Challenge to Republicans and Progressive Democrats

September 29, 2008 · Posted in Congress, Domestic Policy 

You defeated the compromise.

Now fix it. Come up with a solution to this problem other than watching most of us in the middle class lose everything we’ve worked for.

Go ahead, I’m waiting.

You have 72 hours, starting now.

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Comments

  • Raphael Rosa
    The pols will (MUST) come up with a short term solution to this mess in the credit markets. Even the conservative Republicans who squashed the last bill will have to answer to their voters if doing nothing prevails and there is a consequent economic nose dive. Those same voters who (we are told) lashed the conservatives with e-mails against the (any?) bailout, would be the same voters who would turn around and blame their Representatives and Senators if through inaction, we went into a steep recession. So, short term, something will be done. But will it happen again? Of course it will unless the fundamental and seminal cause of these so-called "bubbles" is fixed. The heart of this problem as well as the tech bubble, and other financial scandals is, has been, and will be - executive greed. Corporate managers (not founding entrepeneurs such as Bill Gates) do not care about the long term health of the organizations they've been hired to run, but rather, the short term performance of the company's stock, which makes up the largest (by far) component of modern executive compensation. So they will (as recent history shows us) cook the books, lie, make terrible decisions, e.g., hedge funds, derivatives, mortgage security instruments, close plants/exp[ort jobs, bribe officials, etc, etc, etc, all to boost their total compensation package to incredible (and unnecessary) hights. What to do? Set a cap, a federal maximum wage (which includes all compensation, e.g. base salary, bonuses, stock options, perks, ALL OF IT. It should be tied to a reasonable multiple of the median total compensation for all of the organization's employees. This is a standard used to compare executive compensation internationally. It's also legal. The feds can set a minimum wage, they can also set a maximum wage. Allow for no caps on wages earned from royalties on patents (to encourage innovation and creativity), as well as a certain level of exception for those who found (as in establish) new companies.
    Frankly, by removing the incentive to do absolutely anything to improve stock performance in order to make themselves obscenely wealthy (and to hell with everyone else), corporate managers will find that their success will be measured by how well they strengthen their company, create new jobs (instead of sending them overseas), help their community and improve the environment. You think this is polyanish? Just look at what the founders of some of America's great companies did in their old age. Carnagie, Mellon, and many others became philanthropists as they sought to acheive another kind of status and respect within society, not greed, but good.
  • See my blog post. There are two main sticking points for me - mark-to-market and minimally fettered executive power. Adjust those two things and the bill is passable imo.
  • John,

    The mark-to-market rules are a big part of the problem here though. They should have been phased in over time instead of having to appear suddenly on balance sheets all at once. Pension plans went through the pain of mark-to-market accounting 20 years ago, and it was hugely painful. Now we're seeing that effect magnified sixty times. Mark to market is the correct method, but a phase-in would have allowed less shock to the markets.
  • I agree that mark-to-market could have been brought in better. I just don't agree that it should be stripped entirely until they can get it passed again. The problem isn't mark-to-market, the problem is the bad accounting that mtm revealed.
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