good ! and if some of the exec's decide to leave , well as it is said , everyone is expendable.

U.S. to Order Steep Pay Cuts at Firms That Got Most Aid

WASHINGTON - Responding to the growing furor over the paychecks of executives at companies that received billions of dollars in federal bailouts, the Obama administration will order the companies that received the most aid to deeply slash the compensation to their highest paid executives, an official involved in the decision said on Wednesday.

Under the plan, which will be announced in the next few days by the Treasury Department, the seven companies that received the most assistance will have to cut the cash payouts to their 25 best-paid executives by an average of about 90 percent from last year. For many of the executives, the cash they would have received will be replaced by stock that they will be restricted from selling immediately.

And for all executives the total compensation, which includes bonuses, will drop, on average, by about 50 percent.

The companies are Citigroup, Bank of America, the American International Group, General Motors, Chrysler and the financing arms of the two automakers.

At the financial products division of A.I.G., the locus of problems that plagued the large insurer and forced its rescue with more than $180 billion in taxpayer assistance, no top executive will receive more than $200,000 in total compensation, a stunning decline from previous years in which the unit produced many wealthy executives and traders.

In contrast to previous years, an official said, executives in the financial products division will receive no other compensation, like stocks or stock options.

And at all of the companies, any executive seeking more than $25,000 in special perks - like country club memberships, private planes, limousines or company issued cars - will have to apply to the government for permission. The administration will also warn A.I.G. that it must fulfill a commitment it made to significantly reduce the $198 million in bonuses promised to employees in the financial products division.

The pay restrictions illustrate the humbling downfall of the once-proud giants, now wards of the state whose leaders' compensation is being set by a Washington paymaster. They also show how Washington in the last year has become increasingly powerful in setting corporate policies as more companies turned to the government for money to survive.

The compensation schedules set by Kenneth R. Feinberg, the special master at Treasury handling compensation issues, comes as many other banks that received smaller but significant taxpayer assistance in the last year have been reporting huge year-end bonuses, setting off a new round of recrimination in Washington about the bailout of Wall Street.

Since his appointment last June by Treasury Secretary Timothy F. Geithner, Mr. Feinberg has spent months in negotiations with the companies as he seeks to balance compensation concerns against fears at the companies that any huge restrictions in pay could prompt an exodus of executives. Under a law adopted earlier this year, the Treasury Department was instructed to examine the salaries and bonuses for the five most-senior executives and their 20 most highly paid employees at companies that have received extraordinary assistance.

Mr. Feinberg has already achieved significant results at several companies. As a result of his discussions, Kenneth D. Lewis, the head of Bank of America who recently resigned, agreed to forgo his salary and bonus for 2009. (He will still receive a pension of $53.2 million, although Mr. Feinberg can issue an advisory opinion challenging it that would carry political weight.) And fearful of a political backlash over the pay of Andrew J. Hall, a successful energy trader who received nearly $100 million last year, Citigroup agreed two weeks ago to sell its Phibro unit that Mr. Hall heads to Occidental Petroleum.

Oh no! Haven't you learned yet that the only expendable people are the poor s.o.b.'s on the shop floor?

sussan

A lot of us knew that the folks on top of the heap was making wayyyyy to much money and eating away at the Profits... Why didn't this Government do something about this a very long time ago like in the late 70's?

I think it would have been harder to do then. These were private companies, no? The government didn't really have the leverage, until they started eating from the public trough.

i think this is awesome. other than taxing anyone making over $10M at 99%, this is the next best thing.

As long as they don't go overboard, it's a good thing.

To me at least , it doesn't sound like it is going overboard. In hindsite of course conditions most likely need to be placed from the get go.

As small business drives employment , I am glad to see this too :

Rescue efforts shift to small business
As bailouts of big companies end, the administration redirects its focus

By David Cho
Washington Post Staff Writer
Thursday, October 22, 2009

The Obama administration is winding down several massive rescue programs that aided large banks and automakers during the heat of the financial crisis, while launching more moderate initiatives to help small businesses and the housing market.

