“The Party Is Over!”

Posted: October 4, 2008 in Economy, Politics

“We sent a message to Wall Street – the party is over,” she said at a press conference with Reid and other Democratic leaders from the House and Senate. (Nancy Pelosi, House Speaker)

Now tell us about the other “message”, Nancy.

From washingtonindependent.com

The provisions to end golden parachutes are also plagued with gaping loopholes. The bill does nothing to alter terms of existing contracts, for example, instead allowing retirement packages negotiated before the bailout to proceed. For future employees, meanwhile, the bill would prohibit golden parachutes only when the executive is fired, or the company fails, despite the federal help.

Again, only companies dumping more than $300 million in bad assets are even subject to the golden parachute rules — and it can effect only five employees per company. That means an executive in a corporation receiving more than $300 million from the taxpayer-funded bailout would remain eligible for an unlimited retirement bonanza if that company became profitable and the executive retired voluntarily.

If that sounds vague — it is. The proposal currently asks the Treasury secretary to fill in the blanks after the bill is signed into law.

Another hole big enough to drive through: The proposal does nothing about stock options. So a bailed-out executive could be rewarded now with those options (trading low in the middle of the current financial crisis) and cash in — without penalty — for a windfall later if the company rebounds.

Experts point out why this loophole should be closed: Executives paid in enormous numbers of stock options have incentives to make risky investments — say, mortgage-backed securities — that could send the stock through the roof. Indeed, the AFL-CIO is dedicating its Executive Paywatch Website to the purpose of linking CEO pay to the current credit crisis.

Confused? (more…)

The party has just begun.

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