3 ms·

If there is wrongdoing, I'm totally fine with a clawback. If they take government bailout, a clawback is absolutely essential. One of the stupidest things to h

If there is wrongdoing, I'm totally fine with a clawback. If they take government bailout, a clawback is absolutely essential. One of the stupidest things to happen during the 2008 "crisis" was congress shoveling money at a bunch of firms "that couldn't fail", and companies immediately paying them out as "bonuses they were contractually obligated to pay".

spacebanana7 3y ago
I wish there were fines that executives were personally liable for rather than clawbacks. Clawbacks somewhat arbitrarily limit the penalty to the amount earned in a way that doesn’t exist in other professions. They also seem to complicate the legal process of enforcement.
- laratied 3y ago
  Angelo Mozilo is the poster boy for this. He paid a personal fine. He made $470 million running Countrywide into the ground and had to pay a fine of $67.5 million. Retired to live out his old age worth about $600 million. Who is the fool in this equation? Hard to say it is Angelo.
  - spacebanana7 3y ago
    Perhaps he should have paid a bigger personal fine, assuming he was entirely responsible for the institution's failure as a result of misconduct or negligence. My issue with clawbacks is that they set an upper bound of $470 million for a fine in his case, when I think the fine should be whatever it takes to deter lawbreaking.
anecdotal1 3y ago
The federal government really can't interfere with private contracts like this as long as everything was legal. That's why we couldn't do anything about the 2008 bonuses that were paid out. Once the federal gov starts tampering with private contracts it's game over for the American economy. Maybe even America itself.
- deleted 3y ago
  [deleted]
- nebulousthree 3y ago
  > we couldn't do anything about the 2008 bonuses that were paid out We could've.. Not bailed them out?
- exabrial 3y ago
  Honestly that'd be the ideal situation: No bailouts, ever. I just don't see that being realistic as the cat is out the bag unfortunately.
- malcolmgreaves 3y ago
  I don’t know if you’re aware of this, but it has always been the case that laws supersede contracts in the United States.
  - hbrn 3y ago
    I don't know if you're aware of this, but laws cannot be applied retroactively.
    - Per_Bothner 3y ago
      Of course laws can be applied retroactively. As a general rule, they shouldn't be, but they certainly can be and have been. "The Constitution of the United States forbids Congress and the states to pass any ex post facto law. In 1798 it was determined that this prohibition applies only to criminal laws and is not a general restriction on retroactive legislation." (Britannica.)
      - deleted 3y ago
        [deleted]
- triceratops 3y ago
  > Once the federal gov starts tampering with private contracts Who do you think ultimately enforces "private contracts"?
shaftway 3y ago
I'm not sure what you're advocating as the alternative. If you're saying that they shouldn't have been bailed out, then that's legit, but it was a rapidly evolving situation and it's easy to play armchair quarterback with future knowledge. If you're saying that the funds shouldn't have been allowed to be used for executive compensation then you're just sweeping the problem under the rug. Money is fungible, so it just means different funds would have been used for those bonuses. You can easily find examples of this with PPP loans, and there are similar parallels in lottery money being used for schools (it technically is, but at the cost of other money being taken away). If you're saying that they shouldn't have honored those contracts, then that's a pretty easy lawsuit to win and they'll have to pay out the bonus anyway, plus the additional legal fees.

spacebanana7 3y ago

I wish there were fines that executives were personally liable for rather than clawbacks. Clawbacks somewhat arbitrarily limit the penalty to the amount earned in a way that doesn’t exist in other professions. They also seem to complicate the legal process of enforcement.

laratied 3y ago
Angelo Mozilo is the poster boy for this. He paid a personal fine. He made $470 million running Countrywide into the ground and had to pay a fine of $67.5 million. Retired to live out his old age worth about $600 million. Who is the fool in this equation? Hard to say it is Angelo.
- spacebanana7 3y ago
  Perhaps he should have paid a bigger personal fine, assuming he was entirely responsible for the institution's failure as a result of misconduct or negligence. My issue with clawbacks is that they set an upper bound of $470 million for a fine in his case, when I think the fine should be whatever it takes to deter lawbreaking.

anecdotal1 3y ago

The federal government really can't interfere with private contracts like this as long as everything was legal. That's why we couldn't do anything about the 2008 bonuses that were paid out. Once the federal gov starts tampering with private contracts it's game over for the American economy. Maybe even America itself.

deleted 3y ago
[deleted]
nebulousthree 3y ago
> we couldn't do anything about the 2008 bonuses that were paid out We could've.. Not bailed them out?
exabrial 3y ago
Honestly that'd be the ideal situation: No bailouts, ever. I just don't see that being realistic as the cat is out the bag unfortunately.
malcolmgreaves 3y ago
I don’t know if you’re aware of this, but it has always been the case that laws supersede contracts in the United States.
- hbrn 3y ago
  I don't know if you're aware of this, but laws cannot be applied retroactively.
  - Per_Bothner 3y ago
    Of course laws can be applied retroactively. As a general rule, they shouldn't be, but they certainly can be and have been. "The Constitution of the United States forbids Congress and the states to pass any ex post facto law. In 1798 it was determined that this prohibition applies only to criminal laws and is not a general restriction on retroactive legislation." (Britannica.)
    - deleted 3y ago
      [deleted]
triceratops 3y ago
> Once the federal gov starts tampering with private contracts Who do you think ultimately enforces "private contracts"?

shaftway 3y ago

I'm not sure what you're advocating as the alternative. If you're saying that they shouldn't have been bailed out, then that's legit, but it was a rapidly evolving situation and it's easy to play armchair quarterback with future knowledge. If you're saying that the funds shouldn't have been allowed to be used for executive compensation then you're just sweeping the problem under the rug. Money is fungible, so it just means different funds would have been used for those bonuses. You can easily find examples of this with PPP loans, and there are similar parallels in lottery money being used for schools (it technically is, but at the cost of other money being taken away). If you're saying that they shouldn't have honored those contracts, then that's a pretty easy lawsuit to win and they'll have to pay out the bonus anyway, plus the additional legal fees.