[Marxism] Give Me Bonuses or Give Me Bankruptcy!

["S. Artesian" <sartesian@xxxxxxxxxxxxx>]

Trop bien!  This, I think, is my new favorite article since this sorry mess 
began-- even outdoing the pilloring of Sir James Crosby and Gordon Brown, 
better even than the flogging of Alan Greenspan in public...  If only the 
venality, stupidity, greed, pettiness of the bourgeoisie didn't cause such 
massive suffering throughout the entire planet,  I could really find their 
ignorance, selfishness, infantilism entertaining. We must record this for 
posterity, so after the success of the revoluton, we can write farces with 
all the dialogue and characters drawn verbatim from history.

Our new Patrick Henrys.....

________________________________________

>From today's WSJ.com

FEBRUARY 14, 2009
Bankers Face Strict New Pay Cap
Stimulus Bill Puts Retroactive Curb on Bailout Recipients; Wall Street Fumes

By DEBORAH SOLOMON and MARK MAREMONT
WASHINGTON -- The giant stimulus package that cleared Congress Friday 
includes a last-minute addition that restricts bonuses for top earners at 
firms receiving federal cash -- including those that already received it --  
more severely than the Obama administration's previous pay limits.

The most stringent pay restriction bars any company receiving funds from 
paying top earners bonuses equal to more than one-third of their total 
annual compensation. That could severely crimp pay packages at big banks, 
where top officials commonly get relatively modest salaries but often huge 
bonuses.

As word spread Friday about the new and retroactive limit -- inserted by 
Democratic Sen. Christopher Dodd of Connecticut -- so did consternation on 
Wall Street and in the Obama administration, which opposed it.

Companies that have received federal bailout funds can't pay top earners a 
bonus equal to more than one-third of their total annual pay.

For example: An employee with $1 million pay could receive a bonus of no 
more than $500,000. That figure equals one third of the $1.5 million total 
pay.

The administration is concerned the rules will prompt a wave of banks to 
return the government's money and forgo future assistance, undermining the 
aid program's effectiveness. Both Treasury Secretary Timothy Geithner and 
Lawrence Summers, who heads the National Economic Council, had called Sen. 
Dodd and asked him to reconsider, these people said.

In contrast to executive-pay rules announced recently by the White House, 
those in the stimulus bill -- which cleared the House and Senate Friday and 
is headed to the White House for President Barack Obama to sign into law --  
doesn't apply just to top executives but could reach into the ranks of 
highly paid traders and department heads. The rules apply to any company 
that has received aid under the bailout program since it began in October.

The number of a company's employees affected increases on a sliding scale, 
depending how much federal money the firm receives. More than 350 banks have 
gotten funds from the government's formal investment program. In addition, 
the government has proffered aid to insurer American International Group 
Inc., to auto makers General Motors Corp. and Chrysler LLC, and to Citigroup 
Inc. and Bank of America Corp.

In speaking to Mr. Dodd, Messrs. Geithner and Summers also expressed concern 
over another provision he inserted that lets banks and other aid recipients 
pay back aid more easily. It says banks would no longer have to raise new 
private capital to replace the government's funds in order to repay it. Some 
government officials fear the result could be that banks lose their capital 
cushions and thus become even more wary of lending.

Sen. Dodd said in a statement that "the decisions of certain Wall Street 
executives to enrich themselves at the expense of taxpayers have seriously 
undermined public confidence in efforts to stabilize the economy.... With 
vigorous oversight by the Treasury Department and by Congress, these tough 
new rules will help ensure that taxpayer dollars no longer effectively 
subsidize lavish Wall Street bonuses."

With so much riding on the stimulus bill, President Obama is expected to 
sign it despite his concerns. The pay-limit language in the stimulus bill is 
vague and open to interpretation. It isn't clear, for example, whether the 
value of stock options should be included in the calculation of total 
compensation. The provision could be altered somewhat by the Treasury, which 
would be in charge of implementing the regulations.

A White House spokesman said, "As he has already expressed, the president 
shares a deep concern about excessive executive compensation at financial 
firms that are receiving extraordinary assistance from American taxpayers. 
He looks forward to working with Congress to responsibly address this issue. 
Members of the administration contacted members of Congress with suggested 
technical changes toward that end."

Congressional aides said the bonus provision means an executive could 
receive a bonus equal to as much as 50% of salary. For instance, a $500,000 
bonus for someone with a $1 million salary would meet the test because the 
bonus would make up no more than a third of the person's $1.5 million in 
total compensation.

Under the bill, bonuses can be paid only in restricted stock, which 
recipients couldn't cash in until the Treasury is repaid.

