The Maximum Wage

[AgentDrazenPetrovic]

http://news.yahoo.com/s/ap/20090204/ap_on_go_pr_wh/bailout_executive_pay

President Barack Obama on Wednesday imposed $500,000 caps on senior executive pay for the most distressed financial institutions receiving federal bailout money, saying Americans are upset with "executives being rewarded for failure."

 

[BrianFromWA]

This renders me almost speechless. If the government gives a college loan, can they then also dictate where you work afterward, or which college you may attend? If the VA guarantees my loan, can they tell me I can't live in Washington anymore, since the costs of living are much higher than, say, Oklahoma?

 

[AgentDrazenPetrovic]

This renders me almost speechless. If the government gives a college loan, can they then also dictate where you work afterward, or which college you may attend? If the VA guarantees my loan, can they tell me I can't live in Washington anymore, since the costs of living are much higher than, say, Oklahoma?

In the USSA, you'll live where you're told, for how much they determine..... "For the good of the republic".

 

[SodaPopinski]

You do realize this only applies to the companies who are receiving government money to save them from financial ruin?

-Pop

 

[AgentDrazenPetrovic]

You do realize this only applies to the companies who are receiving government money to save them from financial ruin?

-Pop

Yes.

That point was noted in my quote.

 

[hasoos]

This renders me almost speechless. If the government gives a college loan, can they then also dictate where you work afterward, or which college you may attend? If the VA guarantees my loan, can they tell me I can't live in Washington anymore, since the costs of living are much higher than, say, Oklahoma?

Is there any legislation in place to ratify any of the stuff you said up above? No there isn't. Good try though.

 

[PapaG]

This renders me almost speechless. If the government gives a college loan, can they then also dictate where you work afterward, or which college you may attend? If the VA guarantees my loan, can they tell me I can't live in Washington anymore, since the costs of living are much higher than, say, Oklahoma?

Why stop there. How about home buyers who used an FHA loan on their house being told what they can or can't spend money on or where they can live for fear of a default?

We don't have a President now, we have a guy who thinks he is a king.

 

[maxiep]

Is there any legislation in place to ratify any of the stuff you said up above? No there isn't. Good try though.

And you don't see the parallel? "Take the Government's money and live by rules set up by a bureaucrat."

 

[PapaG]

Is there any legislation in place to ratify any of the stuff you said up above? No there isn't. Good try though.

Is there any legislation currently in place to cap wages?

 

[PapaG]

And you don't see the parallel? "Take the Government's money and live by rules set up by a bureaucrat."

The auto industry is next. "Clean cars" and such will be mandated when the average joe just needs a cheap, gas-guzzling jalopy.

 

[mook]

Really good essay on this by David Brooks:
Ward Three Morality

I’ve become increasingly concerned about the rising number of rich people who are being caught unawares by shifts in the sumptuary code. First, there were those auto executives who didn’t realize that it is no longer socially acceptable to use private jets for lobbying trips to Washington. Then there was John Thain, who was humiliated because it is no longer acceptable to spend $35,000 on a commode for a Merrill Lynch office suite.
Then there are the Wall Street executives who were suddenly attacked from the White House for giving out the same sort of bonuses they’ve been giving out for years. Now there is Tom Daschle, who is being criticized for making $5 million off his Senate prestige.
I’m afraid there are rich people all around the country who are about to suffer similar social self-immolation because they don’t understand that the rules of privileged society have undergone a radical transformation.
The essence of the problem is this: Rich people used to set their own norms. For example, if one rich person wanted to use the company helicopter to aerate the ponds on his properties, and the other rich people on his board of directors thought this a sensible thing to do, then he could go ahead and do it without any serious repercussions.
But now, after the TARP, the auto bailout, the stimulus package, the Fed rescue packages and various other federal interventions, rich people no longer get to set their own rules. Now lifestyle standards for the privileged class are set by people who live in Ward Three.

More here:
http://www.nytimes.com/2009/02/03/opinion/03brooks.html?em

 

[BrianFromWA]

Is there any legislation in place to ratify any of the stuff you said up above? No there isn't. Good try though.

No, there isn't. And until today, there wasn't legislation in place to ratify any maximum wage for money the government was loaning banking businesses.

Not a huge leap. Good try, though.

