White House to slash bailed-out bosses' pay

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Peter wrote:

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Not really, Zen. When creditors interfere in the management decisions of a company, that can have major consequences. Lenders can be held legally responsible for this interference; it's called "lender liability" and any good banker knows to be very careful to respect his role as a creditor and to not cross over and act like an owner. There's another idea called "equitable subordination" where a creditor can have his claim cut to that of an equity holder if he's found to have acted in that capacity. That would put that creditor's claims behind those of other true creditors.
The Feds have major over-reached their roles as creditors. In the case of Citibank, fine, the Feds own 30% and are entitlement to represent that ownership stake. But for much of the rest of the industry, the interference is inappropriate bullying that no one but the Feds would ever get away with. So, much for the rule of law.

The Fixer wrote:

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You are misusing the term "creditor" in this case, a "stock holder" is NOT a "creditor". A "stock holder" is a partial owner, equivelant to the amount of shares they own/control.
So in effect, the US government now "owns" 30% of Citi. If you are part owner you have every right, and responsibility, to ensure the money you INVESTED (not loaned), is used wisely.
So that, when you give a business 40 billion dollars, and agree to back hundreds of billions of potentially bad debt, you have a vest interest, express right, and moral obligation to make sure the "management" making the "decisions" doesn't "decide" to give themselves a great big fat pay check to the detriment of the company's bottom line, reducing the value of the portion of the company you've paid for.

The Fixer wrote:

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You are misusing the term "creditor" in this case, a "stock holder" is NOT a "creditor". A "stock holder" is a partial owner, equivelant to the amount of shares they own/control.
So in effect, the US government now "owns" 30% of Citi. If you are part owner you have every right, and responsibility, to ensure the money you INVESTED (not loaned), is used wisely.
So that, when you give a business 40 billion dollars, and agree to back hundreds of billions of potentially bad debt, you have a vest interest, express right, and moral obligation to make sure the "management" making the "decisions" doesn't "decide" to give themselves a great big fat pay check to the detriment of the company's bottom line, reducing the value of the portion of the company you've paid for.

Peter wrote:

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Yes, as an equity owner you're entitled, but that's what I said. But meddling like that with the creditor hat on is a different story and inappropriate.
Before you get too excited about the political pandering over bonuses, consider this. Take Citi, the Feds own 30%. So, if Citi retains $1 in bonuses, the Feds benefit by $.30. But if that $1 had been paid out, the Feds would've gotten $.365 (income tax + Medicare). NYC and NY state would've received another about $.105. So, government take with bonuses,$.47. Government take without bonuses,$.30. And this example is high; government ownership in other cases is lower or even zero. But it sure sounds good on TV!
It's the law on unintended consequences. NY needs those taxes. So, trash talking bonuses is a nice way to cripple NY's finances (even more). Obama trash talked attending conferences in Vegas earlier this year too. That'll be remembered by all those whose jobs are tied to Vegas when Harry Reid loses re-election next year. It'll just be too funny watching a Republican take down the Senate Majority Leader.

YO Mamma wrote:

Your not very smart are you.
They didn't take control...they PAID for control. The company could have said no to the purchase of all the stock. But they didn't, and you want to know why...because they couldn't...they were on the verge of going under.
Also, the government does take control of businesses, it's called BANKRUPTCY protection. However, in this case rather than the "BK COURT" it was the federal government. What you FOXNEWSians tend to forget because it was so long ago...Mr. Bush signed the bill for the "bailout", that invested money into these large banks and corporations.
Again, stop watching Glen Beck, Shawn Hannity, and Bill O'Riely and start thinking on your own, you wouldn't sound so stupid...or maybe you would.

The Fixer wrote:

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I get what you're saying, but to me it shows even more short sighted stupidity on the part of taxation (especially when it comes to NY):
Considering that the number of people whose pay is going to be controlled by the government is something on the order of only .000000001% of those paying the taxes, it should say QUITE A BIT, as to how much those people are pulling in that, some 75 to 250 people having their salary cut to "reasonable and fair" levels, equivelant to the performance of the business they're supposed to be running, would cause any significant damage to the bottom line of an entire state, or even of an entire city.
Again, the fact that these few, few, few people getting their salaries cut causes any financial pinch on any government, local, state or otherwise, goes to show us just how OVER PAID THEY REALLY WERE IN THE FIRST PLACE!!!
Seems like if that went strictly to the bottom line, or was paid in dividends then taxes on corporate profits and/or taxes on capital gains (which if I remember correctly is how dividends are taxed, but I'm not sure that's why I hire a professional every year...), "should" compensate for the lost personal income tax revenue.
Of course there are those of us who would say, "If they are paid an unfair salary, they SHOULD pay an unfair tax."
With unemployment over 10% now and at least partial blame resting squarly on these asshats shoulders, it doesn't hurt my feelings any that their salaries get controlled, and that it accidentally affects various governmental agencies.
It's more or less a 'two birds, one stone' situation.