a company that has shareholders- should they be allowed to retroactively take my salary? Sure they might have authority to fire me (even though I am just a peon and am invisible to them), but I can't see how they have authority whether they are private or the gov't has a stake in them to take something that I have earned already.

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Falcon5768
October 19, 2009 5:12 PM
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@ncboxer: Well technically he never earned it. This is his 2009 salary of which 2009 isnt even over. And i am sure his contract has a clause in regards to underperformance that stipulated he doesn't get paid a cent, otherwise I would LOVE to be hired by those contract writers.

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treimel
October 19, 2009 6:21 PM
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@Falcon5768:
The claim that his basic salary would be performance-based in his contract shows you are unfamiliar with executive compensation, and financial executive compensation in particular.

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treimel
October 19, 2009 4:11 PM
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@ncboxer:
Shhhh .... the populists are busy crowing--don't spoil it for them.

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wrjohnston91283
October 19, 2009 4:03 PM
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What authority does the government have to dictate what companies pay their employees? The article talks about how Lewis was talked into giving back the $1 million and forgoing the rest, but requires subsciption to read more.


I understand that these companies accepted tax dollars as loans. However, bondholders usually do not have voting power, that's a right that is reserved for equity holders, in return for being taking the greatest risk.

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ARP
October 19, 2009 6:46 PM
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@wrjohnston91283: Legally, they probably don't have the authority. Of course if the CEO wants to work on the board or as an officier of any other SEC regulated company, he'd be wise to give up the money.

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wrjohnston91283
October 19, 2009 7:26 PM
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@ARP:


That's what I was figuring - this is simply a face saving move by an exiting CEO hoping to find a job somewhere else and doesn't want to blow up his bridges.


All the headlines I've seen state something along the lines of \"Pay Czar FORCES CEO to return money\"

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tailstoo
October 19, 2009 5:18 PM
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@wrjohnston91283: There really should be no BoA right now - would be out of business.

While I don't like the government stepping in, in this case, the usual free market mechanisms are broken.

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smiling1809
October 19, 2009 5:03 PM
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@wrjohnston91283: B/c if they didn't get government money, they would be out of business, and the government has a right to say that their money will not go towards that.

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whateverthisis
October 19, 2009 5:07 PM
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@smiling1809: Actually, no, the gov't does not have that right. They have a shareholder vote, but not some unilateral right to manage the operations of the company. If the gov't installs their own puppet CEO, *then* they have the right.

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Falcon5768
October 19, 2009 5:14 PM
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@whateverthisis: They have a 51% controlling interest in the company, meaning they for all purposes ARE the shareholders. It would be impossible for the other shareholders to out vote the government.

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whateverthisis
October 19, 2009 5:36 PM
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@Falcon5768: moot anyway, as, to repeat orielbean above, the gov't has preferred shares, so they just collect div payments... no voting rights...

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1863650
October 19, 2009 5:59 PM
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@whateverthisis: BoA was on the rocks and its savior on gossamer wings glided down and offered to float it by buying a new, special issue of its worthless stock. Even if it wasn't explicitly laid out in the terms of the bailout, it would be EXTREMELY foolish to not comply with a perfectly reasonable request from said savior. Outgoing CEO Lewis obviously sees it that way, as he agreed to forgo pay and return what he'd already received.

He's not stupid. By tossing the Czar a bone, the Czar looks good and triumphant since he wrested a few million from a greedy, evil CEO. The Czar is now less likely to go after Lewis' generous retirement package in the future, which is worth many millions more.

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ChickenMcTest
October 19, 2009 4:16 PM
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@wrjohnston91283: The federal government is one of the largest equity holders in BofA. Part of the bail out deal was the Treasury purchased billions of dollars with of preferred stock.

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orielbean
October 19, 2009 5:11 PM
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@ChickenMcTest: you own preferred stock, which means you are sooner in line to get dividend payments, but you forego voting rights. Not the same as shares w/ voting rights.

