Well well well....looky here. Barney Frank, not a socialist noo, wants the government to decide how private businesses can pay their executives....Is there something wrong with this? I think so......
Rep. Barney Frank says excessive compensation packages for top corporate executives played a key role in the country's financial crisis, and he wants to reign in that pay.
"I believe that the structure of compensation has been flawed," the Massachusetts Democrat said while chairing a House Financial Services Committee hearing on Thursday.
Frank wants to develop guidelines for compensation practices, and not just for companies receiving government bailout dollars. Frank argues the problems is much wider.
"We have had a system of compensation for top decision makers in which they are very well rewarded if they take a risk that pays off, but suffer no penalty if they take a risk that costs the company money," he said.
Gene Sperling, adviser to Treasury Secretary Timothy Geithner, said in testimony to Frank's committee Thursday that the administration does not want to impose caps on executive pay, but compensation must be better managed to prevent the sort of risk-taking that jeopardizes the economy.
Sperling laid out a list of guidelines calling on publicly-held companies to link compensation to long-term performance, not short-term gains.
The administration believes compensation practices "must be better aligned with long-term value and prudent risk management at all firms, and not just for the financial services industry," he said.
The companies subject to federal regulations for executive pay will be those "companies that received such exceptional taxpayer assistance" than their peers that it "brings on a higher fiduciary duty."
Such assistance by the federal government, according to Sperling, makes "an extra level of protection for the taxpayer, necessary and important."
The Obama administration has floated two legislative proposals, one aimed at making sure compensation committees are more independent from the management of their companies and another that would give the Securities and Exchange Commission greater authority to enforce shareholder votes on executive pay practices. But Frank says government regulation needs to go even further, and he wants to see additional legislation to the House floor before the summer break.
Republicans unveiled their own contrasting plan today, with the primary goal of getting the government out of the business of running once-private businesses. GOP leaders from both the House and Senate say taxpayers should no longer be forced to foot the bill for failed Wall Street bets, and that increased government intervention will only worsen the situation.
Republican Senator John Thune says President Obama has become a default CEO of a number of U.S. companies as a result of his administration's policies, and Thune doesn't consider that a plus.
"Government is not well-positioned to make decisions when it comes to running for-profit companies, and the sooner I think we can get out of that situation the better off we'll be," he said.
More government in private business
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