Special Master for TARP Executive Compensation Kenneth Feinberg – referred to by some as the White House Pay Czar – talks about the first thing he does when he examines an executive compensation contract. (0:57)
By Laura Smith – University of New Mexico/Talk Radio News Service
Treasury Official Kenneth Feinberg testified on Wednesday before the House Oversight and Government Reform Committee about his review of the bonuses paid to executives at the seven largest TARP recipients.
According to Feinberg, the Special Master for Executive Compensation under the Troubled Asset Relief Program – also referred to by some as the White House’s ‘Pay Czar’ – those recipients include American International Group (AIG), Bank of America, Citigroup, Chrysler, Chrysler Financial, General Motors and GMAC.
“For the last five months, I have a narrow mandate under the law, and that was to determine pay compensation packages for the top 25 officials in just seven companies that receive the most TARP assistance,” he said.
Feinberg explained that he received proposals from each of the seven companies on the matter of compensation, and after he reviewed them, he took specific actions to correct their flaws.
“I requested and received comprehensive submissions from each of the seven companies, explaining their view on what they thought they needed for their top 25 officials in the way of a comprehensive package. I examined those submissions with the utmost care and scrutiny, and I concluded that six of the seven submissions…were contrary to the statute, contrary to the regulations, and contrary to the public interest,” he said.
Feinberg clarified his remarks by stating that certain of the companies “wanted too much cash guaranteed salary…and made no mention of the perks that were part of their salary.”
Feinberg said that his office evaluated the submissions and made some material changes.
“First we greatly reduced the amount of cash that would be available to the senior officials. Second, they required that when they issue stock, that stock may not be cashed out for up to four years. Third, we said no more unlimited perks. Perks are limited to $25,000 per individual, and anymore than that would have to be approved by the Office of the Special Master,” he said.
by Julianne LaJeunesse- University of New Mexico
Should the Federal Reserve Committee be regulated by the Government Accountability Office? U.S. Representative Ron Paul (R-Texas) says yes, and Scott G. Alvarez of the Federal Reserve says no.
Paul is the sponsor of H.R. 1207, which calls for audits on the Federal Reserve, a quasi-public entity that in theory can control the nation’s money supply, set interest rates, and implement monetary policy.
At a Friday hearing, Paul said the Fed needs GAO oversight because they aren’t doing their job correctly.
“The Federal Reserve was designed, and their mandate was to make sure that we have full employment, price stability, and stable interest rates,” Paul said. “In my lifetime, interest rates have been 21 percent and less than one percent- so they fail there. They [the Fed] want a stable dollar and stable prices… well, we have continuous inflation.”
Paul said it’s Congress’ responsibility to make sure the Fed does what it was created for and not buy into the idea that the Fed needs more power and more secrecy.
Fed Board of Governors General Counselor Scott G. Alvarez argued before Paul, Chairman Barney Frank (D-Mass.), and other members of the House Financial Services Committee, saying that Fed autonomy is instrumental in safeguarding U.S. interest rates, but also that an independent Fed is a nonpolitical Fed.
Alvarez said from an economic stance, GAO regulation would hinder Fed access to and implementation of some programs.
“If it looks like the Federal Reserve is changing directions because a statement [of] the policy review by another agency is influencing the Federal Reserve’s decision… then the integrity of the process will be undermined, confidence that the Federal Reserve will move in the direction that is best for the economy will be undermined, and we won’t be able to carry out our job as well,” Alvarez said. “And that’s what we’re concerned about.”
Alvarez said the Fed has taken many steps to increase transparency since the 2008 bank bailouts, but when Rep. Emanuel Cleaver II (D- Mo.) asked him about the misinterpretation between Congress and the Treasury Department and the Federal Reserve, as far as Troubled Assets Relief Program allocations, Alvarez said the latter departments decided to use the funds to restore confidence to banking institution, a decision Cleaver said was not immediately apparent when TARP was passed.
By Laura Smith
The Committee on Banking, Housing and Urban Affairs held a meeting Thursday to talk about the Emergency Economic Stabilization Act and TARP (Trouble Asset Relief Program).
The panel consisted of Herbert M. Allison, Jr., Assistant Secretary for Financial Stability; Neil Barofsky, Special Inspector General for the Troubled Asset Relief Program; Gene L. Dodaro, Acting Comptroller General of the United States; and Elizabeth Warren, Chair of the Congressional Oversight Panel.
Chairman Christopher J. Dodd (D-CT) said Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke, and SEC Chairman Chris Cox came to Congress with an important message, and that was that the American economy was close to a total collapse.
“Our nation was in the midst of an economic crisis that threatened small businesses’ ability to make payroll, cost us more than half a million jobs, turned the American dream of homeownership into a nightmare for many, kept students from getting college loans, and wiped out hundreds of billions of dollars in savings that Americans were counting on for their retirement,” he said.