Bank of America Corp. CEO Kenneth D. Lewis was paid $16.4 million in 2007, 
of which just $1.5 million was in salary, according to company filings. The 
rest included $11.5 million in bonus, stock-option awards and restricted 
stock. Assuming the same salary level, Mr. Lewis's 2009 pay under one 
interpretation of the stimulus legislation would be limited to about $2.25 
million. The bank declined to comment. J.P. Morgan Chase & Co. CEO James 
Dimon earned $1 million in salary in 2007, but his total pay was more than 
$30 million, almost all in incentive-based bonus and awards of restricted 
stock.

 Many Wall Street bosses, including Messrs. Lewis and Dimon, chose to forgo 
their bonuses related to 2008 performance. But others further down in their 
banks could find their future pay packages much slimmer than they expected.

The bill carves out an exception for those whose employment contracts 
require payment of an annual bonus. Some top finance-industry executives 
don't have contracts; the language in others' agreements may or may not 
exempt them from the restrictions.

The limits build on executive-pay rules announced earlier this month by the 
Obama administration. Those include salary caps for certain firms receiving 
capital injections in the future from the Troubled Asset Relief Program. 
These rules would set a $500,000 cap on executive pay at firms that accept 
"extraordinary assistance." So far, no firm has fallen under this limit. The 
Obama rules have looser salary caps for firms that get more-general aid.

The Dodd rules don't mention salary caps and concentrate instead on 
incentive-based pay.

The stimulus bill says that for companies that receive more than $500 
million in federal money, as many as 25 executives can be covered by pay 
limits. The numbers ratchet down for banks that received smaller sums.

Language in the contracts banks signed when banks took money from the TARP 
allowed the government to change terms retroactively. Still, "I'll bet you 
will see in the next month or so, banks paying back the government," said 
Alan M. Levine, an executive-pay attorney at Morrison Cohen LLP in New York. 
"They don't want to run their business under these restrictions."

Mr. Levine said the bonus restrictions could result in companies shifting 
more pay for top officials to salaries, away from incentive-based pay. 
Corporate-governance advocates seek to move in the opposite direction.

Another stimulus-bill provision requires the Treasury Secretary to examine 
Wall Street and bank bonuses paid last year and early in 2009 to determine 
if they were in the public interest. The government could try to claw back 
any bonuses deemed excessive. The provision would apply to any firm that got 
bailout money.

The bill also requires a nonbinding shareholder vote on executive pay at 
firms receiving bailout funds.

Among the administration's biggest concerns is the stimulus-bill provision 
that allows any firm receiving government money to repay it without raising 
a similar amount of money from private sources. The Treasury now requires 
banks getting cash from the capital-injection program to keep it for three 
years or raise private capital to replace it.

Some banks, such as Goldman Sachs Group Inc., have said they want to repay 
the U.S. as soon as possible but haven't raised private funds to do so. The 
legislation removes that obstacle. But a congressional staffer said 
repayment would be done in consultation with a bank's primary regulator, 
which has authority to order a bank to raise more funds if its capital 
cushion is too low.

Lobbyists and executives at big banks have been discussing the pay 
restrictions with Sen. Dodd's office and Treasury officials, one senior bank 
executive said. The executive said banks are confident the provision's 
details can be tweaked during the Treasury's rule-making process. Banks' 
hope, the executive said, is to modify the provision's language so that it 
applies only to members of companies' management committees or comparable 
decision makers.

Meanwhile, executive payments authorized by Merrill Lynch & Co. and its 
owner, Bank of America, are the subject of a new investigation, from North 
Carolina Attorney General Roy Cooper. He has asked for information about 
payouts authorized by Merrill before Bank of America bought it and separate 
bonuses authorized by Mr. Lewis and his board last month.

New York Attorney General Andrew Cuomo, who is also investigating the 
matter, alleged this week that Merrill "secretly" moved up the date for 
awarding bonuses and said the total was $3.6 billion, including $121 million 
to four top executives. Mr. Cuomo alleged Bank of America had "apparent 
complicity" in the awards. Bank of America has said it urged that Merrill's 
2008 bonuses to be reduced but that this was Merrill's decision.

The North Carolina AG sent Bank of America's board a letter this week after 
Mr. Lewis told the House Financial Services Committee the bank would start 
awarding bonuses Feb. 15. Mr. Cooper has asked the bank to disclose the 
totals and also details of Merrill bonuses awarded in December.

Bank of America said it is cooperating with the inquiry and that bonuses for 
2008 were reduced by an average of more than 60%, with Mr. Lewis and those 
who report directly to him receiving none.

-David Enrich and Dan Fitzpatrick contributed to this article.
Write to Deborah Solomon at deborah.solomon@xxxxxxx and Mark Maremont at 
mark.maremont@xxxxxxx 


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