Monday :: Dec 15, 2008

Paulson Lied To Congress

by Deacon Blues

A small but determined group of Senate Republicans want the United Auto Workers to suffer greatly before the Big Three car companies can get a measly $15 billion in loan guarantees from the federal government, in order to avoid a national economic problem. And yet these same Senate Republicans never seriously threatened to filibuster giving almost 50 times that much to "save" the credit markets and Wall Street. Now we're told that the Bush Administration had no intention of restricting CEO pay as a condition of Wall Street getting that money.

Congress wanted to guarantee that the $700 billion financial bailout would limit the eye-popping pay of Wall Street executives, so lawmakers included a mechanism for reviewing executive compensation and penalizing firms that break the rules.
But at the last minute, the Bush administration insisted on a one-sentence change to the provision, congressional aides said. The change stipulated that the penalty would apply only to firms that received bailout funds by selling troubled assets to the government in an auction, which was the way the Treasury Department had said it planned to use the money.
Now, however, the small change looks more like a giant loophole, according to lawmakers and legal experts. In a reversal, the Bush administration has not used auctions for any of the $335 billion committed so far from the rescue package, nor does it plan to use them in the future. Lawmakers and legal experts say the change has effectively repealed the only enforcement mechanism in the law dealing with lavish pay for top executives.
"The flimsy executive-compensation restrictions in the original bill are now all but gone," said Sen. Charles E. Grassley (Iowa), ranking Republican on of the Senate Finance Committee.

Hank Paulson lied to Congress.

Meanwhile, Paulson repeatedly told lawmakers that he did not plan to use bailout funds to inject capital directly into financial institutions. Privately, however, his staff was developing plans to do just that, Paulson acknowledged in an interview.

As David Sirota notes, there were suspicions that the CEO pay limit was a sham back in October, but the bigger question for me right now is whether or not Barney Frank cares one damn bit.

Deacon Blues :: 12:31 PM :: Comments (1) :: Digg It!