From The Washington Examiner Newspaper comes this report that a measure is quietly going through Congress to give the Federal government the right to approve the pay for every employee at every company receiving federal funds. That's almost all banks, lots of insurance companies, and GM and Chrysler. Not just CEOs (which is already an affront to capitalism and free markets), but EVERY EMPLOYEE. The government now decides when someone's pay is "excessive" or "unreasonable." The government can set the pay scale for UAW line workers. The guy in the mail room better step it up or his pay might be deemed "unreasonable."
What has happened to America? This is not a power any government should ever have, and yet this seems to happen with no fanfare or much concern. Well, we should all be concerned. This is not right.
But now, in a little-noticed move, the House Financial Services Committee, led by chairman Barney Frank, has approved a measure that would, in some key ways, go beyond the most draconian features of the original AIG bill. The new legislation, the "Pay for Performance Act of 2009," would impose government controls on the pay of all employees -- not just top executives -- of companies that have received a capital investment from the U.S. government. It would, like the tax measure, be retroactive, changing the terms of compensation agreements already in place. And it would give Treasury Secretary Timothy Geithner extraordinary power to determine the pay of thousands of employees of American companies.
The purpose of the legislation is to "prohibit unreasonable and excessive compensation and compensation not based on performance standards," according to the bill's language. That includes regular pay, bonuses -- everything -- paid to employees of companies in whom the government has a capital stake, including those that have received funds through the Troubled Assets Relief Program, or TARP, as well as Fannie Mae and Freddie Mac.
The measure is not limited just to those firms that received the largest sums of money, or just to the top 25 or 50 executives of those companies. It applies to all employees of all companies involved, for as long as the government is invested. And it would not only apply going forward, but also retroactively to existing contracts and pay arrangements of institutions that have already received funds.
In addition, the bill gives Geithner the authority to decide what pay is "unreasonable" or "excessive." And it directs the Treasury Department to come up with a method to evaluate "the performance of the individual executive or employee to whom the payment relates."
* This is Barney Frank (D - MA), Chairman of the House Financial Services Committee. This man is probably the single most responsible person for the subprime mortgage crash (that's another post some other day). The economic damage he's done makes Bernie Madoff look like a Girl Scout. This guy should be in jail, not telling other people how much money they can and can't make.