Senator Tim Johnson | Working for South Dakota

Press Release of Senator Johnson

Johnson Presses for Stricter Executive Pay Limitations in Bailout

Contact: Julianne Fisher, 202-224-1638
Tuesday, December 16, 2008

Washington, DC—In response to a December 15, 2008, Washington Post report that executive pay limits in the Emergency Economic Stabilization Act may not be strictly enforced, U.S. Senator Tim Johnson (D-SD) wrote to Finance Committee Chairman Max Baucus (D-MT) to urge tightening of this failed provision.

“I voted against the Emergency Economic Stabilization Act because the bill asked for more from the American taxpayer than it did from the executives of financial institutions who made poor business decisions,” Johnson said. “Unfortunately, we see that the few conditions in the bailout are not being adhered to, and Congress should act to protect the taxpayers’ investment.”

Below is the full text of the letter to Chairman Baucus:

Dear Chairman Baucus:

As Chairman of the Senate Finance Committee, I am writing to you to bring to your attention a troubling article recently published in the Washington Post on December 15, 2008. This article, which I have attached, talks of the concern that the executive pay limits included in the Emergency Economic Stabilization Act are no longer effective because of changes in how the bailout money has been used by the Treasury Department.

As you may know, I voted against the Emergency Economic Stabilization Act because in part I believe that the bill asked for more from the American taxpayer than it did the executives of these financial institutions that made bad business decisions. While the legislation intended to limit executive pay, golden parachutes, and other compensation benefits, I did not believe the measures went far enough.

It is now only coming to light how ineffective these provisions may actually be. As the size and scope of the economic crisis shifts and the Treasury department adjusts its strategy accordingly, the Troubled Asset Relief Program is barely recognizable as the program Congress passed on October 1, 2008. In addition, on December 10, 2008, the Government Accountability Office issued its report that concluded that it could be nearly impossible to determine whether banks are enforcing the executive compensation rules mandating by the legislation.

I ask that the Finance Committee seriously consider whether it should amend Section 302 of the Emergency Stabilization Act to apply the enforcement mechanism to all firms participating in the bailout. The American people have made it clear in past months that the bad actors who contributed to our nation’s economic troubles should not be rewarded. I believe any company and its employees receiving help from the Federal Government should be held to the highest standards of accountability and responsibility, and the law as written does not achieve this end.

Thank you for your consideration.

Sincerely,

Tim Johnson

U.S. Senator

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For more information on Senator Tim Johnson visit his website at http://johnson.senate.gov