Just like a banana republic
Today the Obama administration’s “pay czar” demanded that Ken Lewis, Chairman of the Board of Bank of America, work for free. The “czar,” Kenneth Feinberg, pressured Lewis not only to forgo all remaining compensation for 2009, but to repay the $1 million he has already received this year. Lewis acquiesced, saying that “he felt it was not in the best interest of Bank of America for him to get involved in a dispute with the paymaster.” I’m sure he was right about that.
Response to this outrage has been surprisingly muted. In my view, it is hard to imagine anything more un-American than a “pay czar” empowered to order businessmen to work for free.
The main point here is not sympathy for Mr. Lewis, although I am, in fact, sympathetic to him. He is about to retire and will receive a substantial retirement package–only, perhaps, because the pay czar lacked jurisdiction to negate it. But the idea of empowering the federal government to dictate businessmen’s compensation based on political favoritism is absolutely chilling.
This episode illustrates the problem perfectly. Lewis took on the federal government by testifying that Fed chief Ben Bernanke and Henry Paulson, a Democrat who was then Secretary of the Treasury, bullied him into committing what was, in effect, an egregious violation of the securities laws. Bank of America was due to close on its purchase of Merrill Lynch, and Lewis knew that Merrill’s value was plummeting. Lewis testified under oath that Paulson and Bernanke threatened to fire the entire management and board of Bank of America, including Lewis, if Lewis backed out of the Merrill deal or communicated to the bank’s shareholders what a bad deal the purchase had become.
So, according to Lewis, the federal government forced him to violate his duty to his shareholders in order to advance the government’s objectives. The feds were unhappy with Lewis’s blowing the whistle on their actions, which I believe would have been criminal if carried out by private citizens. Bernanke, at least, denied Lewis’s version of events.
So Lewis took on the feds, and now he’s paying the price. The Obama administration has taken away his entire salary for 2009. Political payback, or just a coincidence? In a banana republic, you never know.
Where is the outrage from those who love liberty? In a banana republic, your “freedom” only lasts as long as you are favored by those in power. Some definition of freedom; it is certainly not the historic definition in America.
Donald,
Correct me if I am wrong, Fed chief Ben Bernanke and Henry Paulson Secretary of Treasury were appointed under President George W. Bush (not of Nobel Peace Prize quality).
Kenneth Feinberg was appointed by Attorney General John Ashcroft (who was appointed by George W. Bush) to be a Special Master and later Special Master for TARP Executive Compensation(created in 2008 by Secretary of the Treasury Henry Paulson and President George W. Bush)appointed by now Secretary of the Treasury Timothy F, Geithner under the Obama administration.
There are a lot of people and program that has direct ties to Republican President George W. Bush above!
Are you complaining about the Democrats or Republicans and the program enforcement written into law established under George W. Bush?
Not pointing fingers but I think a little research should be done before an opinion is blogged to the public. I understand this is a hard core Republican and ant-union blog site but you do have an intelligent audience out here!
PS: It’s 85 degrees and sunny in Honolulu, HI.
Actually, I agree with Don’s point about some sneaking sympathy for Lewis. As anyone who is familiar with the story of Old Stone’s demise can tell you, when a lot of banks are in crisis, trusting the Feds to keep their word is a very high risk bet. Apparently, Lewis fell for it, just like Old Stone did (though the latter didn’t have the benefit of history to study). I wonder if McColl would have falllen for it too? Alternative history, I’m afraid.
John,
Lewis read the fine print and signed on the dotted line when he accepted the government bail-out TARP public funds (tax payer monies).
Lewis new what Secretary of the Treasury Henry Paulson and President George W. Bush were doing and what the consequences of accepting the TARP funds.
I have a wooden nickel for him and his efforts.
As for Kenneth Feinberg as Special Master for TARP Executive Compensation, the poor guy is catching flack for following the laws enacted by the pervious administration.
Look around RI and talk to the over 70,000 unemployed people and all the folks that have had their houses foreclosed. They did not get a TARP bail out. RI stands at 13% unemployment because of greed and high risk taking investments!
In China they shoot people like Lewis.
Are you and Donald going to be bleeding hearts over that?
Ok, so your problem is with current appointees? Who’s the “decider” now? Why are these people still around if Obama is so pure?
Was he forced by the ghost of fascists pasts to keep these people in charge? Your point is idiotic.
