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You want our (taxpayer) money? Then limit executive pay. Now.

Shouldn't Wall Street executives who collected outrageous pay and bonuses when times were good have to pay a price for a bailout too?

by Dory Devlin  |  2380 views  |  2 comments  |        Rate this now! 

The numbers being thrown around on Capitol Hill for an unprecedented financial bailout on Wall Street are so big it's impossible to fully understand what it will mean for us, the folks who will be paying for it. (Actually, our kids and their kids will be paying for it.) After spending $85 billion in taxpayer money to stave off bankruptcy for the American Insurance Group (AIG), the Bush administration wants Congress to immediately act on another $700 billion influx of taxpayer funds to ward off more financial firm implosions.

One of the more wild things about this fast-paced government ride to the rescue is how quickly Congress is being asked to pass the most important legislation with far-reaching consequences than we have seen in a long time. Since we'll be footing the bill, I'd like a few promises from the pols putting it together. Don't tell me I'm still going to get a tax cut when our national debt would rise to $11 TRILLION with this bailout. And there had better be a limit to executive pay and bonuses in the future. Lehman Brothers CEO Richard Fuld received a $22.1 million in compensation, including a bonus, for 2007, it was announced in March. Six months later the 158-year-old investment bank is gone. Gone. How can this be? And how can Treasury Secretary Henry Paulson be so adamantly against tying executive pay to the performance of these companies that will be saved with such a massive infusion of taxpayer money?

So much went so wrong to lead to this financial flame-out, fueled by the sub-prime mortgage lending fury. Things could not have been going as well as company leaders stated publicly, and they clearly (in hindsight) were not going well enough to warrant multi-million-dollar compensation packages. If taxpayers are the ones to bail out these poorly run companies on the brink of failure, then we deserve some assurances that we will not be funding exorbitant salaries and bonuses with this added debt we can ill afford in the first place.

Sound off: Do you think limits to executive pay should be tied to the $700 billion in taxpayer bailout money proposed by the Bush administration?

About the Author

Dory Devlin is the Work+Money editor on Yahoo! Shine. Check out Shine Work+Money here.

Read more by Dory Devlin

2 comments so far...

  • Here in Richmond, the corporate HQ of Circuit City, CC's CEO/President was forced to resign to keep down a proxy fight. The guy ran the company into the ground and has practically destroyed it. And the kicker? Had he left on his own to go to something else, he'd have only gotten 45 days severence pay. BUT the fact that he was forced out after killing the company and its' workers - he gets 2 years worth of severence pay, which is > 1.8 MILLION DOLLARS.

    There is something sick and totally wrong with this picture.

    My husband worked for RadioShack, which is dying as we speak because of mismanagement and dysfunction at the highest managment levels (they fired 400+ employees via email 2 years ago), but every time, the leaving CEOs walk out with BIG BUCKS for killing the company.

    What is WRONG with this picture? And this scenerio repeats itself with company after company. Ultimately, it's the stockholders and the BODs of these companies who are to blame because they've put these iditots into their positions and the BODs approved their compensation packages.

    Flag as inappropriate Posted by JKLD on 26th September 2008

  • Hear hear!

    Flag as inappropriate Posted by tkd_mama on 25th September 2008