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whateverthisis
October 19, 2009 5:01 PM
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@ChickenMcTest: To change his pay, the shareholders (read: gov't) needs the board of directors (red: gov't) to modify pay terms. I have not seen this yet. Anything else is just meddling by \"czars\" (read: checks-and-balances workaround) and should be ignored by company executives.

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TCama
October 19, 2009 6:15 PM
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@whateverthisis: Uhh, RTFM. Kenneth Feinberg didn't force Kenneth Lewis to give up his pay. Feinberg has no power over him, as you keep reminding people in comment after comment after comment.

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Saboth
October 19, 2009 4:04 PM
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I'm sure a few people will jump in with \"it's scary that the government can influence pay like this\" or cry out \"socialism\". IMO, if you are in some of these companies that are \"too big to fail\", or in companies that can ruin/upset the entire financial stability of our country or the world, yes...you need more checks and balances than simple capitalism or \"trickle down\" economics. The recent meltdown shows a complete free reign of capitalism doesn't work. Or rather, it should have worked, but we had the bailout. There simply needs to be more government interference in our investing/banking market. They've shown they can't regulate themselves.

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bohemian
October 19, 2009 5:10 PM
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@Saboth: They were left on their own and almost completely destroyed our economy. They way it looks now it may take a good decade for average people to see meaningful recovery. They screwed up that bad and asked the government to intervene aka: fix their screw up.

We had every right to put a stop to these stupid bonus and pay schemes. We should have been monitoring and heavily regulating all of this from way back. The free market conservatives got their way and their little experiment almost collapsed our economy. We need to regulate the heck out of the banks so this doesn't happen again. Someone's desire to get insanely rich and dump the consequences on the rest of the country doesn't get to trump the nations well being.

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steveliv
October 19, 2009 4:24 PM
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@Saboth: i'm sure you 'll be singing a different tune, when a pay czar tells you that you're making too much for what you do...

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Saboth
October 19, 2009 5:02 PM
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@steveliv:

If the pay czar saw how much I worked and how much I make, compared to what the owners of the company make, I'd probably get a 50% pay increase!

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halcyondays
October 19, 2009 4:09 PM
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@Saboth: As someone who studies regulation for a living, I can tell you Regulation never works in the long run. Markets do.

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Saboth
October 19, 2009 5:04 PM
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@halcyondays:

Also, we already regulate many industries for the sake of our country's well being. EPA? They kind of prevent (or try to) companies from dumping whatever they want into the air and rivers just to turn a profit. I believe people are beginning to see that Wallstreet can produce quite a bit of \"pollution\" that can also affect the lives/health/wellbeing of everyday americans (like when your 401k is now worth 50% less than it was a few years ago).

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Falcon5768
October 19, 2009 4:23 PM
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@halcyondays: Funny but regulation was working GREAT till the markets where deregulated. Then you got the likes of ENRON, the California energy crisis, the savings and loan scandal, the housing crisis...

So as someone who \"studies\" regulation, you obviously where a very poor student.

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ChickenMcTest
October 19, 2009 4:23 PM
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@halcyondays: So what is it called when the market is selling mortgages to people who can not possibly repay them?

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AthronofEryndor
October 19, 2009 4:18 PM
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@halcyondays: Maybe you're right, maybe you're wrong. But America is hardly a free market, so we can't really look at its successes and failures and claim definitively one way or the other.

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SkokieGuy
October 19, 2009 4:14 PM
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@halcyondays: So the free market works when compensation has no ties to profitability?


When the board of directors that sets the executive compensation is basically an interconnected old boy's network?


When the \"market\" includes suspension of anti-monopoly laws, enabling the corporations to grow too big to fail?


When the profits are privatized and the losses socialized?


I'm sorry, there is NO free market at play here.

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pecan 3.14159265
October 19, 2009 4:09 PM
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Can there be an exception to Godwin's law if we start making Soup/Pay Nazi jokes? I mean, it's right there, ripe for the picking. I'm going to claim entrapment if Godwin's law comes back to haunt anyone who makes a Pay/Soup Nazi joke.


