Axelrod Defends Circumventing Executive Pay Caps: Don't Want To Create "Disincentives" (VIDEO)

One of President Barack Obama's closest advisers defended on Sunday moves to help executives at major banks avoid restrictions on lavish pay, saying the administration did not want to "create disincentives" for these banks to participate in bailout initiatives.

"Understand that we are very committed, the president has a tough set of standards that we are refining to deal with this question of executive compensation," David Axelrod told Fox News Sunday. "It is an issue he talked about long before the crisis. But here is the point: on some of these programs we are asking financial companies to come in and help solve this problems by providing more lending, by buying up toxic assets and so on. We don't want to create disincentives and undermine the program. So we have to look very closely at this, making sure we are not rewarding people for irresponsibility, that firms that are getting extraordinary help aren't giving out huge bonuses. But we do need financial companies that aren't in great distress to help lead us out of this and partner with tax payers to help lending get going again."

The remarks come several days after the Washington Post reported that administration officials were "engineering its new bailout initiatives" in a way that would allow participants in the program "to avoid restrictions imposed by Congress, including limits on lavish executive pay." Legally, the administration says it is in the clear. Congress' restrictions apply to those receiving money from the government. But the bailed out firms are actually receiving money through special entities ("middlemen") set up by the government to funnel the money to these institutions.

Politically speaking, the administration has a tougher case to make. There is, as Axelrod acknowledged, a real populist anger with the salaries and bonuses of officials at these firms. And it seems unlikely to be diminished by the need to get other firms to help invest in the administration's toxic asset purchasing program.

UPDATE: A bit of mixed messaging on this front. Treasury Secretary Timothy Geithner, appearing on CBS' Face The Nation, seems to deny reports that the administration was trying to circumvent executive compensation rules passed by Congress.

"Our obligation is to apply the laws that Congress just passed on executive compensation and we're going to do that," said Geithner.

Comments

[MakeAWish]

I have lost all respect for Mr. Axelrod and his protege Obama.

[Gib]

You can't deny that they are very gifted politicians. But how can you tell when a politician is lying? Watch his lips.

[blueflag]

Axelrod has probably been asked to jump on board to lend this mess an air of legitimacy, since the public was told that he did not agree (and his genius during the campaign was roundly praised). But his presence is doing just the opposite: it shows waffling and change we cannot believe in. Lest anyone be confused, I supported Obama and still think he's better than McCain could have been. Still, it's a disappointing capitulation to Wall Street, thus far.

[FrozenNorthObserver]

He means they don't want to "create disincentives" that would interfere with Obama getting another 14mil from his top corparate contributors. So Plunderfestorama 2009 rolls on.

"saying the administration did not want to "create disincentives" for these banks "

[Gib]

You've got it!

[wndrwrthg]

Re: the obama administration: "Meet the new boss, same as the old boss".

[Gib]

If I weren't an atheist, I'd fall down on my knees and pray.

[enaid]

This is worth the time it http://www.pbs.org/moyers/journal/04032009/watch.htmlh.html

[hotwire]

Very interesting, everyone, and I do mean everyone, needs to watch this video.

[Rule Of Law]

For those who haven't worked it out, this fantasy financial crisis--like every one before it, including the market manipulations of the 19th century that produced the Federal Reserve as the solution to a problem that doesn't exist--this fantasy, was dropped on us last Fall after an 8 year buildup. It was Bush's going away present to the Oligarchs on Wall Street after having fleeced America for all he could with the Oil Scam.

We were stampeded into believing, just like with WMD's and Iraq--that we needed to move quickly and forcefully or, in this case, the economy would self destruct! No time to think. No time for Congressional inquiry or oversight. Must write up plan on cocktail napkin and give 350 Billion away as fast as we can!

And Congress did just what Wall Street told them to!

What's worse, is that this make believe crisis, which is just a cover for the greatest rip off the world has ever seen, is still going on with the collusion of a new president and new economic team, Led by Geithner, but with supporting players primarily from the most vested of all the banks, Goldman Sachs!

Today the financial corporations are valued at more than 40% of our total GDP. In America's heyday of the 50's through early 70's, they were perhaps 10%, the rest being manufacturing and real companies that made real products. The concentration of wealth and power in one place, Wall Street, must end.

[WeTellTheTruth]

The Democrats are just as corrupt as the Republicans............

The Democrats in congress are now joining WITH the Republicans to allow BONUSES.

"Melissa Bean of the Wall Street-friendly New Democrat Coalition led the effort to insert a huge loophole in a bill that would have forced TARP recipients like AIG to stop paying "retention bonuses" as long as they were being supported by taxpayer dollars".

