Sun 21 Sep 2008
Erin Burnett ‘98 was on Meet The Press today. (Thanks to Soph Mom for the tip.)
(Burnett’s main comments start at 1:15.) Transcript here. Quotes and comments below.
MS. BURNETT: Now, I think that’s a fair point. I also think it’s important to notice that the job losses we’ve had so far in this slowdown, or whatever term you’d like to use, Tom, are not as bad as in a usual recession. But it is expected, given some of the repercussions that we’ve been talking about here in terms of lending, that some of that job loss may accelerate. So that’s important.
And another thing is you know the Treasury secretary talking to you, he keeps bringing it back to the root is housing. Once housing prices start dropping–stop dropping, we’re going to be all right. And I think that’s highly questionable because the whole point here is there has been contagion. You see credit card–we haven’t seen real blow-ups there, we might. Or on the auto loan side of things. And that not only affects regular Americans, but will have another “derivative effect,” to use the word, on Wall Street.
Correct. Although housing may be the major component, the bubble was everywhere: student loans, credit cards, auto loans, LBOs and on and on. Think all the debt for the LBO deals of 2006–2007 is worth 100 cents on the dollar? Ha! Not even close.
Erin, let’s begin with you. I know that you’ve been talking to a lot of people on the Hill. Are they going to get this done this week?
MS. ERIN BURNETT: They say yes, talking to, to various members of leadership, both in the House and Senate yesterday. They’re going to get it done by Friday, Tom. Right now, what we have is a very rudimentary plan, and there’s a lot of argument, especially among Democrats. Hank Paulson, as you know, wants to have as much flexibility as he can for the money he needs to get this job done. Democrats would like to put in some–maybe a stimulus package of $100 billion. Some are fighting for that, and some are also fighting to say, “Look, banks, if you participate, we want to put a limit on CEO compensation.” So that’s a big part of it. But, Tom, the big question is, last time we went through this, it took six months from the day we signed legislation to the day the RTC was up and running, and some might argue this time we do not have that window of time. It needs to happen much more quickly that.
1) Friday?! Isn’t a week a very long time in politics, especially for a deal that has enemies on both the left (Paul Krugman) and the right (Michelle Malkin)? The campaign ads write themselves.
2) I am not a Democrat, but where are my class warrior friends when I need them? Consider these suggestions.
Let’s assume there really are toxic weapons of mass economic destruction in the portfolios of the world’s banks which need to be seized before they destroy us all. I’m not there, BTW, but there’s gonna be a bailout so let’s think about the rules. They ought to be similar in pain to what bankruptcy would entail.
Rule #1: Cut salaries nowPart of the bailout bill ought to be that any organization which proffers securities for government purchase must agree not to pay any employee or contactor more than $1 million per year for the next four years. No cheating with trips to events on the corporate jet or other perks with draconian penalties TO THE RECIPIENT for violations.
Rule #2: No new golden parachutes
Some executives have contracts which entitle them to huge golden parachutes – especially if their pay is cut. These need to be annulled.
Rule #3: End payment on old golden parachutes
Payments on existing golden parachutes should be stopped.
Indeed. No firm is being forced to sell securities to the government. Want to keep paying your executives huge amounts? Go ahead! But for a firm to, simultaneously, get bailed out by taxpayer dollars and pay its executives (especially all the ones who caused the mess) lavishly is obscene. Don’t my Democratic friends agree?
3) If someone is looking for a way to rein in “CEO compensation,” I have the perfect plan.
4) Why don’t reporters like Brokaw ask Paulson some tough questions? How about this dialog:
BROKAW : Secretary Paulson, isn’t it true that the senior 20 or so executives at Goldman Sachs have collectively earned around a billion dollars over the last 5 years of the credit bubble, including tens of millions paid to you?
PAULSON: Well, Tom, I hardly think that the compensation practices of a single firm are relevant to this discussion, but, yes, financial executives are well-paid.
BROKAW: But now we know that the profits that led to that billion dollars in compensation were, in some sense, fraudulent. Goldman Sachs was never really that profitable in, say 2004. That’s why we need to bail them out now. So, given the fact that Goldman now wants a bailout from the government, shouldn’t executives pay back some of that compensation?
PAULSON: Well, I don’t think it is helpful to focus on the past. We need a plan for the future.
BROKAW: Lloyd Blankfein, your hand-picked successor as CEO at Goldman Sachs, made $67 million in 2007. You propose that US taxpayers — teachers, soldiers, fire fighters — bail out Goldman Sachs with billions of dollars and yet you won’t ask your friend Blankfein to contribute a dime of his massive wealth?