IMO, this is a good thing. He has no business making billions when his company is foundering and his employees are losing their jobs or facing pay cuts. It's being paid for doing something poorly or for not working at all. I'm glad he won't be getting any pay or bonuses.

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5 replies
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nbs2
October 19, 2009 4:16 PM
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@pecan 3.14159265: If you do a bad job at work, do you have to give back your salary?

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NightSteel
October 19, 2009 5:28 PM
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@nbs2:

More that I didn't think of earlier: Nor do I already have millions to hire the best/most sleazy lawyers to get me off the hook. Nor will my company, with *its* millions, circle *its* legal wagons to stonewall any action against me.

If *I* screw up, it's my ass. I lose my job, then probably my home and everything else, since there's no way I'll get a job in this economy having been fired for cause. If I have a family, then my family feels the hurt, too.

But when the Ken Lewis' of the world screw up, it's the world that feels the hurt while they laugh all the way back to their mansions. Millions of people feel the pain, through layoffs, collapsing retirement plans, defaulting mortgages, dwindling investments, the list goes on and on. Contracts be damned. It's not right. The people at the top *should* bear responsibility. That's what the millions they get paid are supposed to be *for*.

You can't tell me that they have to be treated the same way as everybody else in one way and not in the rest. There is *already* one law for them and one for the rest of us.

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nbs2
October 19, 2009 7:09 PM
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@NightSteel: This is a question that I'm sure has been asked and answered a thousand times over, but how did they get so large? It certainly may have had to do with the Monster Bank propensity to eat little banks, but with 99 shutters and counting in 2009, clearly there wasn't a shortage of banks available 3-5 years ago.


Yes, the those banks should never have been allowed to get so large, and they should have been prevented from doing so by a combination of government and market. But, both sides of the equation failed. People kept going to BoA, and the government let them. Credit Unions have been working to gain business longer than this recession, small banks have been fighting for years, and yet people without national needs kept going to the Monsters.


I don't like the contracts that many executives had, but the question is how should we regulate them? Perhaps it would be better to give shareholders more power. With my shares of GE, I get to vote on the Board that determines compensation. Maybe we should require that retirement plans and other institutional investors to distribute voting rights to the lowest level shareholder. That means that if I own .000023 shares of QWE because my 401k has 100000 shares, I get .000023 votes on the board. The more that individual holders have control, the better the economy could do. As for the established contracts, press the reset button. I was all for ignoring UAW contracts, and I'm all for ignoring Lewis's contracts - but in both cases, I want to see institutional restructuring through the bankruptcy process before that happens. If that mean BoA has to sell off assets, leaving several smaller entities behind while the shell is blown up, so be it.


Anyway, sorry for the rant. I understand the point you are making - that when companies get so large that they have global effects, they need greater regulation. But, as long as the company is operating in an effective manner, I don't care what they do behind the scenes. Look at WM. If they collapse, the world economy will implode (Chinese economy crashes, they call their debts, US economy crashes harder, and the dominos are destroyed). But, as long as they manage themselves well, I don't care if the board decides that the Waltons get paid 1 trillion a year.

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bohemian
October 19, 2009 5:13 PM
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@nbs2: I have seen people forced to \"pay back\" certain things out of their last check by an employer. Broken equipment, outstanding balances on employee purchases that had a quit clause in them. Quit clauses usually worked where if the employee left or was fired before a certain date they had to pay the difference between the discounted price for an employee purchase and the retail price plus any remaining unpaid balance.

Gateway was kind enough to do this to employees they laid off.

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nbs2
October 19, 2009 6:55 PM
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@bohemian: A shining star for all to follow.


While I understand the pay-back requirements if the company lets you go for cause or if the employee quits, I don't understand why any company would be allowed to collect from employees that are laid off or otherwise lose their jobs without cause.

