I was elected last November because the people wanted change. And nowhere is change more desperately needed than on Wall Street, which is apparently the only place in the world where you can steal from the taxpayers and then bill them for services rendered. So far, taxpayers have spent over $500 billion in direct cash infusions into banks and financial institutions, with guarantees of trillions more. Yet, these companies are still paying their executives lavish sums for driving their companies (and the entire economy) into the ground.
I introduced a bill - the 'Pay for Performance Act' - to put an end to this theft. It's on the House floor today. It bans unreasonable and excessive pay to employees of financial institutions that are running on taxpayer money. The bill is based on two simple concepts. One, no one has the right to get rich off taxpayer money. And two, no one should get rich off abject failure. If the government owns a chunk of a bank, that bank must pay its employees reasonably, and all bonuses must be performance-based.
But first, let's be clear about what has happened. The government owns stakes in many companies through the TARP program, and Congress tried to put executive compensation restrictions on those companies. Big banks, though, were able to carve out an exception for any contract signed before February. AIG executives drove a truck through that exception and stuffed their pockets with our money. This bill closes that loophole.
The arguments against this bill are fairly predictable. The conservative Washington Examiner said that the bill grants the government 'extraordinary power' to set salaries. But the power it grants is pretty standard; the taxpayers are owners, and owners of companies set salaries for their employees.
Of course, there is a simple solution to this problem for any financial institution bent on paying its employees unreasonable and excessive compensation - just pay the taxpayer money bank to the taxpayer, and then you are free to act responsibly or irresponsibly. This bill grants the government the authority to act like any other owner of an institution, and when that ownership stake goes away, so do these restrictions.
Everyone agrees that Congress must act to reign in these excesses. These bad banks have come close to destroying our economy. They did so to enrich the small group of employees who made horrible, and in some cases, illegal bets. Calling these bad banks "casinos" is a disservice to casinos, who must actually by law hold money to back all the bets they've taken in. Calling these con artists "bank robbers" is a disservice to bank robbers, who can only steal as much money as the bank holds at the time, without tapping into taxpayer funds, too.
It's time for action, and Congress is acting.
Cross-posted from Huffingtonpost.com