The administration and Congress is proposing the regulate executive compensation. First of all, what private companies pay their executives should be their business and not the governments. A company should be allowed to pay what they want to attract top talent.
Congressman Barney Frank commented on CNBC that executive compensation should also include a ‘penalty’ if goals are not met. This is already part of the current system. When one negotiates a contract the ‘bonuses’ are already taken into account. Thank about it, when you look for a job you do not only look at your salary. You compare the bonuses, healthcare, etc. along with your salary and determine what you are worth. So, if you do not receive your ‘bonus’ you ARE getting a penalty.
A second contention I have with Barney Frank’s stance is, “What about YOU?” Shouldn’t the country’s economy be a reflection on YOUR performance, being that you are elected and charged with the duty to LEAD and GOVERN this country? So if we are in a recession and billions and soon to be TRILLION in debt / deficit / trade deficit; shouldn’t YOU and Congress be liable as well? Shouldn’t the politician’s pay packages be ‘penalized’ ?
I think this will do MUCH MUCH more to curb the country’s debt / deficit than even further EXPANDING government.
There’s also the root cause of the housing bubble / CDO fiasco. Congress’ push and guarantee of sub-prime lending. This basically destroyed the natural market tendency to lend based on risk assessment. The government through Fannie Mae / Freddie Mac guaranteed mortgages of those ‘unqualified’ to borrow money. Well then, of course the banks would write as many loans as they could without ‘assessing’ risk. The did assess the risk, it was ZERO. The government guaranteed it! Once again, government’s good intentions back fired.
Obama administration proposes executive pay initiatives – Los Angeles Times.
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