Friday, February 05, 2010

Obama's Pay Czar goes on the Defensive

President Barack Obama's TARP Executive Compensation Master (also known as the "Pay Czar") was on the defensive in an interview with Neil Cavuto of the Fox Business Network. The latest trend in the administration is to place the President in the role of seeing no evil, speaking no evil, and hearing no evil. First, it was Attorney General Eric Holder stating that the President had nothing to do with the decision to place Umar Farouk Abdulmutallab with criminal charges rather than to treat him as a military combatant. Now Fienbert tells Cavuto that he "never, ever" spoke to President Obama or anyone in the White House about AIG. This defensive tone was heard through out the interview.

On the AIG bonus controversy

"First of all, understand these contracts that are being honored occurred years ago before the top law was even implemented-not on our watch. These are valid, binding contracts."

"Under the law that I'm administering, I will do what I can in 2010 compensation where I do have jurisdiction to try and make sure that these retention payments are taken into account when I set prospective pay in 2010, but I'm not prepared to challenge valid contracts entered into years ago.""This is the end of the retention contract problem."

It is interesting how he speaks so casually about taking "into account when I set prospective pay in 2010." The financial destiny of individuals is in the hands of a bureaucrat. It reads like an Ayn Rand novel. His distancing himself from autocratic action when it comes to the bonus situation is only in the present tense. He gives every impression that he plans to expand the government's role at his first opportunity.

On whether his jurisdiction should be expanded to include companies who pay back TARP

"Absolutely not. Not only do I believe my purview should not be expanded, I think the administration has made it very clear-Secretary Geithner repeatedly has made it very clear-we are not here to micromanage these companies. I think it is fair to assume there will be no effort to expand my jurisdiction." Incongruence seems to be a hallmark of the Obama administration. The more the Administration claims that it plans no harm to business, the more companies feel threatened.

On whether what he is doing will chase talent out of the industry

"I think it's vital. I am not trying to be vindictive or revengeful-that's not what I'm here to do…I'm trying to get these companies to reign in their pay and repay the taxpayer."

Major companies should not had participated in TARP and the government had no business in allocating funds in such a way. But the government spent the money and it appears they forced many institutions to participate in the program. However, to argue that the majority of these businesses are dragging their feet in paying back this program is to ignore the headlines. The Christian Science Monitor asks, "Why are big banks like Citigroup rushing to pay back TARP funds?" It goes on to note that Citigroup is "joining the likes of Bank of America, Goldman Sachs and JP Morgan. Why are they in such a hurry?" The "rush" is due to the fact that these businesses have faced the kind of scrutiny discussed in this interview. The penalties have been huge and the government reach has been expansive, there should be no surprise that these businesses want to move on.

The Obama Administration has become famous for its "double speak." It is shocking since Obama claimed to have championed the idea of "transparency" in government. It is time for the public to hold this government accountable.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

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