Stimulus Limits Bonuses For Bailout Execs

(CBS)  The Senate passed a $787 billion economic stimulus plan Friday night, and President Obama says he will sign it Tuesday in Denver.

Some of the highlights include worker tax credits of up to $400, $70 billion to cushion the impact of the alternative minimum tax and $36 billion for state unemployment benefits. It also includes surprisingly tough rules on executive bonuses at banks that receive bailout money, reports CBS News correspondent Michelle Miller.

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Over the objections of the Obama Administration, Senate Banking Chairman Chris Dodd slipped in a little noticed provision that puts strict limits on those massive year end bonuses for top executives at troubled banks.

In a statement, issued late last night, Dodd explained: "These tough new rules will help ensure that taxpayer dollars no longer effectively subsidize Wall Street bonuses."

"If they have their hands in the public pockets, these guys can't have it both ways," says economist Dan Mitchell. "If they're going to mooch they're not going to get big salaries."

The rules apply to the companies which have already received or will get future payments of at least $250 million in bailout money. For example, Miller reports, a top-level manager making a million dollars a year could only receive bonus of $500,000. And if he or she gets stock options, they can't cash them in until the company pays the government back.

It's a reaction to public outrage after reports that 600 employees at Merrill Lynch received at least $1 million bonuses. That's just before the firm was taken over by Bank of America last December. Some Wall Street watchers believe most companies will find a loophole.

"These companies and executives aren't stupid," Mitchell says. "Whether it's going to be stock options or fringe benefits, they'll find ways to get their money."

The stimulus bill passed with the bare minimum sixty votes, only because three Republican senators broke ranks to support it.
By Michelle Miller

[southernsenior]

It's about time! And while you are at it, raise their taxes - a lot.

[rnbwprsm5]

'' .. i don''t care for a non-consensual non-pornographic game of war and raped dead war baby just now, i''m feeling allergic, the sky could change colors and dragons flight away and infants and toddlets and tweens and ol decrepit folk could stop blooming and bakeing around the street cornet sick beds and start whacking each others for being dressed diligent sober celibate sinners and congress and the networks might come back .. ''

[dstudmuffina]

I think that they should not get bonuses period!! This bailout is not for paying them bonuses, its for helping balance out the economy. I would love to just stick all these bank CEO''s in our shoes and they can see how much the real American Public is suffering!!

[4marlene]

They should all be arrested for looting.

[stryker54]

Sure thing. Top management making 1M a year salary, he deserves a 500K bonus of taxpayer money. If you ask me these same people that have made millions should now work for $1.00 a year to straighten out the mess the created. Bonuses are for generating business, not running it into the ground to havethe taxpayer bail them out so they can continue thier lavish lifestyles.

[stryker54]

Sure thing. Top management making 1M a year salary, he deserves a 500K bonus of taxpayer money. If you ask me these same people that have made millions should now work for $1.00 a year to straighten out the mess the created. Bonuses are for generating business, not running it into the ground to havethe taxpayer bail them out so they can continue thier lavish lifestyles.

[stryker54]

Sure thing. Top management making 1M a year salary, he deserves a 500K bonus of taxpayer money. If you ask me these same people that have made millions should now work for $1.00 a year to straighten out the mess the created. Bonuses are for generating business, not running it into the ground to havethe taxpayer bail them out so they can continue thier lavish lifestyles.

[veryupset3]

All we hear about is the limits on executive pay (which is a good thing), but what about the companies that are recieving our money (taxpayer money) that are completely mismanaging the business and overpaying their employees. One example is GMAC. Here we have a company that recieved a lot of bailout funds and just happens to own a large mortgage lender that just continues to post losses after losses. If you look at one section of this mortgage arm, RESCAP, they have a unit in Charlotte, NC that has loan officers (many of the same ones that caused the mortgage crisis in the first place) being paid thousands of dollars for each loan they refinance, making $15k -$25k thousand a month in commissions. The kicker is this, they are refinancing the bad loans that GMAC made/bought and paying people extravagent sums to do it! You would think that someone would have the intelligence to put a stop to this. Taxpayer money going to a mortgage company that continues to lose money month after month and yet they can pay their managers and loan officers $180k - $400k per year to work on loans that they already own. I am sure that there are plenty of people out there that chose not to push subprime loans on people over the last 10 years that would jump at the chance to have a job cleaning up a mess like this and make $50k or $70k a year doing it. Get a clue GMAC! You have our money! Clean up the waste and mismanagement!