The New York Timesleads, the Wall Street Journal banners, and everyone fronts President Obama imposing new limits on executive compensation for companies that get taxpayer money. The WSJ calls it "the most aggressive assault on executive pay by federal officials." Under the new rules, any company that receives "extraordinary assistance" from the government won't be able to pay its top executives more than $500,000. The tough talk from the White House wasn't just reserved for Wall Street. The Los Angeles Timesleads with a look at how Obama "abruptly changed tactics" yesterday when he used some of the most partisan language since taking office to blame Republicans for holding up the massive stimulus package.
USA Todayleads with preliminary state data that show there was a sharp drop in traffic deaths last year in at least 42 states, as Americans drove less due to high gasoline prices and the ailing economy. Twenty-five states and the District of Columbia saw double-digit percentage declines. Experts say that while there could have been other factors at play, the decline in deaths was at least partly due to the plunge in miles driven. The Washington Postleads with a look at how people in the Washington area have been forced to wait longer for unemployment benefits. At a time when unemployment is rising, many local government offices have been forced to cut staff and can't keep up with the rising number of claims. The problem is hardly limited to the Washington area as "Web sites and phone systems in some states are buckling under the strain," notes the Post.
The new rules on executive compensation came amid mounting public anger over the huge amounts of money that some of the leaders of companies that have received money from Uncle Sam continue to receive. The move was seen as particularly important because it came days before the administration is expected to outline a new plan to deal with the continuing deterioration of financial institutions that will probably involve having to ask for more money from Congress. "This is America," Obama said. "We don't disparage wealth. … But what gets people upset—and rightfully so—are executives being rewarded for failure."
The WP off-leads an analysis piece that says Obama has been trying to figure out how to best address the anger that many Americans feel "while not crossing into glib point-scoring that could spook the business class." It's clear that "his indignation has ratcheted upward in recent weeks," but he still has many supporters from the financial sector, and some of the top officials in his administration also hail from that world. While he has long decried Wall Street excess, he hasn't gone as far as other Democrats, and his statements pale in comparison with the anger expressed by President Franklin Roosevelt, who famously declared that "the money-changers have fled their high seats in the temple of our civilization" during his 1933 inauguration.
In addition to the salary cap, the firms receiving exceptional assistance wouldn't be able to offer additional compensation to executives except through company stock that can only be redeemed after the government money is paid back. The new rules would also limit so-called golden parachutes for departing executives. Under what the administration is calling the "name and shame" provision, the government will require companies that get government money to outline a policy regarding luxury items, such as corporate jets and country club memberships.
The new rules are not retroactive, so the big firms that have already received billions in order to stay afloat wouldn't have to abide by them. And for the vast majority of the companies that will receive taxpayer money but not "exceptional financial recovery assistance," the limits are largely voluntary. These companies could waive the restrictions on pay if they disclose their executive compensation package publicly and allow a nonbinding shareholder vote. And while they would still be a subject to a ban on "golden parachutes," it is much less restrictive. That may still change, because the rules that apply to firms that don't receive "exceptional" assistance are subject to a public-comment process. Regardless, even companies that don't get a waiver could still provide as much restricted stock as they want.
In a front-page piece, the LAT warns of "abundant loopholes" that "could undermine any lasting effect" of the compensation restrictions. Wall Street has been able to get around rules that limit executive compensation in the past, and there's little reason to think it wouldn't be able to do the same thing again. And it certainly won't be the end of multimillion-dollar salaries. The restrictions wouldn't apply to midlevel workers on Wall Street, who often get significant bonuses as well. Still, some worry that restrictions could hurt firms by making it harder for them to recruit top talent.
Even if plenty of loopholes are found, USAT talks to some compensation experts who say the new rules might permanently change the way Wall Street firms pay their employees. It could lead to a move away from cash bonuses and a bigger focus on using stocks with long holding periods to reward workers.
The president angered many members of his party by crafting a stimulus package with lots of tax cuts to appease Republicans. Since taking office, he has publicly tried to strike a conciliatory tone. But yesterday, he made it clear that he's had enough and accused Republicans of espousing "the very same failed theories that helped lead us into this crisis." Obama not-so-subtly reminded Republicans, "and perhaps even some wayward Democrats," notes the LAT, that he won the election and has a high approval rating. "I reject these theories," he continued. "And, by the way, so did the American people when they went to the polls in November and voted resoundingly for change."
Obama repeats some of these same points in an op-ed piece in the WP today, where he warns that if nothing is done to fix the country's problems, "[o]ur nation will sink deeper into a crisis that, at some point, we may not be able to reverse." The president criticizes those who think "that we can meet our enormous tests with half-steps and piecemeal measures" or that "our economy and our country can thrive" without tackling "fundamental challenges such as energy independence and the high cost of health care."