**EDIT: Sorry...hadn't read PapaG and maxiep's comments yet. Then again, maybe repetition is good**

 

[PapaG]

Really good essay on this by David Brooks:
Ward Three Morality





More here:
http://www.nytimes.com/2009/02/03/opinion/03brooks.html?em

I read that New York state alone will lose out on $1 billion in state income tax receipts for 2008 due to lower executive bonuses compared to 2007. That's one result of capping income that never gets much play.

New York state will lose a whopping $1 billion in tax revenues this year because cash bonuses to Wall Street employees plummeted 44 percent in 2008, according to a bombshell new report.

In an analysis released this morning by State Comptroller Thomas DiNapoli, he estimates that the securities industry paid its New York City employees $18.4 billion in bonuses last year compared to $33 billion in 2007 -- a drop in bonuses that will also cost the city $275 million

http://www.nypost.com/seven/01282009/news/regionalnews/new_york_takes_1b_tax_revenue_hit_152412.htm

I can only think of two ways to make up for that loss of tax dollars, and with Democrats in power, I'm positive it isn't a massive across the board tax cut.

 

[PapaG]

No, there isn't. And until today, there wasn't legislation in place to ratify any maximum wage for money the government was loaning banking businesses.

Not a huge leap. Good try, though.

**EDIT: Sorry...hadn't read PapaG and maxiep's comments yet. Then again, maybe repetition is good**

There still isn't legislation in place, is there? Wasn't this yet another Executive Order?

 

[BrianFromWA]

Mea culpa. I didn't read that much into it. I guess if "President Obama imposed" something, it would probably be an EO.

 

[barfo]

And you don't see the parallel? "Take the Government's money and live by rules set up by a bureaucrat."

Why should that be surprising or unreasonable? If you take anyone else's money, you live by their rules.

The solution is, don't take other people's money.

barfo

 

[PapaG]

Why should that be surprising or unreasonable? If you take anyone else's money, you live by their rules.

The solution is, don't take other people's money.

barfo

That's the people's money though. Obama did nothing to actually earn it.

Also, a chunk of it comes from the same people being "bailed out". I've already commented on the tax implications of this cap as well, but I'll be happy to revisit it.

 

[barfo]

That's the people's money though. Obama did nothing to actually earn it.

Yes, and the people, through their elected representative, President Obama, are enforcing their will on the bailed-out firms.

Also, a chunk of it comes from the same people being "bailed out". I've already commented on the tax implications of this cap as well, but I'll be happy to revisit it.

Yes, tax revenues go down when income goes down. So the government should give me $1 billion so that I'll pay more taxes? Tax revenue isn't the single most important thing in the world.

barfo

 

[PapaG]

Yes, and the people, through their elected representative, President Obama, are enforcing their will on the bailed-out firms.

I wouldn't mind as much if the people's representatives had actually voted on this. Apparently, that did not happen and Obama, in my opinion, is overstepping his authority.

Yes, tax revenues go down when income goes down. So the government should give me $1 billion so that I'll pay more taxes? Tax revenue isn't the single most important thing in the world.

barfo

I don't recall saying that tax revenue is the most important thing in the world, but for an expanding government with more people dependent on it, less money does spell major trouble down the road.

 

[blazerboy30]

Why should that be surprising or unreasonable? If you take anyone else's money, you live by their rules.

Actually, that isn't at all how it works. Loan rules and conditions are set up front, before the transaction, and both parties agree on, and sign the terms.

The banks can not just change the conditions of my real estate loans at any time they decide to. We both signed the loan agreements up front, and if something is to change, the loan documents need to be re-written, with both parties agreeing to the terms and signing for them.

I'm sure you don't want to promote predatory lending practices.

The solution is, don't take other people's money.

barfo

That certainly is A solution, but probably not one that is good for an economy built on credit and lending.

 

[barfo]

Actually, that isn't at all how it works. Loan rules and conditions are set up front, before the transaction, and both parties agree on, and sign the terms.

These were emergency loans. It was probably perceived that there wasn't time to hammer out all the terms and conditions before making the loan. My guess is that the banks signed something that gives the government quite a bit of leeway to add additional T's and C's afterwards.

If you are desperate to get money, then you get screwed. That's how it works.

