Pay czar Kenneth Feinberg's official government title is "Special Master for Compensation." You'll be happy to know that he's really getting into the confiscatory spirit of his role. Asked by Reuters whether his powers include reaching back and revoking bonuses awarded to financial industry executives before his office was created earlier this year, Feinberg asserted broad and binding authorities — including the ability to "claw back" money already paid out.
Regulations governing his office explicitly limit his jurisdiction over contracts signed before Feb. 11, 2009. But the fine print is no obstacle to Obama's czars. "The statute provides these guideposts, but the statute ultimately says I have discretion to decide what it is that these people should make and that my determination will be final," Feinberg claims. "Anything is possible under the law."
Yes, he said "anything." It's not just senior executive officers who fall under Feinberg's purview. "These people" also includes "the next 100 most highly paid employees" of all bank bailout recipients, who must file compensation proposals with their pay overlord by Friday.
But why stop there? The Troubled Asset Relief Program has morphed from a toxic asset buy-up to a capital injection plan and back to a toxic asset buy-up. The money has been doled out to auto supply companies and life insurance companies. Congress wants to siphon off more of it to bail out bankrupt California and create a "national housing trust fund" to bail out low-income renters. Grabby-handed politicians have used TARP as a crowbar to pry open new areas for command-and-control meddling under the guise of saving the economy.
How much longer until the pay czar is determining all corporate pay he wishes to deem "inappropriate, unsound or excessive"? House Financial Services Committee Chairman Barney Frank has yapped all year long about extending pay curbs to all financial institutions and perhaps to all U.S. companies.
Let's remember that the Beltway hysteria over bonuses served as a convenient distraction from the responsibility of subprime meltdown-enabling lawmakers like Frank and Obama's crony economic team. Treasury Secretary Tim Geithner landed his previous job as head of the Federal Reserve Bank of New York thanks to heavy lobbying by his Wall Street mentors Robert Rubin and Larry Summers, both of whom sat on the New York Fed's selection committee. Their cronyism had multibillion-dollar consequences for taxpayers.
Rubin was also an executive at New York-based Citigroup, which Geithner regulated. Or was supposed to regulate. Instead, he helped foster Citi's spending binge and engineered the teetering company's $52 billion federal bailout. This makes the Obama administration's recent protestations about one Citi employee's $100 million compensation package look like the very kind of manufactured outrage of which it incessantly accuses its political opponents.
Geithner also had a hand in the $30 billion Bear Stearns bailout and the multilevel AIG bailouts ($85 billion and $38 billion under President Bush and another $30 billion in March 2009 under Obama). Massive sums of that taxpayer money went to major financial institutions that had employed Obama's moneymen and their closest confidants. Goldman Sachs, for example, raked in nearly $13 billion in December 2009 from AIG in federal TARP funds — and reported record profits this quarter with a bonus pool of more than $11 billion.
The "solution" isn't to empower a pay czar to curb bonus payouts ex post facto. The solution is to stop dumping billions into failing companies in the first place.
As for private businesses (what's left of them, anyway), this is a teachable moment, to borrow one of the president's favorite phrases. Government strings are like sexually transmitted diseases: They attach forever. If a basket-case company is willing to take bailout money, it will pay an interminable price. The long arm of regulators can and will reach back and open sealed deals and signed contracts on a whim. The Obama campaign chant is the czars' chant, too: "Yes, we can!"
