It is a rather curious spectacle to see congressional Republicans express outrage at the exorbitant bonuses being handed out by bailed-out companies and blame the Obama administration for failing to curb the practice with AIG. Because when the first installment of the Troubled Asset Relief Program was passed it was the Bush administration and GOPers in Congress who were insisting that caps on executive compensation not be part of the legislation.
As the New York Times reported at the time that TARP was being crafted, "Congress and the administration remained at odds over the demands of some lawmakers, including limits on the pay of top executives whose firms seek help."
Former Treasury Secretary Hank Paulson said that while he was upset with the levels of salary afforded to top executives, any cap on such would dissuade companies from participating in the TARP.
"If we design it so it's punitive and so institutions aren't going to participate, this won't work the way we need it to work," he told Fox News Sunday on September 21.
Senator Richard Shelby, the top Republican on the Senate Banking Committee, told CBS news that: "It should be up to the board of directors of a private corporation to set the compensation of an executive; it shouldn't be Congress's role."
Senator Mel Martinez told CNBC that: "While it is very appealing to think about executive compensation as being a part of this, one of the drawbacks to that is perhaps that we would have fewer entities participate in what is essentially a voluntary act."
And House Minority Whip Eric Cantor, "outraged" over AIG's issuance of $165 million in bonuses, said he was not in favor of "the federal government be[ing] able to set salaries across the board," when the issue of executive compensation arose in September 2008.
The issue extended to when the Obama administration was tasked with writing its own version of the TARP. Senate Minority Leader Mitch McConnell, likewise dismayed over AIG's bonuses this past week, said back in early February that while he was "appalled" at some of the perks executives had received, he didn't want "the government to take over these businesses and start telling them everything about what they can do."
That said, the Obama administration too was pushing back against overly-strict caps on executive earning albeit still favoring some form of limitation.
Of course, a distinction could be made between executive compensation and issuance of bonuses. One being salary, the other being rewards. But in this and other cases, money is fungible. And back when the Troubled Asset Relief Program was being debated, it was the leadership of the GOP and the past administration that asked that the issue not be touched for fear that it would derail the legislation.
It was, after all, President Bush who warned lawmakers not to "insist on provisions that would undermine the effectiveness of the plan" while Barney Frank, chairman of the House banking committee, declared that there would be "no golden parachutes while we are the owners" of the bad assets of Wall Street firms.
(Hat tips to Think Progress and Dana Milbank)