Senator Kay Hagan cosponsored the amendment that would limit CEO pay for those executives receiving money under the TARP program. This probably came as a surprise to those who claimed she was too "business friendly" during the campaign. It may have come to a surprise to a few CEOs as well. Hagan's first amendment is at risk of being stripped from the stimulus bill and it may be up to the average taxpayer to help keep it in the legislation.
Executive compensation limits have been wildly popular among the people I talk to on the ground. I spend time with as many Republicans as I do Democrats and the average "Joe the Republican" I speak with doesn't have a problem with capping pay for those companies on the public dole. There isn't any mention of that slippery slope of socialism. It seems the only people worried about that are the D.C.G.O.P.
The CEO pay limit provisions are at risk after the CBO released a report indicating the pay limitations would cost the Treasury almost $11 billion over the next ten years. Of course, there are many factors the CBO can't measure.
It's extremely difficult to measure the effect on these banks of having hundreds of millions of dollars at their disposal that in the past had gone to line the pockets of the very executives running those banks into the ground. That money could be used to keep other employees on the payroll which reduces unemployment claims. In turn, those employees would likely be able to continue to pay their mortgages and other debts which reduces the number of bad debts these same banks are having to deal with.
It also can't measure the effect this has on public opinion and confidence. The average person feels a total disconnect with an executive who runs his business into the ground and continues to pay himself tens of millions of dollars - and that's not including the obscene bonuses. When a bank CEO whines that he can't live on $500,000 after having been paid hundreds of millions over the course of his career, the average American has to be wondering why. If we can't pay our debts in bad times, I'm sure Mr. Banker and his collectors would tell us we should have saved for a rainy day. The same should apply to Mr. Banker.
The other thing the CBO can't measure is the motivation Mr. Banker and his banker buddies will feel to pay this money back to the American taxpayers. Will they work harder and smarter to clean up their messes? Will they pay the money back more quickly so they can start paying themselves obscene sums of money once again? One would think so.
I personally don't think the restrictions on CEOs goes quite far enough. I think there needs to be a law that will make it a criminal offense for a company to refuse TARP assistance because they don't like the limitations placed on participants. If their company then fails because of their refusal to accept TARP funds, Mr. Banker and his banker buddies go to jail. In other words, you fail to bail and you go to jail.