Bailout CEOs who refuse pay cuts unpatriotic - Frank
Tue Sep 23, 2008
NEW YORK - Wall Street titans who refuse to take a pay cut to join a proposed $700-billion U.S. financial system bailout were "selfish and unpatriotic", a senior Democrat said on Tuesday.
House Financial Services Committee chairman Barney Frank said he doubted the legislation would pass the Democrat-controlled Congress without including limits on compensation for executives of firms offloading bad assets.
The financial crisis has become the No. 1 issue in campaigning for the Nov. 4 U.S. presidential election, and with many members of Congress also vying to retain their seats, lawmakers are reluctant to merely rubber stamp the Bush administration's plan.
The Massachusetts Democrat was responding to Treasury Secretary Henry Paulson's assertion that limits on compensation could discourage companies from joining what would be the largest government bailout in U.S. history.
"What he is saying here is, this program that they think is very important, we need it to get the economy out of the doldrums, but if it is going to nick them of a couple of million of the millions that they already have, they are going to boycott it," Frank told CNBC.
"I hope they are not that selfish and unpatriotic," he said. "This is going to be a hard sell to a lot of elected officials even with this."
Paulson last week called for the creation of a massive government war chest to take illiquid assets off the books of banks and other firms in the hope of unclogging credit markets choking on mortgage-related debt.
"The question is does he want this package passed or not," said Frank.
Democrats, who control both chambers of Congress, want more taxpayer protections, help for home owners facing foreclosure, limits on compensation for executives of firms offloading bad assets and greater oversight of the program, which would give the Treasury secretary nearly unfettered powers.
"You can't have these situations where if the investment pays off, the CEO makes money, but if it doesn't pay off he goes home and has a nice dinner and makes no penalty," Frank said. "People who have gotten themselves into some trouble and need federal help, they have no right to expect that there won't be some compensation numbers," he added. (Reporting by Jason Szep; Editing by Tim Dobbyn)