He said the Bush administration had a proposal on how to help large and small businesses who were unable to access the credit they needed to operate, but called it was unacceptable.
He stated that the Bush administration asked for an unprecedented amount of taxpayer money and executive power under the unchecked control of one unelected individual, with no guidelines to ensure that it would be used properly.
“Doing nothing wasn’t an option. But neither was this proposal,” Dodd said.
Herbert Allison said earlier this year that what the nation faced was no longer just a financial crisis; it was a full-blown economic crisis. He said that in January alone, 741,000 Americans lost their jobs, home foreclosures were at a rapid rate, and businesses and families were struggling to find credit.
“In short, the economy was in a free fall and there was increasing concern we were headed towards a second Great Depression,” Allison said.
He said a comprehensive strategy was put in place to stabilize the financial system and the housing market, to stimulate economic activity, and to provide help to those in most need.
“TARP has been vital to our achievements to date, and it will continue to be an important part of our recovery. The recovery has just begun, the financial system remains fragile, and the credit markets are not fully functioning. And with unemployment still unacceptably high, home foreclosures still rising, and many Americans still suffering through no fault of their own, we still have work to do,” Allison said.
He stated that EESA had authorized $700 billion for TARP, and that as of September 21, 2009, Treasury has announced plans to provide $644 billion for specific TARP programs.
“Of that amount, we have entered into commitments of $444 billion, and we have disbursed $365 billion,” he said.
Allison said a large part of the total activity to date occurred last fall under the Capital Purchase Program (CPP) following the adoption of EESA in October 2008.
Chair of the Congressional Oversight Panel Elizabeth Warren, says she sees no plan on whether or not TARP will be extended one more year. (0:45)
By Mariko Lamb
Rep. Cathy McMorris Rodgers (R-Wash.) unveiled a new GOP website Thursday that “shines the light on government spending.” Sunshine.gop.gov tracks stimulus project spending, earmarks, TARP programs, and transparency legislation.
“We thought it was important that taxpayers actually be able to see exactly how every dollar was being spent,” she said. “Sunshine.gop.gov will give taxpayers greater insight and ultimately hold the federal government accountable for how it spends our tax dollars.”
The site is more user-friendly and cost-effective than Recovery.gov, she said. Development of sunshine.gop.gov cost only $20,000 as opposed to the recent $18 million contract signed to update the administration’s stimulus site, Recovery.gov.
Rodgers urged both the public and the media to use the website as a tool to conduct research on government spending and pursue stories on wasteful government spending.
“We’re making a transition as far as using new media [and] the internet. It’s impacting the way we communicate as a society, but its also is impacting the way people get information,” she said. “This is a step in the right direction.”
Rep. Barney Frank (D-Mass.) says he longs for the “good ole days when I thought TARP is what you used to cover up the infield whenever it was raining.” Frank made the remark during a discussion of financial regulatory reform at a National Press Club luncheon. (0:05)
“We feel a great obligation as responsible stewards of their money,” Assistant Treasury Secretary Herbert Allison Jr. says, adding that the Treasury is committing every effort to ensuring an ample return for taxpayers for their lending to TARP. (0:18)
The Troubled Asset Relief Program (TARP) has been “key to stabilizing the financial system and preventing greater deterioration in the availability of credit,” says Assistant Treasury Secretary for Financial Stability Herbert Allison, Jr. Despite signs of economic recovery, “our financial system and our economy remain vulnerable…this is why Treasury must remain vigilant and press ahead in our economic stabilization efforts,” he adds. (0:57)
By Mariko Lamb, Talk Radio News Service
Assistant Treasury Secretary for Financial Stability Herbert Allison, Jr. said that the Troubled Asset Relief Program (TARP) has been “key to stabilizing the financial system and preventing greater deterioration in the availability of credit,” in his testimony to the House Oversight and Investigations Subcommittee Wednesday.
“There’s also signs that the economy is beginning to mend,” he said. Indications of economic stabilization include an increase in the issuance of corporate debt, increase in consumer confidence, and higher housing starts.
Despite these improvements, “Our financial system and our economy remain vulnerable,” he said, as unemployment and home foreclosures remain high and strains in the commercial real estate market continue to build. “This is why Treasury must remain vigilant and press ahead with our financial stabilization efforts,” he said.
Allison attempted to assure members of the subcommittee that taxpayers can put their trust in the Treasury, and that the agency is dedicated to high standards of transparency.
“We feel a great obligation as responsible stewards of their money,” he said, assuring those at the hearing that the Treasury is committing every effort to ensuring an ample return for taxpayers.
“I will regularly update Congress on our progress. We have productive, working relationships with our four oversight bodies–Special Inspector General of the TARP, Government Accountability Office, Congressional Oversight Panel, and Financial Stability Oversight Board,” he said.
Information on lending activities of Treasury-invested banks can be found at www.financialstability.gov.
