Some powerful Wall Street CEO's testified on Capitol Hill today and for the most part they defended the huge pay packages they receive for running public companies. I have no problem with paying CEO's millions of dollars per year if they earn a good return for stockholders on investments, but when they lose money for those same investors they should not be rewarded for bad business. Over the past twelve months, some major banks and mortgage investment firms have lost billions of dollars. While these losses grew ever larger, some of the CEO's for these companies earned huge bonuses and the few that were asked to resign were paid tens of millions of dollars in severance pay know as 'golden parachutes'.
Former CEO's Stan O'Neil of Merrill Lynch and Angelo Mozillo of Countrywide are just two of many company leaders that lost money for their stockholder and were rewarded for their bad business practices with multi million dollar 'golden parachute' packages. Like many politicians, I believe CEO's live in their own world and they give little thought to how their bad business decisions effect the lives of thousands of other people. When Barack Obama was campaigning here in Texas for the democratic nomination for President, one of his television commercials talked about the disconnect between Wall Street and Main Street in America. He said in one of those commercials that some company CEO's earn more in 10 minutes than some of their employees earn in a year.
While the US Congress was grandstanding for the folks back home today about CEO pay being too high, once the cameras were turned off in the hearing room most likely many of these same representatives were lobbying these same CEO's for campaign contributions. The world of high paying CEO's and Members of Congress are intertwined in many ways. That is the reason that regular Americans are so under represented in the halls of Congress. It takes big money to stay in political office and the people that give the most money to politicians are the very CEO's that were being grilled by Congress today.
Until real campaign finance reform is enacted into law, the close and often times too close relationship between politicians and corporate CEO's will continue. It's not just Congress that has kept too close of a relationship with large company leaders, President Bush has seen his share of problems because of the lobbying efforts of others as well. For most Americans the free flow of money into Washington D.C. for access and sometimes favors when it comes to new laws has had a bad smell about it for a long time. This close relationship between politicians and CEO's will not be changing any time soon. What people witnessed today in Congress was nothing short of a show trial for the voters back home to show that their Member of Congress is on their side.
Read more about the Economy:
It's The Economy, Stupid All Over Again
Stock Markets Crash As US Recession Fears Increase
Tuesday Could Bring Big Trouble For US Stock Prices
Grim Economy In 2008, Fed Chairman Bernanke
Is Citibank In Financial Trouble, China/Kuwait Rush Cash?
March 07, 2008 Archives