1 Recall that a number of TARP recipients DID NOT go in asking for a handout.  Sec. Paulson herded the CEO's of nine of the largest banks in America into a room and told them that they would have to sign over a portion of their business to the government.  So that the government could have more oversight over those banks - procedures, loans, the whole ball of wax.

This kind of government 'investment' and forced oversight is incompatible with a free market, and so is dictating profit sharing, salaries, bonuses, dividend payments, loan practices, etc., etc.

How is this behavior by the gov't. different from the Mafia?

2 I, too, am ambivalent about this issue, but the more I think about it, the more I disagree with the government trying to set a "salary cap" for anyone. I just cannot stop thinking that, with all this so called stimulus, and all of the money that the government is throwing around, and who knows what kind of stipulations or conditions they may impose after the fact, we are allowing the camel to get his nose into the tent. 

3 I totally agree with the fears about where this is headed.  But if you ask for the money, then you have to accept the terms.  It's different if the money is more or less forced upon you.  I was pondering this on the way in to work this morning.  My first inclination is "my money my rules".  But this has further implications.  One of my strongest reasons for opposing nationalized healthcare is that then the government does have an argument that it can tell me to stop eating cheese fries for lunch.  Yeah.  No.  Same thing with this, once the government starts setting salary caps where will it stop?  Look at how the Commerce Clause has been warped to permit federal preemption of nearly everything.  I can easily see this transmuting from only TARP to any type of government contract or tax incentive and bam.  There's pretty much every business in the country. 

I can't speak to the constitutionality since I haven't given  that more than a second's thought.  Knee jerk reaction is that Supremes would find this to be rationally related to the purpose of TARP.  The question is whether it would be a rational relationship test or a strict scrutiny review.  I defer to Gabe for his thoughts since he's more likely to have reviewed the recent jurisprudence than I am. 

So, yeah, I share your concerns.  From a strictly political pov, it's a good move.  The public's visceral reaction is going to be my money, my rules. 

4

Hey, Breda, welcome!

*kicks hobo out of the way so she can have a place to sit*

5

I understand that the government is saying "our money, our rules", but I just am extremely uncomfortable with the precident this creates.  Furthermore, let's say the government goes ahead and institutes this "salary cap" on company executives, when exactly will that salary cap end?  At what point will the government say "ok, you can go back to paying your guy whatever you want now" ?  I think I have a legitimate uneasyness with government controlling the private sector in this manner.

Now, if busniesses actually believed the government would let them fail, even after they've already recieved some TARP money, these companies might take it upon themselves to institute this salary cap on their own.

The problem is that the government hasn't had a good track record of doing that.  Just like kids who don't actually believe their parents will punish them, why should they listen?

6 Sorry Brenda. teh Spelling Skillz. I has nune.

7 Recall that a number of TARP recipients DID NOT go in asking for a handout.  Sec. Paulson herded the CEO's of nine of the largest banks in America into a room and told them that they would have to sign over a portion of their business to the government.  So that the government could have more oversight over those banks - procedures, loans, the whole ball of wax.

I have heard this a lot but except for blogs I haven't seen a source for it.  Anyone?

The Herald Tribune reported:

Paulson essentially strong-armed several of the country's biggest banks into participating when he announced the program earlier this month.

To attract healthy banks into the program, Treasury officials also imposed as few restrictions as possible for those that received money. Banks could still keep paying dividends. They had only limited restrictions on executive bonuses and compensation. And the government would not force the banks to make loans they did not want to make.

But that only raised the question: why was the government trying to give those banks money in the first place?

Which isn't quite the same thing.  They also reported:

Since the Treasury Department introduced its plan, officials have stressed that their goal was to strengthen healthy banks and get them to revive their lending. Officials are also encouraging the takeovers of sick banks by healthy ones, as they did last week when the Treasury approved the bailout program's purchase of $7.7 billion of preferred shares in PNC Financial Services and rejected an application from National City Bank, based in Cleveland. National City quickly agreed to a takeover by PNC.

So what this sounds like to me is that Paulson tried to get large strong banks (mmmm me strong like bull) into the program to expand credit availability and they actually imposed very few restrictions. 

8

I'm torn, on the one hand, they deserve it.

On the other hand, the gov't shouldn't be in the job of telling private enterprise how much they can pay people.

On the third hand, since we're all doomed anyway from the Funniest End of Civilization Ever, the question to ask is, "Is it funny?".

This one has potential, but it's not funny yet. 

In general it's just depressing as we watch our idea of limited gov't get blasted out of the water.

We've unlearned so many hard-earned lessons that relearning them is going to suck.

9

By the way, an unintended consequence of this would be various CEO's bailing out of their current jobs and being lured to banks and other companies that don't have salary caps in place.

10 I was saying the same thing this morning

11 When in doubt, always choose to keep government out of something. They know how to produce a CF faster than any other organization.

12 Easy call, really.  When hiring, you get what you pay for.  Setting an artificial limit on salaries places an artificial limit on the quality of employee you can hire.  At this level, that's not the greatest of ideas.

What you do is make good hiring decisions and then perhaps link salaries to outcomes. 

An arbitrary cap is senseless and amounts to nothing more than a populist political gesture.

13 Is the Government going to be this aggressive about knocking down the unions a peg or two....or is it just the few execs at the top???

14 I would hope there was a contract. If I had a contract and it said nothing about limiting pay. I would tell the government to suck eggs. If it is in the contract then they have no choice. I do not think it is, but what do I know? 

15 I said this at AOSHQ, I hope you don't mind me repeating it:

So, after 20 years of Democrats espousing the evils of the “very rich”, they now decide that amount is $500K per year. Well, except for Democrat ex-presidents making speeches, Democrat ex-Senators doing under-the-table lobbying and the rest of the leftist anointed peerage.

This is how it came to pass that Communist Party members had beautiful dachas in the suburbs and expansive homes in Moscow while the prols survived in cold-water, one room flats in dilapidated, high-rise gulags. Is this the Democrat Party’s vision for America’s future? <i>You bet your ass it is!</i>

16 Schaut ihr auch gerne zu, wenn Frauen beim Camsex ihr geile Muschi fingern? Ich liebe es, den Frauen dabei über die Schulter zu schauen. Anschließend schaue ich mir noch ein paar versaute Pornofilme an und dann gehe ich in das Bett.