- The Washington Times - Saturday, January 31, 2009

A day after President Obama unleashed a scathing rebuke of corporate America, Sen. Claire McCaskill introduced legislation Friday that calls for capping executive salaries at companies that accept federal dollars because of the economic downturn.

“We have a bunch of idiots on Wall Street that are kicking sand in the face of the American taxpayer,” the Missouri Democrat said on the Senate floor Friday, a day that also saw the top Republican senator on finance issues harshly criticize Wall Street pay.

Under Mrs. McCaskill’s proposal, employees of companies that receive money from the Treasury Department’s $700 billion Wall Street bailout fund, called the Troubled Asset Relief Program (TARP) would not be able to make more than the U.S. president — $400,000 — until the company no longer relies on federal assistance.

The cap would include salary, bonuses and stock options. It also is common for top executives at Fortune 500 companies — the relevant talent pool — to make tens of millions in salary, with stock options and bonuses reaching the hundreds of millions.

Mrs. McCaskill said she was appalled that the average pay of executives of the first 116 banks that got TARP money was $2.6 million.

“They don’t get it. These people are idiots,” she said. “Once they’re off the public dole, once the taxpayers aren’t footing the bill, then it’s not as much our business what they get paid. But right now, they’re on the hook to us.”

Mrs. McCaskill’s legislation comes on the heels of an angry reaction by Mr. Obama to news reports Thursday that Wall Street handed out $18.4 billion in bonuses last year, calling the payments “the height of irresponsibility.”

“It is shameful,” Mr. Obama said from the Oval Office on Thursday. “Part of what we’re going to need is for the folks on Wall Street who are asking for help to show some restraint, and show some discipline, and show some sense of responsibility.”

Sen. Charles E. Grassley of Iowa, the ranking Republican on the Senate Finance Committee, applauded the president’s comments, saying executives who “run their companies into the ditch should beg for forgiveness, not rewards.”

“President Obama is right,” Mr. Grassley said. “The president should use his full power to pull back bonuses for bailout recipients. That includes past recipients and those going forward.”

Mr. Grassley stopped short, however, of endorsing Mrs. McCaskill’s bill.

White House press secretary Robert Gibbs on Friday was noncommittal about whether Mr. Obama would accept Mrs. McCaskill’s bill as drafted. But added that “it is very safe to assume” the president will address executive compensation and bonuses.”

“Nobody begrudges people that are successful and make money,” Mr. Gibbs said. “But when the sixth-largest year of bonuses fails in any appreciable way to match the huge losses, I think ‘outrageous’ is probably just the beginning of words one might be able to intone.”

Mrs. McCaskill isn’t the only Capitol Hill lawmaker in recent weeks to propose measures to curb excessive executive pay.

The House earlier this month passed a measure that called for new constraints on executive salaries at companies that accept TARP money — constraints that would apply retroactively to banks that already have accepted money from the bailout fund.

The measure, proposed by House Financial Services Committee Chairman Barney Frank, Massachusetts Democrat, also would prohibit “golden parachute” payments as long as the bank has government capital.

The Senate has yet to take up the measure.

Mr. Grassley and Mrs. McCaskill in November co-sponsored a bill that called for increasing the power and authority of the special inspector general created to oversee TARP.

In a Friday afternoon interview on MSNBC, Mrs. McCaskill said Congress was mistaken not to include executive pay restrictions when it first approved the $700 billion bailout last fall, but added, “I don’t think any of us thought these guys were this stupid.”

The senator said she has received considerable feedback from her Missouri constituents who are angry about the “greed and the selfishness” of corporate executives.

“They are chewing my head off about this,” she said.

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