White House Furiously Back Pedals On Obama's Praise For Banker Pay
Yesterday the world was shocked when Obama seemed to make nice with banker pay, including the multi-million dollar packages delivered to JP Morgan Chase CEO Jamie Dimon and Goldman Sachs CEO Lloyd Blankfein.
"Oh. My. God," Paul Krugman wrote in horror.
Late afternoon yesterday White House deputy communications director Jennifer Psaki wrote a post on the White Houses blog ”to clear up some confusion” about the president’s stance on executive pay. (Via DealBook.)
Here's the full text of the blog post:
We wanted to clear up some confusion about where the President stands on bonuses and excessive executive compensation. A recent headline from an interview the President did with Bloomberg yesterday inaccurately made it sound like the President brushed off the impact of bonuses and applauded the role of bankers. This naturally came as a surprise to the many people who share his outrage at the behavior that continues on Wall Street and is not an accurate portrayal of where the President stands or what he said during the interview.
The President has said countless times as he did in the interview that he doesn’t ‘begrudge’ the success of Americans, but he also expressed ‘shock’ at the size of bonuses and made clear that there are a number of steps that need to be taken to change the culture of Wall Street. A sentiment he has consistently expressed since long before he took office.
He also made clear, as he has said many times before, that he believes bonuses should take the form of stock so that the compensation is tied to long term performance. His focus from day one has been on signing into law a comprehensive financial reform package that reins in the abuses on Wall Street, addresses Too Big to Fail, imposes real oversight and strict accountability on financial companies, prevents predatory lending practices, ensures that consumers get clear information and imposes a fee on the biggest banks to ensure they pay back every dollar of money owed to the taxpayers.
What did the President actually say during the interview?
“I, like most of the American people, don't begrudge people success or wealth. That's part of the free market system. I do think that the compensation packages that we've seen over the last decade at least have not matched up always to performance. I think that shareholders oftentimes have not had any significant say in the pay structures for CEOs.”
When asked whether seventeen million dollars is a lot for Main Street to stomach, he expressed shock at the size of the compensation and called for the same actions that are a part of the comprehensive financial reform proposal that has been working its way through Congress:
“Listen, $17 million is an extraordinary amount of money. Of course, there are some baseball players who are making more than that who don't get to the World Series either. So I'm shocked by that as well. I guess the main principle we want to promote is a simple principle of "say on pay," that shareholders have a chance to actually scrutinize what CEOs are getting paid. And I think that serves as a restraint and helps align performance with pay. The other thing we do think is the more that pay comes in the form of stock that requires proven performance over a certain period of time as opposed to quarterly earnings is a fairer way of measuring CEOs' success and ultimately will make the performance of American businesses better.”
And what has the President said about this same topic over the course of the last year?
* ONE YEAR AGO-In February 2009, Pres. Obama Said, This is America. We dont disparage wealth. We dont begrudge anybody for achieving success. And we believe that success should be rewarded. But what gets people upset and rightfully so are executives being rewarded for failure. Especially when those rewards are subsidized by U.S. taxpayers. [Remarks by Pres. Barack Obama on Executive Compensation, 2/4/09]
* ELEVEN MONTHS AGO- In March 2009, Pres. Obama Said, I’ve Always Been a Strong Believer in the Power of the Free Market. Our Role as Lawmakers is Not to Disparage Wealth, But to Expand Its Reach. I've always been a strong believer in the power of the free market. It has been and will remain the very engine of America's progress -- the source of a prosperity that has gone unmatched in human history. I believe that jobs are best created not by government, but by businesses and entrepreneurs like you who are willing to take risks on a good idea. And I believe that our role as lawmakers is not to disparage wealth, but to expand its reach; not to stifle the market, but to strengthen its ability to unleash the creativity and innovation that still makes this nation the envy of the world. [Remarks by Pres. Barack Obama at the Business Roundtable, 3/12/09]
* EIGHT MONTHS AGO- In June 2009, Pres. Obama Said, I Believe Our Role is Not to Disparage Wealth, But to Expand Its Reach. In these efforts, we seek a careful balance. I've always been a strong believer in the power of the free market. It has been and will remain the engine of America's progress -- the source of prosperity that's unrivaled in history. I believe that jobs are best created not by government, but by businesses and entrepreneurs who are willing to take a risk on a good idea. I believe that our role is not to disparage wealth, but to expand its reach; not to stifle the market, but to strengthen its ability to unleash the creativity and innovation that still make this nation the envy of the world. [Remarks by Pres. Barack Obama on Regulatory Reform, 6/17/09]
* FIVE MONTHS AGO-In September 2009, Pres. Obama Said, I Believe the Role of the Government is Not to Disparage Wealth, But to Expand Its Reach. I have always been a strong believer in the power of the free market. I believe that jobs are best created not by government, but by businesses and entrepreneurs willing to take a risk on a good idea. I believe that the role of the government is not to disparage wealth, but to expand its reach; not to stifle markets, but to provide the ground rules and level playing field that helps to make those markets more vibrant -- and that will allow us to better tap the creative and innovative potential of our people. For we know that it is the dynamism of our people that has been the source of America's progress and prosperity. [Remarks by Pres. Barack Obama on Financial Rescue and Reform, 9/14/09]