The Running Tally

[Lurker]

What type of company has a competitive edge... a company that recieved TARP funds and is now subject to special restrictions on pay?

Or a company that didn't receive TARP funds and isn't subject to special restrictions?

You want to focus on compensation. Fine. I don't think it's been proven that restoring sanity to pay (ie. not rewarding failure and incompetence with large salaries and bonuses) puts a company at a disadvantage. Quite the opposite. Look at executive pay for Japanese auto companies compared to executive pay at GM, for example.

So in short, there are two levels of regulation... the first is applied industrywide, and the second is only applied to TARP recipients. Any business person will tell you that regulation that isn't applied evenly will game the market, and put the companies with the higher level of regulation at a disadvantage.

Wrong. Companies that received TARP money are companies that failed or were on the verge of failing. They traded Government oversight for aid, and CEO whining aside, it's their only chance to survive. And with the larger institutions doing most of the whining, there's no direct competitor.

So I ask again, who are they at a competitive disadvantage to? Be specific.

[Embar Angylwrath]

Don't know how else to put it to you Lurker. If you can't grasp that uneven regulation within an industry sector produces competitive advanatages, then this isn't going anywhere.

[Partha]

You could level the field absolutely and the AIGs of the world would still fail. Not because they couldn't hire anyone, but because they're playing magic tricks with fake money. You can only run a multinational empire for so long on smoke and mirrors.

Plus, I'm with Lurker - the folks who brought you these types of investments are not 'innovators' and 'geniuses' - they're chiselers and con men.

[Lurker]

What Partha said. And...

Don't know how else to put it to you Lurker. If you can't grasp that uneven regulation within an industry sector produces competitive advanatages, then this isn't going anywhere.

You haven't explained which regulations are putting TARP recipients at a disadvantage and from who. Limits on compensation? Please. There's more proof that outrageous compensation packages hurt the company than the reverse. So what are you talking about?

[Embar Angylwrath]

Let me ask you this Lurker. Whatever it is that you do for a living, would likethe thought of having your salary capped by the government at your current job? And if you thought you could make more money doing the same thing somewhere else, wouldn't you want to switch jobs? And seeing how you're probably a talented individual, your departure from you company will hurt, and put them at a competitive disadvantage to other companies who don't have to deal with government imposed salary caps.

Now, I think both you and Partha feel I'm advocating for the removal of salary restrictions at TARP recipients. I am not. If the CEO wants to take TARP money, they have to take the chains that come with it. I'm simply stating by doing so, they put themsleves at a competitive disadvantage to other non-TARP companies. However, I think mor and more CEOs are seeig the TARP funds as less a lifeline, and more a noose.

[Fallakin Kuvari]

Not because they couldn't hire anyone, but because they're playing magic tricks with fake money. You can only run a multinational empire for so long on smoke and mirrors.

We're running out of time, then. The Fed created $1 Trillion dollars out of thin air this week and bought $1 Trillion of debt from our own treasury. Talk about magic tricks with fake money.

[Lurker]

Embar,
When you say TARP recipients are at a disadvantage are you only saying that because of compensation limits? I'm making that assumption because that's the only example you have brought up. If there are other regulations at play please name them and name who it puts them at a disadvantage from.

On the compensation point... I don't care if the braniacs at these financial companies leave for other jobs. By and large these are people making huge bonuses whether they failed at their jobs or not. If a non-TARP company wants to hire them and pay them huge salaries and bonuses they have my blessing. It certainly didn't help the last company the person worked for, now did it. And there is plenty of financial industry talent looking for work.

I don't see the salary restrictions as a competitive disadvantage for TARP recipients. Sorry.

[Embar Angylwrath]

Yes Lurker, the disadvantage I'm talking about is the pay limits. And I guess we just disagree on this point.

I'll see if I can dig up some economists comments about how this is actually hurting institutions like AIG. The main gist of their argument was that, as badly as some of these guys fucked up, they're still the best resource for untangling the mess. If they leave, it makes it difficult for the AIGs out there to figure out what went wrong, and how to extricate themselves from some very intertwined and complicated financial entanglements.

[Lurker]

I'll see if I can dig up some economists comments about how this is actually hurting institutions like AIG.

I'd love to see examples of this causing actual harm. I know it was the rationale pushed by the current CEO of AIG, Liddy, which might be where you heard it. His theory was that he had to pay the bonuses to employees at AIGFP because only the people who developed the computer system that fucked everything up can understand it well enough to unfuck things. I disagree with his rationale.

It's also funny that some of these "retention" bonuses went to people that had already left or that AIG planned to terminate. I don't see how ending idiotic compensation packages is a bad thing.

[Embar Angylwrath]

I think I see where we are disconnecting. It seems you think that all of the employees at AIG, in all divisions, were responsible for this mess. If that's what you think, you are wrong. It was a few people in a couple of divisions that fucked around with the Credit Default Swaps. Yet all the other divisions of AIG, the well run ones, the profitable ones... they are held to the salary restrictions too. If those individuals leave to go to work someplace else that doesn't have those salary restrictions, don't you see how that can harm the company?

