TARP Recipients Corraled: Taxpayers Avenged
Finally our government has realized that TARP is not a blue piece of canvas to be used to cover up past mistakes. TARP recipients will be put in their rightful place, as that of “borrowers” of taxpayer money. As it should be, “borrowing” comes with duties and responsibilities. The taxpayer has no obligation to lend money to irresponsible borrowers, and the government has every obligation to make sure that recipients of such funds do nothing with the funds that is contrary to the public interest.
Treasury Secretary Paulson, Fed Reserve Chairman Bernake, the Bush administration and most of Congress, including President Obama somehow did not grasp this concept, they seemed to believe at the time that we had to give these financial institutions incentives to allow the government to bail them out. Unbelievable! They coerced the country into believing that throwing money at the very same banking and financial institutions that got us in this mess in the first place was the way to go. The recipients, the same people whose greed superseded sound financial decisions that lead the country into it’s downward spiral, were going to police themselves and rectify the situation without the need of any rules and regulations being imposed upon them. Upon receipt of the money they were going to use the money to ease up the credit markets which they had caused to dry up. But, in actuality what they did with the money they were given, besides the reported 19 billion dollars in bonuses is known only to them. In the end it looks more like a cattle drive gone bad, with the money spread everywhere but making no difference.
Better late than never, Obama’s reaction to the arrogance of Wall Street’s 19 billion dollar bonus giveaway of taxpayer money, has been swift and to the point. As part of the “American Recovery and Reinvestment Act of 2009″, better known as the Stimulus Package, the recipients of the TARP money will be leashed and set on the straight and narrow path. Here are some excerpts from that legislation which is currently being debated in the Senate as we speak. These rules will address both future and past recipients of TARP money.
TITLE VI–EXECUTIVE COMPENSATION
- Executive compensation and corporate governance.
- Limits on compensation for senior executive officers of the TARP recipient that take unnecessary risks that threaten the value of their companies.
- Provides for the recovery of any bonus or incentive paid to the top 20 senior executives based on materially inaccurate statements of earnings, revenues, gains, or other criteria.
- Prohibits the making of any golden parachute payment to a senior executive officer or any of the next 5 most highly-compensated employees of the TARP recipient.
- Prohibits TARP recipient paying or accruing any bonus, retention award, or incentive compensation to at least the 25 most highly-compensated employees, or as the secretary may seem fit in the public interest.
- Board Compensation Committee for the purpose of reviewing employee compensation plans.
- Limitation on luxury expenditures.
- The board of directors of any TARP recipient shall have in place a company-wide policy regarding excessive or luxury expenditures, as identified by the Secretary, which may include excessive expenditures on–
- entertainment or events
- office and facility renovations
- aviation or other transportation services
- other activities or events that are not reasonable expenditures for conferences, staff development, reasonable performance incentives, or other similar measures conducted in the normal course of the business operations of the TARP recipient
- The board of directors of any TARP recipient shall have in place a company-wide policy regarding excessive or luxury expenditures, as identified by the Secretary, which may include excessive expenditures on–
- Shareholder approval of executive compensation
- Review of prior payments to executives.
- (a) In General- The Secretary shall review bonuses, retention awards, and other compensation paid to employees of each entity receiving TARP assistance before the date of enactment of this Act to determine whether any such payments were excessive, inconsistent with the purposes of this Act or the TARP, or otherwise contrary to the public interest.
- (b) Negotiations for Reimbursement- If the Secretary makes a determination described in subsection (a), the Secretary shall seek to negotiate with the TARP recipient and the subject employee for appropriate reimbursements to the Federal Government with respect to compensation or bonuses.
And last but not least:
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Limits on Executive Compensation
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No person who is an officer, director, executive, or other employee of a financial institution or other entity that receives or has received funds from the TARP program may receive annual compensation in excess of the amount of compensation paid to the President of the United States.
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And shall remain in effect for the duration of the assistance or obligation provided under the TARP.
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Now I know this is a lot to swallow all at once but it is worth it to see that finally the taxpayer will be avenged. Now if you are really interested in looking at all the details of the “stimulus package” you can go to the Library of Congress and see the latest revised version as it stands right now before it goes to a vote in the Senate.
