General Question

Mr_M's avatar

So WHY does the "bailout" HAVE to include any severance for the CEO's? I don't get it!

Asked by Mr_M (7586points) September 28th, 2008
Observing members: 0 Composing members: 0

9 Answers

SquirrelEStuff's avatar

Why is there any bailout?!?!?

Isnt that called socialism????

If there is a bailout, I do think some should go to homeowner, but I dont think there should be a bailout. I didnt buy a house and lose money. But now I must help the person that did. Freedom my ass.

Let the prices of houses drop to where they should be so I can buy up a few cheap houses from the people that ran the debt up to $11 Trillion so I can make up for the taxes I’ll owe.

fireside's avatar

As i understand it, the issue is not about including severance for CEOs.
The problem was that there was nothing in Paulson’s initial 3 page proposal stating limits to executive compensation.

This is a good breakdown:

When Treasury released the initial proposal, there was no mention of executive compensation in this very brief three or four-page bill. But when the proposal got to Congress, one of the first things they focused on was a concern and maybe outrage that several hundred billion dollars in taxpayer money could [end up in someone’s golden parachute]. There was no indication that there could still be high salaries paid to executives at companies that potentially would receive some of this bailout money… . Its become clear that if this proposal has any chance of [getting passed], there’s going to have to be some kind of limitations put on executive compensation for those companies that participate in the program.

Mr_M's avatar

That’s my point. “Limits” to executive compensation? Why should there be ANY executive compensation? That’s MY issue.

fireside's avatar

Apparently that was the most important aspect of the plan to the Bush Administration:
The Bush administration, for its part, agreed to much broader executive-compensation limits than it originally envisioned, among other things.

Most likely it has something to do with the fact that Jeb Bush and George Bush (the younger Hispanic cousin) were both hired by Lehman Brothers last year.

Or maybe because Sect. Paulson used to be CEO of Goldman Sachs.

Simple answer: corrupt politicians
More complex answer: we wouldn’t want anyone to go into bankruptcy, would we?

googlybear's avatar

http://money.cnn.com/2008/09/26/news/companies/fishman_wamu/index.htm

You mean like the WM CEO who will get $18M for 3 weeks….Gosh that’s got to be difficult :-(

fireside's avatar

I’m sure there is only a handful of people that they definitely wanted to give a big wad of cash to, but without the blanket policy, it would be too easy to connect the dots.

We could have just gone along with the initial plan to give Paulson the money and just let him do whatever he wanted with no oversight. Wouldn’t that have been better than us knowing who has the potential to get rich quick off the trouble?

Hopefully, Fishman won’t get more than his earned salary. It obviously wasn’t his fault that the company just became insolvent overnight, so he is entitled to something.

galileogirl's avatar

Mr.M: At that level they all have employment contracts which are ironclad having been vetted by very good lawyers. The question is are they going to go quietly with a golden handshake or will they go to court if they don’t get their millions, costing us millions more in legal costs (Possibly those contracts call for arbitration which may be biased in the CEOs favor) Or do we really get nasty and threaten criminal trials which may open a real can of worms.

The new Wamu CEO just started work on Sept 7 so he had nothing to do the bank’s failure but his contract seems to give him $13 million for 3 weeks work.
http://www.reuters.com/article/ousiv/idUSTRE48P8LG20080926

EmpressPixie's avatar

GalileoGirl’s basically got it. They all had great compensation written into their contracts (which makes sense—the ability to find another job once you’ve been fired as a CEO is not great, and experts estimate it takes 1 month per $10K to find a similar job, though obviously skewed with CEOs). Right now we want to get around those contracts and stop just ridiculous compensation in the future. It’s an issue because certain parts of congress don’t want the caps, other parts do. Having caps at all is such a huge issue that banishing the golden parachutes completely would be a nightmare of another degree.

Mr_M's avatar

Or is the bottom line because these CEO’s put money into the campaigns of our politicians?

There is NO legal reason why such a massive government maneuver HAS to come with compensation for these CEO’S. Am I missing something or don’t these CEO’s WANT the help to save their company?

And I don’t want “caps”. They should get NOTHING.

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