"Bean's amendment initially failed on a voice vote, but she called for a roll call vote -- which allowed bank lobbyists to see exactly who did and didn't vote for the bill. This time, the New Democrats and the Blue Dogs made good on their threats to join with Republicans to pass legislation. Sixty-three Democrats joined with 165 Republicans to pass the Bean amendment".

http://www.huffingtonpost.com/jane-hamsher/melissa-bean-helps-banks_b_182797.html

Keep in mind that Obama.......the bankers best friend........said nothing and did nothing about this.

[Jazzcomedian]

The Obama administration has been handed the worst hand imaginable, and they're playing it pretty good in my opinion. They've taken on the responsibility in a calm, deliberate, reasoned, industrious way. Will it work? Only time will tell. Bush didn't have a clue, and if McCain/Palin had been elected to handle all these problems, I certainly wouldn't have any confidence in his ability to handle it. Especially with his boy Phil "nation of whiner, mental recession" Gramm as Treasury Secretary.

Paulson the Republican gave the banks $350 billion without any conditions whatsoever, and nobody knows where that money went. At least with the second tranche, Geithner has put everything he gave and the conditions on a website for us all to see. We're in very dangerous, uncharted waters, and I'd rather have Obama at the helm than anyone the GOP has. Imagine Gov. Sandford as president? He turned down $700,000 million to help his schools. No money for education for him. To hell with the children. How'd you like to have the "spending freeze" GOP in charge during this crisis? We wouldn't have a society worth living in, much less capable of global leadership.

[patrickgarret]

Funny listening to a bunch of bloggers here who can't manage their own money pretend to know ALL THE ANSWERS. LOL

[hotwire]

Especially Jazzcomedian.

[Citizen54]

The American credo: Protect the wealthy at all costs.

[bokiluis]

The White House has got to do a better job at explaining to the populous what is going on with the seeming coddling of Wall St. again. I have tried to understand this but it is definitely above my pay grade and I don't want this to be "misunderestimated". I fear that these fantasmagorical derivatives is understood by few. Geithner and Summers are just not very reassuring. President Obama seems lost in a quagmire like the rest of us. NEVER Forget this was created under the nefarious Bush administration. It is the bank robbery of this new millenium. Shock and awe to a devastated society. Tent cities, rethuglican governors trying to defend not "extending unemployment benefits".....as unemployment continues to rise. A disgusting recipe for "soup lines" to build. We must communicate our frustration to the White House and keep President Obama's feet and hands to the fire!

[1088]

Why bother go on the Republicant news channel to explain anything. These people doesn't listen at all, for they are working from a talking point script.

[Dark Sphere]

Like CNN, CNBC, MSNBC, ABC, CBS, NBC, and PBS, not to mention all of the major News Papers, haven't done that for decades...

[Drdemocrat]

Sam Stein you are confluting to different things together. The banks who are getting bailed out will have their executive salaries capped. However, the companies that are buying the toxic assets will not.

I don't see what the problem is.

[rabiddog6708]

It's too complicated for their tiny brains to process.

[quad11]

Yes! Simple and to the point. You should paste this comment into every forum on this topic. It won't satisfy those whose hate for the rich makes them forget that we are all in this mess together, nor the trolls who pretend to be outraged on behalf of the little guy, but would call O a commie the minute salaries WERE restricted, but it makes good sense. Thanks.

[Gussmith]

DISINCENTIVES!!! How about the incentive to keep your job. The out-of-reality compensation has been one of the most pervasive causes of the financial mess. It is time for the owners, the stockholders, and presently the taxpayers, to establish an equitable but reasonable pay standard for work done. Get a salary basis going. Keeping the job should be incentive enough, period. If you don't like the pay, leave.

[rssrai]

I am a populist but I understand that some bonuses are necessary. We just do not want to see millions of dollars in bonuses given out to bailed out banks. Why don't these bonuse be in the thousands and not millions? Why don't these bank workers get a yearly salary and the bonus should be based on the salary they get and not on how many bad loans that buy or sell. I get a yearly salary and the bonus I get is in relation to my salary and performance. The same should go for bank workers.

[MagicalPossibilities]

Bonuses could be given in the form of stock options that can be cashed out after the TARP money is paid back. But to take taxpayer money and turn around and give cash bonuses to the very people who helped run the companies into the ground should be a crime.

[Gib]

In the new economic climate, we don't need bonuses to provide incentive for success, we need a disincentive for failure - perform poorly and get the sack.