The banks can not just change the conditions of my real estate loans at any time they decide to. We both signed the loan agreements up front, and if something is to change, the loan documents need to be re-written, with both parties agreeing to the terms and signing for them.

I'm sure you don't want to promote predatory lending practices.

You presumably were in a better negotiating position than the bailed-out firms. Nevertheless, there are no doubt some restrictions placed on you by the lenders.

That certainly is A solution, but probably not one that is good for an economy built on credit and lending.

I meant, that's the solution if you don't like the restrictions that come with borrowing money.

barfo

 

[barfo]

I wouldn't mind as much if the people's representatives had actually voted on this. Apparently, that did not happen and Obama, in my opinion, is overstepping his authority.

I think you know that we don't vote on every issue here.
But if he's overstepped his authority, or if it isn't legal to place the restrictions on the banks that he has, then I expect the courts will overturn the order.

I don't recall saying that tax revenue is the most important thing in the world, but for an expanding government with more people dependent on it, less money does spell major trouble down the road.

Yes, there is trouble down the road. Giving some bankers bigger paychecks won't avert the trouble.

barfo

 

[PapaG]

Yes, there is trouble down the road. Giving some bankers bigger paychecks won't avert the trouble.

barfo

That remains to be seen. That money gets recycled in the economy. My view is this is simply a populist political move to try and elevate Obama's already sagging approval rating.

 

[blazerboy30]

These were emergency loans. It was probably perceived that there wasn't time to hammer out all the terms and conditions before making the loan. My guess is that the banks signed something that gives the government quite a bit of leeway to add additional T's and C's afterwards.

If you are desperate to get money, then you get screwed. That's how it works.

Your entire position is based on a completely unbacked assumption that the companies agreed to give the power to change the terms of the loan to the government.

In the absence of proof of your wild-ass-guess, the more likely scenario is that the lender should NOT be able to change the terms and conditions at their leisure.

You are clearly just trying to justify this decision because it was Obama's.

You presumably were in a better negotiating position than the bailed-out firms. Nevertheless, there are no doubt some restrictions placed on you by the lenders.

barfo

Obviously there are restrictions. And I signed the docs to agree to them. And now, the bank can't just make up more restrictions on a whim.

If the $500k max salary condition is in the loan terms, and it was signed, I have absolutely no problem with this decision.

 

[barfo]

Your entire position is based on a completely unbacked assumption that the companies agreed to give the power to change the terms of the loan to the government.

Yes, it is. That's why I described it as my guess.

In the absence of proof of your wild-ass-guess, the more likely scenario is that the lender should NOT be able to change the terms and conditions at their leisure.

That's just your guess, and as such is worth just about as much as mine is.

You are clearly just trying to justify this decision because it was Obama's.

Really? I don't think that's what I'm doing at all. I have no idea whether Obama's decision was proper or not, it would depend on a lot of things none of us know.

Obviously there are restrictions. And I signed the docs to agree to them. And now, the bank can't just make up more restrictions on a whim.

Right, and all I was saying was if you didn't like those restrictions, you shouldn't have borrowed money from that bank.

barfo

 

[barfo]

That remains to be seen. That money gets recycled in the economy.

Then the government should give me $100 trillion. I will recycle it in the economy. Economic crisis solved!

barfo

 

[PapaG]

Then the government should give me $100 trillion. I will recycle it in the economy. Economic crisis solved!

barfo

I think you are having a difficult time grasping that businesses received this money and not individuals.

 

[blazerboy30]

Yes, it is. That's why I described it as my guess.



That's just your guess, and as such is worth just about as much as mine is.

Wrong. I have a long history of millions of loans, and the most likely scenario to backup my position.

You're making your guess in order to justify Obama's position.

 

[e_blazer]

Hmmm. This would mean that top execs at these firms would make less than the minimum contract for an NBA player with one year's experience.

 

[mook]

The difference between borrowing money from a bank and borrowing from the American people is that the American people (and their leaders) tend to be rather fickle and inclined to change the rules as they go along.

A better analogy is that taxpayers are a loanshark, and may decide to do all sorts of strange things after you borrow their money. If you are a banker and don't realize that going in, you are naive.

Doesn't make the taxpayers or their leaders right. It's just the way it is.