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Ragman
October 19, 2009 5:46 PM
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@bohemian: I had an employer that took my last check and applied it to an employee purchase that I was paying for through paycheck withdrawal. I understood that the full balance came due if I left, and that it would be taken from my last check. However, my last check didn't cover the whole amount. They couldn't be bothered with contacting me and telling me where to send the remaining balance. Apparently, it was easier to send me to a collections agency instead.

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ChemicallyInert
October 19, 2009 4:50 PM
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@nbs2:

You do if you agreed that your employment was performance-based. You get what you sign on the dotted line for, as BofA did when they accepted all that stinky taxpayer cash. No one held a gun to their head to make them take that money, or to force the CEO to take/keep the job.

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NightSteel
October 19, 2009 4:33 PM
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@nbs2:

No, but the economy won't collapse and the government won't feel the need to step in and bail out my company lest it disintegrate if *I* do a bad job at work. Nor do I get millions in retirement and severance pay if I get let go or quit under dubious circumstances.

The mantra of today's megacorp CEO: With great power comes no responsibility.

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bohemian
October 19, 2009 5:16 PM
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@NightSteel: This is why any company with a large monopoly or one of a few providing a critical product or service should be heavily regulated.

No company should become so large that they can risk the entire countries economy. They also should not hold such a monopoly or position of power they can raise prices and be more or less holding the country hostage in that way.

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RecordStoreToughGuy_starcommandseries.com
October 19, 2009 4:15 PM
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In a situation like this, I always wonder \"What would Jack Donaghy do?\"

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cmdrsass
October 19, 2009 4:20 PM
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Wait, how many czars do we have now?

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ARP
October 19, 2009 6:48 PM
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@cmdrsass: Fewer than Bush had. Sorry, despite what Beck says, there have been numerous czars from Reagan onward.

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cmdrsass
October 19, 2009 7:36 PM
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@ARP: I don't see what Bush or Beck or Reagan has to do with my question. It seems every special appointment gets the label czar these days, so I am curious ho w often it's being applied at to whom. Off topic as it is.

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DollaValueLIFO
October 19, 2009 8:26 PM
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@cmdrsass: You do realize that \"Czar\" is a post-mortum title being given by the media, meaning that the title is \"Special Assistant to the Undersecretary of Health and Human Services\", which is then reduced in the press as \"Abortion Czar\".


But, again, these \"Czar\" positions are remnants from the days of Reagan and Bush I, who distrusted GS employee's to actually undertake the mission of their Presidentially-appointed (and Congressionally confirmed) Secretaries. Small Gub'ment FTW!

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b4k4
October 19, 2009 4:31 PM
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@cmdrsass: Technically his official title is \"Special Master for Compensation\"

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Applekid
October 19, 2009 4:21 PM
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Well, he did work in 2009. He deserves pay, IMHO. Not a million dollars, though. How about the same salary they pay to their lowest paid employees? Seems like a more equitable punishment for poor performance AND strikes home the sad fact that the hard workers that actually make the business run are the most punished for the mismanagement.

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anthonyhasp
October 19, 2009 5:50 PM
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@Applekid: The majority of pay (bonuses, stock options, and restricted stock) are tied to company performance. The salary is only a small part of the total compensation of the CEO. The salary is a guaranteed fixed amount, while the rest of it (the majority of his pay) will be worthless if the company goes bankrupt. These executives have already taken big hits on their pay through their incentive compensation.

The government regulates the pay of the lower end workers (minimum wage) and the upper end workers. Who do you think that they are coming after next?

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ARP
October 19, 2009 6:55 PM
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@anthonyhasp: Funny, you think having a minimum wage is an example of the government coming to get you? Please cite to me where the government has regulated the \"middle\" of any company (bailout or non-bailout).


If you notice, those companies that are not recipients of TARP/Bailout money don't have this sort of scrutiny. So, the message is: don't fuck up the entire economy and let the government bail you out, and you won't have to worry about it.