PAULSON: …
Am I the only one that finds this absurd? If Goldman Sachs needs a cash infusion, then the first dollar ought to come from the multi-millionaires who have been taking money out of the firm for the last decade. If they won’t contribute, then why should I?


September 22nd, 2008 at 2:38 am
Obama responds. McCain has some splainin’ to do.
September 22nd, 2008 at 2:46 am
The re-regulator. How quickly Cokie and Will turn.
September 22nd, 2008 at 4:06 am
Can you stick to “quoting” things that are actually quotes, please?
September 22nd, 2008 at 7:15 am
From an equity perspective, of course this makes complete sense to me David. Although I am not sure if there is any mechanism or precedent for Congress to retrospectively target the wages or particular individuals who were already paid those wages pursuant to a contract. And I’m not sure we want to set that sort of precedent here. Or even to interfere with an already-existing employment contract that contains a golden parachute provision (although the latter seems like less of a stretch). Very different from a general tax based on income levels (of course, if the Bush tax cuts hadn’t been pushed through, a good chunk of this revenue would already be in the federal treasury …). One mechanism might be, if there is some plausible theory of fraud that might lead to litigation against the uber-compensated individuals, to frame it as immunity for suit in exchange for, say, 75 percent of salaries above certain levels in certain years. But that would be an opt-in sort of mechanism that would only work if there was a plausible threat of potentially successful litigation. And again, I don’t know anything about how these companies work and whether they are structured and governed in such a way as to permit a shareholder derivative action or a breach of fiduciary duty type suit. But one thing is for sure — if there is a way, there certainly is a will among the plaintiffs’ bar …
September 22nd, 2008 at 7:21 am
Thanks Nuts. McCain’s ad about Raines, who met Obama once, for five minutes (but who is a black man, oh no!), when his campaign manager was in bed with these institutions, based solely on his access to McCain, to the tune of hundreds of thousands of dollars, is the very definition of chutzpah / stupidity (take your pick). If McCain loses, and does the inevitable blame the liberal media routine, he might want to start by taking a look in the mirror to realize that his hypocrisy and dishonesy, and nothing else, caused the media to turn on him … nothing more embodies that hypocrisy / dishonesty than the Raines / Davis comparison …
September 22nd, 2008 at 7:45 am
I absolutely think that future compensation should be limited for any firm that wants the govt to bail them out. And any funds that have not yet been paid out to a CEO should be limited wherever possible, and I realize this might not always be possible. There are CEOs still working at some of these firms who have various bonus calculations in their contracts though. How abut the boards of directors start, I don’t know, directing their companies and make sure there is some criteria for receiving the bonuses that might reflect not running them into the ground?
I’m glad to see the Dems are at least pretending to have a backbone right now and not giving a blank check to Paulson. I love that he seems to think he’s done such a huckuva job that he deserves such unfettered piles of money to play with. It remains to be seen what kind of spine the Dems keep…we’ll see.
September 22nd, 2008 at 8:11 am
I would be against any plan that said, “Give us back the money that you made.” That is not what I propose. Instead, the plan is: “If you want to participate in the bailout, give us back some of the money that you made.”
If Goldman does not participate, then Blankfein can keep his $67 million.
September 22nd, 2008 at 12:09 pm
R. Reich has conditions.
September 22nd, 2008 at 12:40 pm
A fascinating turn of events in this election (as evidenced in this video), are the increasing numbers of conservatives that are openly criticizing, and voicing apprehension, about the GOP ticket.
It will be interesting to see how that plays out at the polls…whether they actually end up supporting Obama, or pushing the button for Barr, or foregoing their vote altogether.
September 22nd, 2008 at 12:47 pm
(Addendum to #9)
Or sadly…supporting the ticket regardless of their serious misgivings.
September 22nd, 2008 at 2:05 pm
Why should we (the taxpayers) hand over a trillion more dollars to big banks who give away billions in golden parachutes? Heck, if we do the math… you could cut each American tax payer a check for how much exactly, with a trillion dollars?
I do not need a smart eph to do that calculation.
1,000,000,000,000/138,000,000=
1,000,000/ 138= 7250 X number of taxpayers in my family.
September 22nd, 2008 at 2:22 pm
its over 2000 per individual. i’m not sure if that’s only adults…i think it isn’t.
September 22nd, 2008 at 2:57 pm
Rory- I believe my math is correct. It is over 7k per tax payer. That means 14 plus K for my wife and I, then of course… my mother, my father, my aunts, my nephews… I am doing the math per tax payer, not per population. I believe the 2k figure comes into play if you were to pay every American, including those who do not pay taxes.
September 22nd, 2008 at 4:13 pm
my mistake. I misread your post while multitasking and eating lunch.