Saturday, March 08, 2008

Awwww! Poor little rich kids

Whoever said "Money can't buy happiness" is an idiot. Or, at the very least, they didn’t watch C-SPAN yesterday.

Yesterday, the House Oversight and Government Reform Committee held a hearing about the extraordinarily high compensations received by financial executives in the face of a looming mortgage crisis. Included on the panel were a host of high level executives from some of the nation's biggest mortgage lenders.

This hearing was long overdue. It's no secret that, by all measures, executive compensation has been steadily on the rise while the pay of average workers continues to diminish. In the 80's for example, CEOs earned somewhere around 35 times the salary of an average worker. Today however, they make nearly 360 times as much. Though today's figures are down as compared to a couple of years ago, the disparity is still too alarming to ignore. Particularly interesting in this situation is that these CEOs are being rewarded with insane compensation packages even when their companies have performed miserably; recording billion-dollar losses, contributing to a record number of property foreclosures, and causing shareholders to lose millions.

As expected, the questions, comments, and observations provided by the committee cut across party lines. Representative Tom Davis (R-VA) vehemently justified the compensation for CEOs; citing that the committee was playing a "...derivative and potentially damaging role in the discussion of complex transactions, proprietary business decisions and marketplace dynamics." Meanwhile, Representative Elijah Cummings (D-MD) was scathing in his assault of these CEOs (most notably former Countrywide CEO Angelo Mozilo who -- in a 2006 memo -- complained about Countrywide not paying the taxes that incurred from his wife's travel on the company jet. Yes. While his company was recording major quarterly losses, he was trippin' about paying taxes for his wife to fly on their company jet.). One by one, the committee (with the exception of the more-than-forgiving Republican members) grilled the CEOs on their exorbitant salaries; juxtaposed to the miserable losses faced by their companies. One by one, the executives defended themselves by testifying on how they really did deserve their payoffs.

Finally -- also as expected -- the committee adjourned by doing absolutely nothing. Well, I guess to say they did nothing is a little understated. Committee chair Henry Waxman (D-CA) did at least congratulate the CEOs on their success and "their many contributions to our country" before ending the hearing. He also made it clear that the committee's questions were -- in no way -- intended to "disparage their records”. Yes, you heard me correctly. At the end of the day, executives who land hundreds of millions of dollars while their companies burn are likely to only receive a figurative slap on the wrist.

So I say again: whoever says "money can't buy happiness" is an idiot.

- ACL

10 "Insiders" spoke their mind. Join in...:

Ellena said...

I'm convinced that the 110th Congress is the most useless and ineffective session in the history of the country. Besides reminding these greedy CEOs about how great they are, what was the prupose of this hearing?! Really?!

Honestly, I think this hearing was some failed attempt by Congress to give the impression that they actually accomplished something. But these fools continue to miss the mark time and time again. They continue to waste money and people's time while protecting corporate fatcats (great picture) and special interests with their shady earmarks. They all need to be arrested.

Kenya said...

I'm not suprised by the lack of real action taken by the committee. If they haven't done anything about Halliburton and Blackwater, what makes you think they'll do anything about these crooked CEOs?

Lone Grey Squirrel said...

Spike Milligan:"All I want is an opportunity to prove that money can't buy me happiness."

Anonymous said...

Well I'm against the government trying to regulate business. Free trade means JUST THAT! Anything else would mirror the communism you'd find in the former Soviet Union.

Anonymous said...

Besides, it's clear that government can't be relied on to manage the money THEY have. What makes you think they should have the right to tell businesses how they should handle theirs?

Cynthia said...

Anonymous, I agree that we don't have any business turning into the former Soviet Union. But let's not forget the people affected by these corporations are your average hard-working American. If they can't rely on their employers not to screw them, SOMEBODY has to come to bat for them.

J. Alex said...

To be honest Andre, I don't see why Congress would waste their time with this hearing. I agree to an extent with anonymous in that they can't dictate what private companies do (or don't do) with their earnings. Let the company's board members and shareholders bear the responsibility of dictating accountability. Those are the people to whom these CEOs are beholden. If CEOs fail to carry out their fudiciary duties, the government shouldn't be the entity they give accountability to.

Anonymous said...

Even though I strongly consider myself a liberatarian, I believe there is something fundamentally wrong with CEOs walking away with hundreds of millions of dollars for doing nothing but watching companies fail. They make more than the President of the United States for crying out loud!

To address anonymous: this isn't an issue of the government communistically dictating to companies. This is about the government accepting its call to keep the order. These CEOs should not be allowed to damage people lives and -- on a larger scale -- the nation's economy.

Giving CEOs undeserved compensation when a company's worth plummets is just plain wrong.

Andre said...

@ Ellena: "I'm convinced that the 110th Congress is the most useless and ineffective session in the history of the country."

I would've said the 109th was worse, but they spent too much time being engulfed in scandals. The 110th actually tries to be a Congress, except they keep failing miserably.

@ Kenya: "If they haven't done anything about Halliburton and Blackwater, what makes you think they'll do anything about these crooked CEOs?"

Bingo.

@ LGS: Hahaha! Great quote!

@ Anonymous and J. Alex: I agree with Cyn and anonymous #2 here. I don't think we should call on the government to rule with an iron fist. But some corporate accountability has to be taken here when these failed businesses and overcompensated CEOs are undermining the entire economy. In fact, I just read an article talking about how Countrywide is being investigated on its possible role in the mortgage crisis. This is serious stuff that the whole nation has felt.

heiresschild said...

At the end of the day, executives who land hundreds of millions of dollars while their companies burn are likely to only receive a figurative slap on the wrist.

ahhh, but the wrist slappees will feel the real burn later. of course, that doesn't help now, but still.....