Finally, corporations exist at the pleasure of the government (federal, state). There's nothing in the constitution that says we have to treat them like people. So technically, the SEC could pass a rule tomorrow that says that allows SEC regulated companies (allowed under commerce clause) can't have more than a 10X differential between the lowest paid worker and the highest paid worker.

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anthonyhasp
October 19, 2009 9:30 PM
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@ARP:

Union contracts are based on the \"prevailing wage\" which is impacted by the minimum wage. So, when the federal minimum wage is increased, Congress is also regulating the \"middle of the company\".

In several cases, these banks were required to take the bailout money and are not being allowed to repay it.

[online.wsj.com]

[www.businessinsider.com]

[online.wsj.com]

[money.cnn.com]

While, \"corporations exist at the pleasure of the government\" they can choose to take their ball and play elsewhere. After the passage of Sarbanes-Oxley many foreign firms chose to no longer be cross-listed on the US exchanges because the additional cost and regulation. If the US Government comes down too hard on companies, then they will just move their operations offshore and trade in difference markets.

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DollaValueLIFO
October 19, 2009 6:30 PM
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@anthonyhasp: \"Coming after\"? Seriously, the paranoia demonstrated in recent debates over health care and executive compensation is a bit much.


Just remember a few things: The government isn't \"coming after\" the incomes of any one group. In case you don't understand how it works, Federal employee's get paid at a variety of rates, just like the rest of us.


And also, \"compensation\" is a loosely defined term. It is a lot of things, like housing, vacations, travel budgets, stock options, season tickets, and yes, cash. That an individual would stand to receive in excess of $50 million dollars when all he did was run the company into the ground doesn't speak of fiscal sanity at the top of BoA, does it?

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ExtraCelestial
October 19, 2009 4:32 PM
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@Applekid: I don't have a problem with them voiding any future payments, but essentially billing someone for backsalary is kind of shiesty.

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woolygator
October 19, 2009 4:41 PM
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What are you guys talking about. We haven't had Free Capitalism since the 1920-1921 recession.

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jsbeagle
October 19, 2009 4:44 PM
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Since the government was telling them to make loans to people who were not likely to afford them, its hard to place all the blame on the banks.

Note the 1999 date on this article:
[www.nytimes.com]

Heres a good quote:
\"Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people\"

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e065702
October 20, 2009 7:18 AM
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Re:jsbeagle @jsbeagle: Ahhh, the last bastion of the pro-deregulators . . blame Clinton.
FYI, commercial banks had long since lowered the standards for loans to low and moderate income people. Fannie Mae was only adjusting their business model (if you can call it that) to compete with what was already happening in the Private Sector. In addition there has been no comprehensive analysis suggesting that low and moderate income borrowers were (or are) failing at a higher rate than others.
So . . . I do put all the blame on the banks. They had a responsbility to the borrowers and their stockholders to behave in a responsible manner (regarding home loans) and they did not. Then when the SDO's went south, despite the so-called mathematical models, the bankers went to the U.S. taxpayer for a bail-out and continued paying themselves exorbitant salaries and bonuses. That is the whole story, nothing more, nothing less.

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MentallyRetired
October 19, 2009 6:02 PM
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@jsbeagle: Luckily we had calmer free market capitalist ideas prevail in the form of Republican Representative Patrick Tiberi's Zero Downpayment Act of 2004.

[www.boston.com]
President Bush's weekend campaign promise that he will push legislation allowing for no money down on some federally insured mortgages could cost taxpayers as much as $500 million over four years because of a higher rate of defaults, according to the Congressional Budget Office.

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DollaValueLIFO
October 19, 2009 6:25 PM
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@MentallyRetired:


Aw, now don't start telling the truth to these people, you'll ruin their Randian fantasies.

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DollaValueLIFO
October 19, 2009 7:45 PM
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@Duke_Newcombe (now with 50% more feigned interest): If only the mods at Jezebel felt the same way.


/dick joke.