There was no language in that bill (that I know of) that exempted performing parts of organizations taking TARP funds. If a company has people working for it who make the company money, and have done so reliably and ethically, and did not contribute to this mess, why not exempt them?

[Embar Angylwrath]

And for the encore...

The Obama administration is specifically responsible for those bonuses, lets not lose sight of that. Dodd had the bill ready to go, got pressure from the Treasury to insert language, pretty much specifically for AIG, which allowed the bonses to be paid.

I find it very disengenious of Obama to be "outraged", when his people ensured that it would happen. If he's outraged, he should fire Geithner.

[Embar Angylwrath]

Oh shit.. lots of stuff around this is starting to break, so there may be multiple posts by me tonight!

Maxine Waters throws the President and Dodd under the bus, hinting at conspiracy. (she's just trying to distance herself from the upcoming shitstorm, and she knows she'll be in the middle of it if the press rightly links her to Fannie/Freddie debacle)

http://www.realclearpolitics.com/video/ ... to_do.html

[Embar Angylwrath]

Holy Shit!

Geithner claimed publicly that he didn't know about the AIG bonuses until March 10th. Here's a C-Span snippet where a Congressman directly addresses teh bonuses, and asks Geithner to do something about it. This was on MARCH 3rd, a full week before Geithner claimed he heard of them.

http://www.realclearpolitics.com/video/ ... ring_.html

[Embar Angylwrath]

@ Lurker (and Partial)

Should Obama give back the +$100,000 he received from AIG? How about Dodd's $280,000 political contribution? This all happened in 2008, the year AIG first received TARP funds.

[Lurker]

The Obama administration is specifically responsible for those bonuses, lets not lose sight of that. Dodd had the bill ready to go, got pressure from the Treasury to insert language, pretty much specifically for AIG, which allowed the bonses to be paid.

Can you source the claim that language was inserted to benefit AIG? I know that CNN and other news sources have falsely reported that, but the interview transcripts don't show either Dodd or Geithner saying anything like that. Dodd's original ammendment would not have stopped any bonuses; it would have just limited them. Geithner said they raised questions about the legality of retroactive alteration of contracts and that was what was removed from the language. Maxine Waters isn't up to speed on what transpired.

Should Obama give back the +$100,000 he received from AIG? How about Dodd's $280,000 political contribution? This all happened in 2008, the year AIG first received TARP funds.

To clarify, that was from employees that work at AIG, not the company. I'm not sure what allegation or point you are trying to make here.

Geithner claimed publicly that he didn't know about the AIG bonuses until March 10th.

Treasury said they didn't know the scope of the bonuses until March 10th, which falls in line with when AIG released their formal plan to the Feds who forwarded it to Treasury. Obviously, everyone has known about AIG bonuses in less specific terms for months and months, although it appears that AIG publicly lied about them for awhile. Still... who knew what and when is being investigated. Nobody is stonewalling that investigation, which is a refreshing change.

[Embar Angylwrath]

Did you even watch the C-Span transcript? The Congressman was VERY detailed about the AIG bonuses. He even listed the amounts for Geithner. Geithner is lying.

You know neither Dodd nor Giethner would publicly name AIG, especially now, it would be suicide. But if you read the reports carefully, the language was inserted for AIG. Why do you say it was "falsely" reported? You have evidence it was made up?

You said everyone is cooperating in the investigation... bullshit. Who were the individuals at the Treasury that asked Dodd to insert the language? Why won't they "cooperate" and come forward?

[Lurker]

You know neither Dodd nor Giethner would publicly name AIG, especially now, it would be suicide. But if you read the reports carefully, the language was inserted for AIG. Why do you say it was "falsely" reported? You have evidence it was made up?

Yes, I do.

TARP as passed last year had no restrictions on compensation. None. The Dodd ammendment to the Recovery bill that passed in February provided some restrictions on compensation. Geihtner said that Treasury objected to the legality of the retroactive nature of the one provision and Dodd removed the retroactive nature.

Those are the facts. That's somehow being reported as language being inserted into the bill specifically to aid AIG. It's a completely manufactured talking point.

How bad is the reporting? Take a look at this CNN Political Ticker. According to that report "Geithner told CNN" that Treasury asked Dodd "to include a loophole in the stimulus bill". And yet, when you look at the actual transcript Geithner doesn't say that. Anyone reporting that language was inserted specifically to aid AIG is saying things not supported by the evidence.

You said everyone is cooperating in the investigation... bullshit. Who were the individuals at the Treasury that asked Dodd to insert the language? Why won't they "cooperate" and come forward?

I'm sorry. I didn't know that you were conducting the investigation and that the Treasury staff had refused to appear before you. Hopefully the official probe has better luck.

[Embar Angylwrath]

http://www.thisamericanlife.org/radio_e ... sched=1242

Great report on the whole housing meltdown, in a way non-financial people can understand.

[Harlowe]

I totally posted that here before. =)

[Embar Angylwrath]

Sorry Harlowe, don't mean to steal your thunder. I must have missed it.