[Congressional Record Volume 155, Number 22 (Wednesday, February 4, 2009)]
[House]
[Page H1014]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                         EXECUTIVE COMPENSATION

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from California (Mr. Sherman) is recognized for 5 minutes.
  Mr. SHERMAN. I am all for the private sector paying executives 
whatever the private sector wants to, but it is very different when the 
so-called private sector firms, the firms that demand hundreds of 
billions of dollars in Federal funds, decide that they want to pay 
executives lavish salaries and enormous bonuses. That is why I have 
come to this floor often to talk about the executive compensation of 
those firms that have benefited from the $700 billion bailout also 
known as the TARP.
  Why is this executive compensation issue important for those 
companies that have received TARP funds?
  First, because of fairness. Executives who have driven their 
companies into the ditch so badly that they need a Federal bailout 
shouldn't be receiving enormous salaries.
  Second, our constituents demand it. And if you don't think they 
demand it, see what happens when the administration comes, having 
gotten the second $350 billion and asks for another one-half trillion 
dollars, a third installment on the TARP. We will hear from our 
constituents.
  Third, the law we passed demands that there be reasonable standards 
of executive compensation at every company that receives TARP funds. I 
thought the Bush administration would fail to follow that law, one of 
the many reasons I voted against it, and Section 111 of the TARP bill 
continues not to be applied.
  And finally, and most importantly, our economy demands that we be 
tough with those who are coming to Washington for bailouts, because 
otherwise every executive and every industry is going to be coming here 
asking for a bailout.
  So I was surprised this morning when my staff called me and said, 
``Congressman, announce victory. President Obama and the Secretary of 
the Treasury have announced that we are going to have a $500,000 limit 
on executive compensation of those who have received TARP funds.'' That 
was even stricter than the limit that I was proposing.
  Unfortunately, the Treasury Department has now issued a detailed 
statement of how they are going to carry out this $500,000 limit, and 
they have made a mockery of the solemn pledge made today by the 
President of the United States to the American people. The headline is, 
``$500,000 Limit.'' However, the text of the Treasury announcement has 
three giant loopholes that make a nullity out of the statement of the 
President.
  First, the limit has no application to those companies who have 
already received money unless they come back for even more. So 
Citigroup and AIG, who have already received well over $40 billion 
apiece in government money, have no limits, and they can pay $1 million 
a month, $2 million a month, to whatever executive they choose.
  But, second, what about those companies that are going to get more 
money in the future? How are they affected by the Treasury Department's 
interpretation of the President's statement? Well, they can pay any 
amount they want as long as they have a shareholder vote. And here is 
the beautiful part. They can pay it even if the shareholders vote 
against paying it. It is a nonbinding resolution. So you can get a huge 
amount of money from the government before today, then get another 
helping of TARP money after today and pay any executive anything you 
want as long as you have a nonbinding resolution of your shareholders 
which you are free to ignore.
  Now, there are a few companies that are going to face a real limit, 
not the ones who got the first helping like the $25 billion that went 
to the major banking institutions; not those who got their second 
helping, an extraordinary amount of money that they may have gotten 
prior to today; not those who got the third helping of TARP funds, the 
``ordinary'' amount that might be distributed in the future. But if you 
come back for a fourth helping, then and only then do you face a real 
$500,000 limit on executive compensation.
  Finally, the proposal is supposed to contain limits on luxury perks. 
But what does the proposal really contain in the fine print? It says 
that the board of directors of these companies has got to adopt a 
policy dealing with such items as private jets and lavish parties. 
Well, these are the boards of directors who have already approved every 
private jet and the concept behind every lavish party that these 
companies have already had. So what good is it to have these same board 
of directors adopt new policies which will simply mirror their own old 
policies on luxury perks?
  I look forward to working with the administration, with the Treasury 
Department, so that the words of the President of the United States to 
the American people today are not rendered moot, but rather are 
actually carried out. We need a real $500,000 limit on all those firms 
that are holding our TARP funds, our taxpayer money. And I hope those 
companies choose to return the money to the Treasury, then they can pay 
their executives whatever they want.

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