Geithner opposes caps on bank CEO pay

Discussion in 'Wall St. News' started by ASusilovic, May 18, 2009.

  1. WASHINGTON (MarketWatch) -- Treasury Secretary Timothy Geithner said Monday that he is not in favor of the federal government placing limits on the compensation of top executives of banks that have received taxpayer funds. "I don't think our government should set caps on compensation," Geithner said during an interview at an event sponsored by Newsweek magazine. The government should focus instead on incentives stemming from the pay structure at financial institutions. "You had a crisis magnified by people who were paid to take short-term risk," Geithner said. Since the financial crisis started, there has been pressure for boards of directors to rein in executive pay. Geithner also said that he did support disclosure of executive pay packages[/b] [b]Circus Maximus...:D
  2. When Geitner returns to the private sector, he wants to be sure there are no limits on his future pay. :cool:
  3. This is a positive for sure. Compensation caps would not allow for the banks to recruit/retain high level employees. It is very reassuring that the government is not looking to go in this direction.

    I also support Geithner's comments regarding the need to evaluate compensation structure so as to not give incentive for executives to take on excessive short term risk. IMO this is a good way to go about handling the compensation issue.
  4. Because it pretty much states publicly that the bank execs can just take taxpayer money and put it into their pocket with no restrictions?
  5. 1) Caps are feasible because there is no place for these "high level" people to go. They are "damaged goods".
    2) Excessive risk is okay during a bull market, not so during a bear market.
    3) The best way to handle the "issue" is not to compensate anyone until the company stock is trading above its all-time high.
    4) We will be in an age where everyone receives hedge fund-style compensation with a highwater mark. :cool:
  6. Not at all. How does a lack of compensation cap equate to execs putting taxpayer money into their pocket with no restrictions? Geithner specifically stated the need to regulate the structure of the compensation packages so as to avoid excessive short term risk taking. As long as the structure is fair (simple i.e. - exec receives 20% of NI as a bonus), then it should not matter if a cap is imposed or not. If the government were to tell the top banks in America "you are only allowed to pay execs maximum $200,000/year", no self respecting, talented exec would work for that company.
  7. Having no caps certainly worked out great. Bernie Madof could manage Citi from prison and do a better job than Bob Rubin, Prince, et al.
  8. 1.) that's true for the dregs of the company, not true for producers. They have plenty of places to go (including starting their own shops) and going they have been.

    2.) I'm assuming you're being sarcastic and I agree with you. However, Ben & Co. have been giving money away to re-inflate the exact same bubble - the bubble in the shittiest credit. And it's working. That trash has outperformed everything. What will they have to do to reinflate it a second time?

    3.) Yeah....they're trying to reinflate the stocks by making shorting impossible and lending every moron with the ability to form single-syllable words money to buy insolvent banks.

    The banks are insolvent. Full Stop. Nobody should be paid because everyone should lose their job. But, if they aren't going to lose their job, then they need to be paid or you as the taxpayer will guarantee that you will be pouring money into these zombie banks until you and the whole country explodes.

    4.) Cool. If you can find me a hedge fund which honors its high water mark AND holds on to its employees without the managers digging into their own pockets to pay them, you let me know. That's the problem you have with banks.

    The whole system needs to be scrapped and we need to start over.
  9. Because it is the taxpayer money that is funding these banks which are posting profits by "Mark to Fantasy" accounting rules. Can you not connect the dots on where they are getting the cash from to pay compensation?

    The bailout by itself is just plain robbery and by disregarding caps because these banks need to retain talent, you're essentially condoning out in the open robbery of the taxpayers.

    If you came to me and you were in a similar situation and needed a bailout loan from me, I would make sure that your compensation & those under you would be the bare minimum. If you tried crying to me about retaining talent, I would tell you to go F**k yourself and to go beg someone else for bailout money. If you actually wanted to save & rebuild the company you ran, you would suck it up and work till the bailout funds were repaid. Then, as the company would be prospering, you would benefit in the form of equity.

    Gee, I wonder why none of these executives are asking for equity stake instead of compensation, taking minimum salaries and are simply thankful for the bailout funds (taken against the people's will)
  10. In my opinion Geitner did a good job today and gave answers that were relatively honest.
    #10     May 18, 2009