Why not just nationalize the two?

I clicked the link (October, 2002) in your post and was taken to a page where you compiled a list of praiseworthy articles, one of which had to do with the general topic of CEO pay levels. I could not determine who wrote the article, originally published in The Washington Post, because the Post no longer has it available.

Was that the article your link referred to? Did you write it?

Reading your post, one comes away with the impression that you called the housing bubble in 2002. Did you?

As you get billing here at TPM as an "economist," your post is rather short on economics and long on bile.

I agree that CEO's whose companies fail under their leadership should not be walking away with $50 million severance packages. But merely, and arbitrarily, capping executive pay is not any sort of solution to the mortgage/credit disaster currently taking place that one would expect from an "economist." Is it?

We need a day of Jubilee. All debts of any kind erased. It would work. The winners would be the people who actually work in the real economy. The losers would be the wealthy who hold the paper.

Fredrick,

the people who pocketed from the Bear Stearns bailout were the creditors of BS, who would have taken a big hit, the stockholders and managements of the other top invstment banks, who got free insurance from Ben Bernanke, and the shareholders of BS, who got $1.2 billion from J.P. Morgan in exchange for a guarantee from the Fed of BS debt.

Dean, I couldn't agree more about compensation limits.
Whatever the dollar amount or limit is, it must be tied to long-term performance of the company somehow, and after the debacle at BS (snarky, I like that), it should also have some ties outside the company as well. I.e. if the executive's policies lead to a near meltdown of the banking system, the money goes back to the government. Perhaps earmarked for financial education programs for high school students that specifically cover mortgage products and savings.

Upper management has a broken labor market - in which inside dealing has led to incredibly damaging amounts of money going to the upper management. I think this should be dealt with via taxes. Any corporation that pays its upper management- CFOs, CEOs, etc - a multiple of 80 times its lowest paid employee should have its tax rates doubled or tripled. In the 1980s, the standard for payment to the upper management had risen to the 80 multiple. And it was considered a scandal. Now, 80 is considered way below average.

There are other changes, too. For instance, it should be against the law for any corporation to pay its employees personal income tax - as often happens as part of the compensation package "negotiated" by the CEO.

Instead of money going to waste - and this truly is corporate peculation, as nobody contributes the equivalent of 5 to 10 thousand dollars per hour for a company - the money should flow to the stakeholders: investors and work force.

Now, if, say, GE really insists on paying its CEO a multiple of 150 times its lowest paid employee, then the board will just have to explain why GE should take on a tax burden that is one hundred percent bigger than its rivals. Ought to be an interesting explanation. All that value added one empty suit or another adds to the company.

There is a really easy solution to the "problem" of high CEO pay for failing corporations. DON'T BAIL OUT THE CORPORATIONS.

The NYT is reporting the Bush administration has a bailout plan for the purchase of Fannie and Freddie stock on the open market, and asking Congress to simultaneously approve raising the ceiling on the national debt. link

My guess is this will push the dollar down, inflation up, and eventually push oil to over $150-160/barrel.

Hey, comrades,

I can't believe I'm defending an economist. The only economist I really like is Francisco Soberon, and I view economists as so committed to their theories that they're willing to defend them by squashing the little bugs. And I can't believe that people are criticizing him for not calling the exact moment of the bubble, when what I think was the important part of his work was warning low- and moderate-income homeowners that they might be getting themselves into a real mess. And now it's happened. It's not only recent homebuyers, but people who had owned their homes for 18 or 20 years and who refinanced from cheap mortgages to more expensive ones to, for instance, pay medical expenses.

And what's happening to the foreclosed is a disaster. The lucky ones are doubling up with family of friends. Most rental housing is closed to them, as they have low credit scores, so they are taking whatever they can get at whatever price. In more than a few cases they pay huge deposits ($5,000 in one case), only to find that the house they're renting is in foreclosure and they're going to have to move again, as well as try to recover their deposit money. Quite a number of people have been forced to move twice, and some have been forced out three, four or five times.

And don't get me started on the tenants who are being evicted because their landlords faced foreclosure.

In a nutshell, this is how the new system will work or should I say, nothing really has changed? Get used to our “new” economy. Print paper. Loan paper to paper loaners. Paper loaners loan $6mil worth of paper to Raoul, my illegal alien 7-Eleven clerk who makes $6 of paper/hr. at 7-11, but has a 12 bedroom/4 bathroom house and a Hemi. Raoul goes belly up when the interests rate resets due to the paper being worthless. Raoul goes to “Just walk away.com”, and just walks away. Raouls neighbor gets Raouls weeds and blight from abandoned bigfoot. “Bank of Dumb Ass” that loaned Raoul 6mil goes under because Raoul walked away. Government prints more paper to bail out “Bank of Dumb Ass”. My taxes go up to bail out government. Everything costs more, because paper is more worthless than the day before. Beautiful.
That’s all we need to know. We are without a doubt, the largest debtor nation on the face of the earth. Bread and soup lines won’t be far behind after the ponzi scam falls in on itself.
Got gold?

Re: Most rental housing is closed to them

This is a gross exaggeration, many landlords do not check credit scores, and those who do generally don't give a damn about a tenant's credit score or even a past bankruptcy. I've known plenty of people who had no trouble renting places no matter they had bad credit or a recent trip through Chapter 7. Landlords are looking for something very specific in credit records: court judgments by previous landlords. As long as you don't have that sort of history you're generally OK.