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henneko
October 19, 2009 10:22 PM
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@DollaValueLIFO: Eh, there's more than enough blame to go around. Too bad so many people are incapable of accepting that, requiring some scapegoat to flog. What neither of you noted was that Bush halted enforcement of the CRA (essentially undoing the Clinton-era changes along with his own \"Blueprint for the American Dream\")

Obviously, as soon as the government stopped forcing banks to make stupid loans, the banks immediately continued to make stupid loans because their computers were telling them they were going to get so rich off of these interest-only alt-a subprime ninja loans.

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whateverthisis
October 19, 2009 5:05 PM
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@jsbeagle: Aw, now don't start telling the truth to these people, you'll ruin their socialist fantasies.

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ChemicallyInert
October 19, 2009 4:46 PM
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To claim that this is somehow a violation of free market principles, and that a lack of said principles is what precipitated the crisis is utter lunacy, and disingenuous in the extreme. Since markets are never free, free market proponents can always claim that their principle can never be validated- which is frankly ridiculous. It seems free marketeers (the fact that this rhymes with Three Musketeers is coincidental, but not lost on me) seem to believe that the principles of laissez-faire economics can only be demonstrated in the binary. If you ask them to show their work and demonstrate that markets that are more free are better in the long run, they huff about how no market is completely free.

There is no sliding scale where more market freedom equals a healthier economy, as far as this argument is concerned, all market failures are due to regulation. Meanwhile since no true modern free market exists, this is not an assertion that can be backed with any evidence, but is merely accepted on faith. Upon this faith in unattainable free markets, we build numerous assertions that cannot be validated scientifically because our basic presumptions have yet to be tested. Instead they exist as mathematical models where the logic is internally sound, but fails to fit into the externalities that are cast-aside as not being central to the beauty of the model. This is precisely what Marx was describing when he talked about reification. (Yes, I just cited Marx, believe it or not, people do it every day and just don't realize it. This includes economists and business-folk.)

TL;DR: Human behavior is too messy for free markets to work in stable way.

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sir_pantsalot
October 19, 2009 4:53 PM
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Then the government should also go after union employees of GM who have been over compensated for what they have done leading to the downfall of the company. It would only be fair to go into past years and require those employees to pay back wages that they didn't really earn but they got paid because they had a contract saying they should get paid.

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bmorg003
October 20, 2009 2:33 PM
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@sir_pantsalot:(sarcasm) Oh god yes, thank goodness somebody finally said it. Would someone please put their foot down about all of these horrible \"union\" employees who have these big bonuses and high salaries and still have their nice jobs after receiving Billions (with a \"B\") in tax-payer bailouts. These people are living it up on our dime with their fancy washrooms and personal drivers and perks while the rest of us suffer. Thank you for standing up and calling attention to these people.(/sarcasm)

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DollaValueLIFO
October 19, 2009 5:50 PM
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@sir_pantsalot: Except that UAW employee's aren't judged based on EPS or the P/L. Face facts, you can't claim a line-worker didn't do his/her job if they made the cars management told them to make.


Also, BoA is a very, very specific case. The fact that Ken Lewis even thought about accepting any form of compensation speaks to his lack of grounding in reality.

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Falcon5768
October 19, 2009 5:21 PM
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@sir_pantsalot: Stop watching republican nonsense. The Unions have absolutely had NOTHING to do with the fact that GMs management has been terrible, that GM HAS too many managers, that GMs designers sucked at producing good cars, and that GM for years had ignored the warning signs of their companies troubles.

It has been pointed out time and again that if GM had not deferred their union obligations for pay back in the 90's instead of handing bonuses to managers, or had they just let go of 5-10% of their management, they could have plenty of money to avoid a bailout.

But then its a lot easier for republicans to get morons like you who dont know any better to rally against your own people and support 6 figure wage earners, than to tell their own kind they fucked things up.

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whateverthisis
October 19, 2009 5:38 PM
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@Falcon5768: wow... so I guess all those union dues you have been paying off every paycheck didn't help much in the end eh? Oh well... I am sure your union leader still has his mansion though...