The moves are being billed by senior administration officials as a "new direction" for the government's oft-maligned $700 billion financial rescue program, which has been credited with preventing a collapse of the financial system but angered many politicians and members of the public for bailing out the big banks that may have triggered the crisis in the first place.

The Troubled Assets Relief Program, or TARP, will now focus on the ailing housing market and small businesses, which are seen as vital to the economic recovery because they employ so many workers, officials said.

Using the Landover records-storage company Metropolitan Archives as a backdrop Wednesday, President Obama said, "There is still too little credit flowing to our small businesses.

"There are still too many entrepreneurs who can't get the loan they need to open their doors and start hiring," Obama said. Small businesses "fuel our prosperity," he added. "And that is why they must be at the forefront of our recovery."

Under the administration's plan, small companies will be able to get low-interest loans through local banks with less than $1 billion in assets. Those institutions will be allowed to borrow from TARP at a 3 percent rate, lower than its usual 5 percent. The banks will be required to submit plans on lending to small businesses and present quarterly progress reports to regulators.

Community development financial institutions, which provide credit to low-income urban and rural areas, will be able to borrow from TARP at 2 percent.

The precise terms of those programs have not yet been fully worked out, said administration officials who declined to reveal how much they estimate they will have to allocate to the program. The sources spoke on the condition of anonymity because the discussions have been private.

Some of the officials are concerned about whether community banks will participate, given the stigma that has been attached to the federal bailout, sources said. Moreover, many banks have been reluctant to lend to small firms because they historically have been a bigger credit risk than larger corporations.

Raising lending limits

Obama also will ask Congress to raise the cap on how much a company can borrow from the Small Business Administration's major lending programs to $5 million from $2 million. In addition, the limit on an SBA microloan program will increase from $35,000 to $50,000 to help start-ups and other smaller businesses. Those SBA loans are also administered by banks and are backed by federal guarantees.

"America will not recover until our small businesses recover. In communities across the country, they are the engines of job growth and lead the way to the industries of the future," Treasury Secretary Timothy F. Geithner said in a statement.

Similar proposals to increase SBA loan limits have already been put forward on Capitol Hill, and lawmakers rushed to take credit for those efforts Wednesday. The staff of Sen. Olympia J. Snowe (R-Maine) noted that she had introduced a bill last year that was nearly identical to what Obama proposed.

In the House on Wednesday, the Committee on Small Business passed by a voice vote a measure that calls for a new $3 million ceiling for the SBA's largest lending program and similar increases to the microloan program. Rep. Nydia M. Velázquez (D-N.Y.), the chairman of the committee, said she would work with the administration on the measure.

"The ultimate goal is to get affordable capital into the hands of small businesses," she said. "I applaud the president for reaffirming his support for our nation's small businesses and recognizing their importance to the economic recovery."

But several business owners and community bank presidents said some of the SBA's programs are plagued by bureaucracy. The microloan program, for instance, has not been well-utilized by banks, which see it as a time-consuming and unprofitable.

Programs winding down

Meanwhile, the government is winding down TARP's biggest effort, the $250 billion capital purchase program, which lends money to banks but requires them to submit to executive pay limits, among other conditions.

In addition, the government's initiatives to buy toxic assets and revive the consumer credit markets will not rise above the $30 billion of TARP funds that have been allocated to each of the efforts, officials said.

"The major banks that were in critical condition a year ago need no new assistance from the government, and so we are winding down that portion of the TARP program," Obama said. "But to spur lending to small businesses, it's essential that we make more credit available to the smaller banks and community financial institutions that these businesses depend on."

Treasury officials declined to say whether Geithner would ask for a year extension of the TARP authority, which expires Dec. 31.

http://www.washingtonpost.../AR2009102101703_pf.html

It's just that going to extremes produces negative results more often than not.

Oskar , I think I understand that ; unintended consequences. That is a good point.

just read the article and i like what i see. i need to find out how i can profit from it, now.

lol

think of the kindness bestoyed on the unemployed in this nation when small businesses / entrepreneurs prosper.