The FACT is that one of the few clearly outlined responsabilities of government is to protect contracts. Our current president has decided to adopt one of his ideological hero’s tactics(Chavez/Castro,ect…) and demagogue people out of thier predetermined compensation.
If you disagree, and you have a particularly valuable skill. Please contact me. Id love to get some free service. Just think of it as “the public option”
comrade…
“But the idea of empowering the federal government to dictate businessmen’s compensation based on political favoritism is absolutely chilling.”
Time for a recent history lesson.
How about “Wage and Price Controls” under Nixon. That was a debacle. Then we had “Rent Control” in Manhatten, Boston, Brookline, Cambridge.
I remember having an apartment at 64th & Park for $225 a month (I had to buy the sofa for $4,000). Later, I owned a building in Brookline and had well known surgeons paying $235.00 for large 5 room, brick apartments with decks overlooking a park.
A bit of humor for this group. One day I was standing in the courtyard talking to one of the doctors. We were approached by a young woman with a petition to “prevent the right wing from taking over”. Dave told her “You don’t understand, we are the right wing”. He might as well have told her that his parents were aliens.
In all of these jurisdictions, favoritism was rife. No one of any influence paid a realistic rent.
While not “as American as apple pie”, “wage and price controls” have been with us since WWII.
ADDEMDUM:
John,
As for rationalizing Ken Lewis and Bank of America to the government loan agreement and Old Stone Bank, yes the government erred in judgment but the management of Old Stone Bank also failed their shareholders and depositors by not reading agreement documents and questioning government intent or wording which left open wiggle room.
Most all of the shareholders were left bone dry by the settlement and payout except the lawyers and preferred shareholders.
Certain Old Stone executives, close friends and insiders who held the right Old Stone stock made an exceptional killing on the government law suit payout. Retirement for them will be blissful which only Robin Leach can report on!
Warrington Faust.
“But the idea of empowering the federal government to dictate businessmen’s compensation based on political favoritism is absolutely chilling.”
Nothing about the acceptance or offering of TRAP funds was proven to be political favoritism or political motivated. That bridge was examined and found to have no cracks.
Under the written conditions of accepting government bail-out or TRAP funds (tax payer funds) the private entities accepted the written condition of executive salaries and bonus caps because in most cases the government and tax payers became very close to being the majority stockholders of the financial institutions.
This was all written in stone and put into place by Treasury Henry Paulson and President George W. Bush in 2008.
Like I said above, as for Kenneth Feinberg as Special Master for TARP Executive Compensation, the poor guy is catching flack for following the laws enacted by the pervious administration.
Don’t forget, President George W. Bush was the first president to hold office with a Masters Degree in Business Administration from Harvard if that’s worth anything.
“Where is the outrage from those who love liberty?”
Have you spoken with a libertarian in the past 20 years?
With all due respect to some of the comments thus far, where is there any distinction in this blog post about Republicans versus Democrats?
Neither party has been friendly to liberty in recent years and both deserve to be condemned for that.
So focusing on Bush versus Obama is an interesting way to lead a debate detour away from the fundamental question of whether liberty is and should be paramount.
Shall we press the “reset” button?
Donald,
That’s why I asked you first place if your comments were about Democrats, Republicans or the program enforcement under the law as established under the Bush Administration?
Now your are asking consideration of just applying “liberty” to the equation.
Liberty means an awful lot to some people and not much to others. This is probably based on individual living standards within the family unit, outside family member, financial, sexual, educational, business, entertainment, church, community, government, national and international influences.
When I look at “liberty”, I look at what was done to the Caribbean Indian nations by Christopher Columbus, American Indians by European explorers and the United States of America, United States of America instituted slavery of African and Caribbean Nations because of natural skin tone and the English explorers, New England missionary religious interference into native Hawaiian lives and forceful overthrow of the Sovereign Kingdom of Hawaii by the United State of America.
That’s real “liberty”! To take what is not yours in the name of God and to decimate the population best to your ability after you have plundered and pillaged the resources.
Makes me real proud to have served my country in actual combat fighting to protect liberty.
In my private estimation Carl Lewis and BOA held the ideals of liberty to the highest extent of antiquated colonial European class ideals and exceptional risk.
As I have indicated, Lewis loosing his salary was following the laws to which he signed up to and fully understood in receiving the TARP bailout.
His liberty was not infringed upon.
At his salary and retirement benefits he will not be able to spend it all before he dies and neither will his heirs.
ADDENDUM:
Sorry it should be Ken Lewis not Carl and BOA as I stated!