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Falcon5768
October 19, 2009 9:55 PM
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@whateverthisis: How about I have half a brain and can look up facts and not make shit up because im a conservative fascist who thinks Obamas not American and the the public option is code for kill your grandma.

Go burn your cross and sieg hail somewhere else numbnuts.

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tailstoo
October 19, 2009 5:20 PM
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@sir_pantsalot: Tens of thousands of them did lose their jobs. I don't of many bank CEOs that were downsized.

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bohemian
October 19, 2009 5:19 PM
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@sir_pantsalot: If you were talking executive level people I would agree. The powers that be at GM torpedoed their company through bad decisions. The average worker is the only person who is unionized. They are the footsoldiers of a company following orders, not the ones who screwed up the company through short sighted business plans.

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veg-o-matic
October 19, 2009 5:32 PM
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@halcyondays: Exactly which \"long run\" are you talking about?
And how do you define \"works\"...?

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sir_pantsalot
October 19, 2009 6:04 PM
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The Obama administration wants to take credit for \"saving\" jobs because there is no way to measure that metric. Since no jobs were being created they can say they saved jobs instead.

How do we know that Ken Lewis didn't \"save\" BoA from complete destruction in his short time he was the CEO. Maybe BoA would have been in a far worse condition if it had not been for Ken Lewis.

-I am not trying to defend Ken Lewis but pointing out the hypocrisy. Everything is great while the government is attacking someone else but when it is your turn then you will be screaming the loudest.

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bmorg003
October 20, 2009 2:22 PM
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@sir_pantsalot: Everything is great while the government is attacking someone else but when it is your turn then you will be screaming the loudest.

I'm sorry, but haven't you been paying attention? Who do you think is paying for the wall street bail outs? We are! We are in effect paying for Mr. Lewis' salary and bonuses while he contributed to running his company into the ground (and almost taking the entire economy with it). What do you suggest we do, give him a medal or a prize?

All this talk of the sanctity of contracts is bull (and if you think we live in a free country with rights that's bull too - go ask George Carlin). If you (shareholder) hand over the keys to your car (company) to the valet (executive) and he promptly slams his foot on the gas and runs your car into a wall, are you obligated to tip him? This is ridiculous, and it's about time that the people on wall street learned what we all learned growing up; there are consequences to your actions (it's called character).

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Duke_Newcombe sez íViva la Revolucion de Chihuahua!
October 19, 2009 7:17 PM
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@sir_pantsalot: Everything is great while the government is attacking someone else but when it is your turn then you will be screaming the loudest.

You've been paying attention from 2000-2008, right? That ship sailed, sir.

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DollaValueLIFO
October 19, 2009 7:48 PM
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@Duke_Newcombe (now with 50% more feigned interest): Yeah, not to mention the fact that by all obvious measures, Ken Lewis was as big a failure as the New Coke.


Christ, the company he was in charge of had to BEG THE GOVERNMENT FOR MONEY.


More importantly, it isn't like Mr. Lewis is being tarred and feathered here. He stepped down from his jobe of his own valition, and is still worth a pile of money.

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TCama
October 19, 2009 6:18 PM
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The government didn't force Lewis to do this. Feinberg just asked him to. He didn't have to give it up. Feinberg doesn't have to power to force him to give anything up.

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umbriago
October 19, 2009 6:30 PM
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Damn, the \"soup Nazi\" seems dated. What was that, fifteen years ago?

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ARP
October 19, 2009 6:31 PM
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@steveliv: Isn't there a Beck, Limbaugh, or Hannity show you can be watching? Please cite an example of the government regulating the salary of average workers (i.e. not C-level) at a non-TARP/bailout company. I'll wait.


There is no slippery slope here. These banks took billions of taxpayers dollars because they messed up the entire economy. Granted, some were \"forced\" to take the money, not because they didn't need it, but because they would rather go bankrupt and bring down the entire banking industry rather than cap their pay for doing a crappy job. So, unless Saboth is a CEO of a major industry corporation that took bailout money, nobody will be knocking on his door anytime soon.

