Executive Pay Packages: We Told You So, Part 4

My newspaper column this week [1] looks at three new government reports that prove progressives were right in their criticism/predictions about the economy, and our Beltway Bailout artists were wrong - wildly wrong. But let me now add a fourth "we told you so" example to the pile - this one arguably the most frustrating of all.

Back in September when Congress was debating the bailout bill, I and others [2] reported on the Treasury Department secretly reassuring Wall Street executives [3] and analysts that the bill's supposedly tough executive compensation rules were written to be unenforceable.

The closest we got to traditional media coverage of this scandal was (oddly enough) Fox News on 10/1. The network noted my In These Times report, and then asked Rep. Jane Harman (D-CA) about it (she replied "I don't know if it's true, I would be surprised" and then added that if it was true, "that would obviously hurt" the bailout bill's prospects in the House). But other than that Fox News report, Democratic politicians were allowed to blanket the radio and television airwaves insisting that they had really "improved" the bill by including tough executive compensation limits.

Now, months later, we get this front-page story in the Washington Post [4] (which is a carbon copy of a November report from Bloomberg News [5]):

"Congress wanted to guarantee that the $700 billion financial bailout would limit the eye-popping pay of Wall Street executives, so lawmakers included a mechanism for reviewing executive compensation and penalizing firms that break the rules. But at the last minute, the Bush administration insisted on a one-sentence change to the provision, congressional aides said...The small change looks more like a giant loophole, according to lawmakers and legal experts...Lawmakers and legal experts say the change has effectively repealed the only enforcement mechanism in the law dealing with lavish pay for top executives."

At his American Prospect blog, economist Dean Baker [6] ridicules the Post for stating - as undebatable fact - that Congress "wanted" to limit executive pay as part of the bailout. "Let me suggest an alternative hypothesis," he writes. "Perhaps Congress really did not want to cut executive compensation on Wall Street. After all, word has it that members of Congress gets lots of campaign contributions from very high paid Wall Street executives." Baker's case, of course, is bolstered by the fact that the Treasury Department was on record - before the bailout vote - saying the executive compensation measures were unenforceable, and yet Congress nonetheless voted for the bailout and bragged about its supposed executive compensation limits anyway.

As I fumed back in October [7], this whole affair is a redux of the same kind of government-media negligence/collusion (take your pick) that got us into the Iraq War. Politicians insist on something that sounds compelling - whether Iraq's supposed possession of WMDs or the bailout bill's supposed inclusion of executive pay limits. Reporters then regurgitate that propaganda as unquestioned fact, never bothering to see if it's true until after the votes have been cast - that is, until well after it actually matters. And maybe most insultingly of all, when the media does finally report the story, they report it as if it's breaking news - as if it's some incredible front-page "discovery."

Look, I'm glad the Post is finally reporting the story, just like I was glad the Wall Street Journal made mention of it a few days after the bailout vote. But the act of reporting the story post facto is, unto itself, an admission of journalistic malpractice, when the facts were so clearly available beforehand.

The only silver lining is the very last paragraph of the Post's report noting that "senators on the Finance Committee have expressed concern to Paulson and are now considering whether they should amend the law" to strengthen the executive pay limits.

For some reason, I'm not holding my breath.