Bailout package has a greed loophole

WASHINGTON — Now they tell us that there is a loophole in the bailout legislation that could negate pay limitations for chief executive officers. In other words the government, without some extra congressional action, may not be able to deprive top execs of those big-time compensation packages that helped get the economy where it is today.

It seems the bailout bill, thanks to some last minute maneuvering by the White House, contains a provision that restricts CEO income when their institutions sell their troubled assets to the government in an auction. But wouldn’t you know it, all the money doled out so far from the $700 billion rescue fund has been used to buy the bad loans directly, not through the auction process despite the Treasury Department’s initial plan to do so.

Lawmakers on Capitol Hill, who often seem to be suffering from an epidemic of narcolepsy, let the change happen without protest until suddenly awakening too late to do anything about it. That is not an unusual state of affairs for Congress, which is the only governmental body with a lower approval rating than the current president. Now no one needs to ask how any institution outside the United Nations could be so lowly regarded.

But don’t lose hope. The Treasury, which originally didn’t want serious restrictions on pay on grounds it would limit the effectiveness of the bailout, says it still has ways of making companies participating in the plan limit the golden parachutes and bonuses that have turned Wall Street into an obscene example of gluttony over the last few decades. One of these would be a provision that prohibits companies from deducting from their taxes compensation of more than $500,000. That’s hardly enough to keep the wolf from the door.

Intestinal drama

All this gets very complex. It also triggers a severe case of intestinal drama for Americans who have lost billions of dollars of their life’s savings in this era of asset manipulation that has destroyed housing and stock value unlike anything we have seen for 80 years. Many of those born in the midst of that nightmare now seem destined to go out the same way they came in — with only a change of diapers between their maker and them. But before that happens, it probably would give great pleasure to millions of hard working citizens to see those who are responsible lying destitute in a downtown alley in mid-winter.

It is the thought of that sort of retribution by stockholders and the many who based their lives on now depleted 401(ks) and their suddenly depreciated homes that is enough to make any company think twice about repeating the excesses of executive pay. Some companies already have frozen salaries and others have cut executive pay drastically. A few in the auto industry have said they will work for a dollar a year. Of course, most all of these measures apply to officers who have had large incomes for so long, financial trouble is the least of their worries.

We all should have a Christmas wish that the first thing Barack Obama does after taking the oath of office will be to expel the money changers from the temple. Perhaps he even could force Congress to get off its bloated, collective butt and do something. But don’t bet on it.

While I still have faith in capitalism and pay for achievement, there is a huge difference between fair return for hard work and obscene profits based on nothing but greed. In the spirit of this holiday season it seems appropriate to ask just how much money does one need? More importantly how much is it reasonable to pay? Is any man worth $40 million a year? Probably not, but once you’ve earned that much you have trouble convincing yourself that you aren’t worth it.

If you take Uncle Sam’s money, however, you should be forced to do so.

X Dan K. Thomasson is former editor of the Scripps Howard News Service.