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treimel
October 19, 2009 6:46 PM
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@ARP:


Wage controls were last implemented in the '70s.
[www.pbs.org]


Everyone here is so young.

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DollaValueLIFO
October 19, 2009 8:32 PM
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@treimel: Do you have comprehension issues? Price/Wage Controls were implemented under Nixon in order to slow/stop inflation and increase employment, not punish people for making too much money.

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treimel
October 20, 2009 1:08 PM
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@DollaValueLIFO:
I'm afraid it is you that has the comprehension issue--the contention was made that the US does not engage in wage controls; I corrected that misapprehension. I did not claim that it was for the same purpose as now, or implemented in the same way.
When you resort to insults, try to be right.

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treimel
October 20, 2009 1:09 PM
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@treimel:
Oh--and it failed spectacularly for Nixon, as wage/price controls always do, by the way.

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Colonel Jack O'Neill
October 19, 2009 6:58 PM
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Why do you link to the WSJ?

Not everyone has a subscription to it, I don't, so I can't read the whole story because of that.

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pecan 3.14159265
October 19, 2009 7:25 PM
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@Colonel Jack O'Neill: They just linked to a weird, parallel universe version of the article. It's not supposed to be a subscription article, but for some reason in that link, it trunctates.


Here's the article, no subscription: [online.wsj.com]

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Eoghann
October 20, 2009 12:20 PM
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@pecan 3.14159265: @pecan 3.14159265:

Here's the article, no subscription: [online.wsj.com]

How about this one instead, let google pay for the subscription: [online.wsj.com]

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wvFrugan
October 19, 2009 7:44 PM
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Even gutting that asshole like a fish in public & then grinding him up for chum wouldn't satisfy me, but then again most would consider me a weinie wagging socialist.

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Oranges w/ Cheese hates what Christmas has become
October 19, 2009 8:40 PM
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@wvFrugan: *chants ala school yard* weenie wagging socialist weenie wagging socialist!

Lets get a line up of all of them and gut them like fishes!

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wrekxx
October 19, 2009 8:53 PM
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I used to work for BofA and the way I was fired still pisses me. This makes me happy, if for maybe no other reason than pure spite. Somehow it even still seems righteous

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wrekxx
October 19, 2009 10:03 PM
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pisses me off I mean... I hope I wasn't fired for a lack of proof-reading

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Mr.Duke
October 19, 2009 11:13 PM
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No pay at all? Is that legal? Should he not get at least minimum wage? Or did his employment contract say he could make zero dollars for an entire year? Or is the great Czar making up the rules after the game started? I thought Bank America's board should have fired Lewis in October 2008. He has hung around for another year. No matter how much money Lewis made in the past, no pay seems rather strange to me.

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PLATTWORX
October 19, 2009 11:24 PM
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I found it suprising this happened and kinda wondered about the government telling a company it could not pay a CEO. HOWEVER, since I feel Ken Lewis is evil and is known for being rude and nasty to employees.... I think this is a great idea and he should have to turn over all his stock options also.

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Thricebanned
October 20, 2009 1:47 AM
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What is the uproar all about? It's assumed that the Consumerist is an arm of the DNC.

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savdavid
October 20, 2009 3:17 AM
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I loved that 60 minutes puff piece on Bank of America a year ago. Lewis sat there smiling and said \"We were told we HAD to take the billions! We were told it was our patriotic duty!\" LOL! Oh, you are such a good US citizen, Mr. Lewis..you just love your country. Screw the customers.

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Meathamper
October 20, 2009 4:36 AM
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The AIG boss should not be allowed any health insurance, see how he likes it.

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RandomZero
October 20, 2009 11:30 AM
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@halcyondays: Which is why Canada, a heavily-regulated nation, drags the US into recessions all the time. Fortunately, the US is far better insulated from the worst damages of them, as seen in the dot-com bubble and the current crisis.


Oh wait, that's completely goddamn backward.

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