2009 Ron Paul 89:1
Mr. PAUL. Mr. Speaker, many Americans
are justly outraged that Wall Street firms that
came hat in hand to receive bailouts from the
federal government rewarded their executives
with lavish bonuses. But while holding those financial
firms accountable to the taxpayers is a
laudable aim, the legislation before us, H.R.
3269, goes far beyond this.
2009 Ron Paul 89:2
This is not the first time that Congress has
meddled in matters of executive compensation,
and unfortunately it will not be the last.
Just like Congress’ meddling with the economy,
each intervention creates unseen problems
which, when they crop up, are again addressed
by legislation that creates further unseen
problems, thus continuing the cycle ad
infinitum. Problems with executive compensation
cannot be addressed by further burdensome
legislation.
2009 Ron Paul 89:3
The Wall Street bailouts have already given
the federal government too much power in
corporate boardrooms, and H.R. 3269 is yet
another step in the wrong direction. While
shareholder votes on compensation may be
non-binding now, once the precedent of government
intervention on behalf of shareholders
is set, there is no reason to believe that these
votes will not become binding in the future.
2009 Ron Paul 89:4
Perhaps even more frustrating is that enforcement
of the provisions of this bill will be
undertaken by overpaid bureaucrats who lack
the skills to earn comparable salaries in the
marketplace by providing useful products or
services desired by consumers. People who
shuttle between federal regulator and federally
regulated firms, trading on their political connections
and epitomizing the corruption endemic
to the government-managed financial
system, will be making decisions that affect
every single public company in this country.
2009 Ron Paul 89:5
In order to understand the reasons behind
excessive executive compensation, we need
to take a look at the root causes. The salaries
and bonuses raising the most ire are those
from the financial sector, the sector which directly
benefits from the Federal Reserve’s
loose monetary policy. Loose monetary policy
leads to speculative bubbles which drive up
stock prices and enrich executives who cash
in their stock options. It makes debt cheaper,
which encourages reckless business expansion.
And it shuttles money from industries
that produce valuable products and services to
industries that are favored by the federal government.
H.R. 3269 is a well-intended but misguided
piece of legislation. Until we strike at
the root of the problem, we will never get our
financial system back on a firm footing.
