Sunday, March 22, 2009

Corporate America And The Politicians They Own Get Ready For The Battle Over Regulations


I was up-and-at-'em by 5:30 today. Before going for a swim I turned to the NY Times and to Frank Rich's column. It made me want to go back upstairs, get under the blankets and curl up in a ball and go back to sleep. Could populism really wreck Obama's reform agenda? Angry voters will replace Democrats with... what? Corporatist Republicans whose ideology and avarice-- inasmuch as their ideology and avarice aren't identical-- caused the whole mess in the first place? I moved on to Stephen Labaton's somehow more comforting news story, Adminstration Seeks Increase In Oversight Of Executive Pay.

Aside from compensation oversight, the proposal mandates that "many kinds of derivatives and other exotic financial instruments that contributed to the crisis be traded on exchanges or through clearinghouses so they are more transparent and can be more tightly regulated. And to protect consumers, it will call for federal standards for mortgage lenders beyond what the Federal Reserve adopted last year, as well as more aggressive enforcement of the mortgage rules." OK, that part the public will easily get behind, I'm sure. Where the banksters and their bought-and-paid-for political handmaidens-- the entire GOP and the Blue Dogs in the House and the anti-Obama Bayh Bloc in the Senate-- will howl most loudly, and effectively, is the part about compensation. When progressives tried regulating it in the past, corporate America wheeled out it's biggest carrots and sticks to shoot it down. Last month Democrats in the House tried eliminating all future golden parachutes for TARP senior executives, stopping incentives for top executives to take unnecessary risks, and cracking down on future bonuses, retention awards, and incentive compensation for all TARP executives. 246 Democrats voted for the reform while every single Republican voted "no"-- and for the special interests of their corporate paymasters. They were joined by 6 reactionary Blue Dogs who habitually vote with the Republicans against working families: Bobby Bright (AL), Parker Griffith (AL), Walt Minnick (ID), Collin Peterson (MN), Heath Shuler (NC) and Gene Taylor (MS) plus one progressive who didn't think the bill went far enough, Pete DeFazio (D-OR). Reactionary Tennessee shill Lipinski, Jr (IL) hid under his desk during the vote and squeaked "present" when someone kicked him in the nuts.

Earlier-- in 2007-- the House tackled how executive comp-ensation should be set. Democrats were insistent that the owners of public companies (the shareholders) have a say in the pay packages for management. Management, of course, insisted that only they-- through their docile and self-serving Boards of Directors-- would determine their own salaries. Of course, most Republicans went along with management... as always. First, 6 of the House's most shameless Big Business shills-- Tom Price (R-GA), Adam Putnam (R-FL), Patty McHenry (R-NC), John Campbell (R-CA), Scott Garrett (R-NJ) and Pete Sessions (R-TX)-- tried, unsuccessfully to neuter the legislation with 7 corporately-written amendments, all of which were voted down. The final bill passed 269-134, with 55 Republicans abandoning their reactionary, corrupt leaders to vote with the Democrats. Five Democratic corporate hacks crossed the aisle in the other direction and voted with the Republicans and management: Allen Boyd (Blue Dog-FL), Nancy Boyda (KS- subsequently defeated), Dennis Cardoza (Blue Dog-CA), Henry Cuellar (TX), and John Tanner (Blue Dog-TN). And that brings us to what the Obama Administration is proposing in this area.
The administration has been considering increased oversight of executive pay for some time, but the issue was heightened in recent days as public fury over bonuses spilled into the regulatory effort.

The officials said that the administration was still debating the details of its plan, including how broadly it should be applied and how far it could go beyond simple reporting requirements. Depending on the outcome of the discussions, the administration could seek to put the changes into effect through regulations rather than through legislation.

One proposal could impose greater requirements on company boards to tie executive compensation more closely to corporate performance and to take other steps to ensure that compensation was aligned with the financial interest of the company.

The new rules will cover all financial institutions, including those not now covered by any pay rules because they are not receiving federal bailout money. Officials say the rules could also be applied more broadly to publicly traded companies, which already report about some executive pay practices to the Securities and Exchange Commission.

During the presidential campaign, Mr. Obama repeatedly urged regulators to adopt new rules to give shareholders a greater voice in setting executive pay for all public companies. And last month, as part of the stimulus package, Congress barred top executives at large banks getting rescue money from receiving bonuses that exceeded one-third of their annual pay.

...An important part of the plan still under debate is how to regulate the shadow banking system that Wall Street firms use to package and trade mortgage-backed securities, the so-called toxic assets held by many banks and blamed for the credit crisis.

...A broad consensus has emerged among regulators and administration officials that hedge funds must be registered and more closely monitored, probably by the Securities and Exchange Commission. But officials have not decided how much the funds will have to disclose about their investments and trading practices... A central aspect of the plan, which has already been announced by the administration, would give the government greater authority to take over and resolve problems at large troubled companies not now regulated by Washington, like insurance companies and hedge funds.

That proposal would, for instance, make it easier for the government to cancel bonus contracts like those given to executives at the American International Group, which have stoked a political furor. Under the proposal, the Treasury secretary would have the authority to seize and wind down a struggling institution after consulting with the president and upon the recommendation of two-thirds of the Federal Reserve board.

The corporate pushback, voiced by shameless shills and hacks like disgraced New Hampshire Senator Judd Gregg, recently exposed inserted earmarks in a project that directly benefited a firm owned by himself and his brother, is that Obama's plan-- not their misgovernance and not their unfettered greed of the past decade, will bankrupt the country.

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