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Top Geithner Aide Fought CEO Pay Reform
As a Goldman Sachs lobbyist, Mark Patterson once worked against a bill to curb executive compensation. The legislation's sponsor: Barack Obama.
On Wednesday afternoon, as President Barack Obama was leaving the White House for a town hall meeting in California, he spoke for 15 minutes to reporters about the AIG controversy. Responding to the rising rage over the $165 million or so in bonuses paid to executives at the bailed-out insurance firm, Obama noted that he was quickly developing policies to prevent future AIG-like catastrophes. And he slammed Wall Street's culture of "excess greed, excess compensation, excess risk taking." To demonstrate that he's committed to battling such greed, the president cited his work in the Senate to rein in executive compensation. Noting that he and Rep. Barney Frank (D-Mass.) had each introduced legislation on this front in 2007, Obama declared that "there were some people who attacked us, saying government has no business doing that."
US President Barack Obama (R) stands with Treasury Secretary Timothy Geithner (L) as he makes remarks about AIG and his economic recovery package before departing for a trip to California from the White House in Washington, March 18, 2009. Obama on Wednesday assailed AIG's hefty executive bonuses as an "inappropriate use of taxpayer funds," saying the government needed tools to prevent a situation like AIG's from ever again posing a risk to the financial system. (REUTERS/Jonathan Ernst) One of Obama's opponents at that time was Mark Patterson, a lobbyist then for Goldman Sachs, the investment banking firm, which opposed the Frank-Obama initiative. Yet Patterson is now chief of staff to Treasury Secretary Timothy Geithner, the embattled point man in the Obama administration's endeavor to undo the notorious AIG bonuses. That is, a Washington influence-peddler who worked against Obama's effort to limit excessive corporate pay is now a key member of the Obama administration team that is supposed to contain excessive compensation in the AIG case and in general.
In 2007, Frank, the chairman of the House financial services committee, introduced H.R. 1257, the Shareholder Vote on Executive Compensation Act. The bill required public companies to allow shareholders to hold nonbinding votes on executive compensation plans. The measure—dubbed "say on pay"—was a modest step, though only one of the few attempts then to address exorbitant salaries. It did not limit pay for corporate managers; the legislation would merely permit shareholders to express their displeasure with compensation packages. Corporations would be free to ignore the outcomes of these symbolic votes. Still, the banking industry opposed the bill. And Goldman Sachs, for which Patterson was a registered lobbyist from September 2005 to April 2008, was no fan of "say on pay." Sachs' chief executive, Lloyd Blankfein, who took home at least $70 million in 2007, has argued that shareholders are "less sophisticated and have less understanding" of compensation issues than corporate board members.
According to lobbying disclosure forms (PDF), Patterson was one of four Goldman Sachs lobbyists registered to work on HR 1257. How the group tried to influence congressional action on the bill is not revealed in the documents, but given Goldman Sachs' opposition to this reform, Patterson and the others were surely not trying to help the measure pass. (In January, a Treasury official confirmed to the Associated Press that Patterson's lobbying portfolio included this compensation measure.)
Despite industry opposition, the House approved Frank's bill on a 269-to-134 vote on April 20, 2007. That same day, Obama introduced a version of the legislation in the Senate. The bill, which initially attracted only five cosponsors, was referred to the Senate banking committee. Weeks later, Obama sent a letter to Sen. Chris Dodd (D-Conn.), the chair of that committee, asking him to hold a hearing on the proposed law. Obama wrote:
I believe public discussion and debate over executive compensation packages would force corporate boards to think twice before signing over millions of dollars to CEOs. Certainly, many CEOs are ably steering their firms and deserve their paychecks. But the rate at which executive pay has grown, as compared to stagnating wages among American workers, is rightfully frustrating shareholders and employees alike, especially given the lackluster performance of many of the companies paying these high salaries.
Dodd, then running against Obama in the Democratic presidential primaries, apparently was not convinced. He held no hearings on the bill, and the measure met a quiet death in his committee. (Whatever Patterson had done, he could claim a success.) But on the campaign trail last year, Obama repeatedly touted the legislation to show he was serious about corporate reform. At an Indiana press conference in April 2008, he said of the measure, "This isn't just about expressing outrage. It's about changing a system where bad behavior is rewarded—so that we can hold CEOs accountable, and make sure they're acting in a way that's good for their company, good for our economy, and good for America, not just good for themselves."
As vice president for government relations at Goldman Sachs, Patterson, who had previously been policy director for Sen. Tom Daschle, handled a wide assortment of financial, banking, patent, energy, and insurance issues. He worked on tribal gaming matters. And he was registered to lobby on credit default swaps and carbon trading. Because of his lobbying activities, Patterson did not meet the tight ethics rules Obama adopted to slow down Washington's ever-spinning revolving door. His appointment—which was not subject to Senate confirmation—was questioned by White House reporters and criticized by government reform outfits. But the Obama administration granted Patterson a waiver, and the ex-Goldman Sachs lobbyist was able to join Treasury. (Goldman Sachs has been one of the biggest beneficiaries of the federal rescue of AIG; the fallen insurance firm, which has received $170 billion in funds from the Federal Reserve, has used that money to pay Goldman Sachs $6.8 billion.)
A spokesperson for Goldman Sachs would not provide any details regarding Patterson's lobbying. And the Treasury Department and the White House each declined to comment on Patterson's past lobbying for Goldman Sachs or his present work for Geithner.
On Wednesday, while recounting his and Frank's attempts to enact "say on pay" legislation, Obama pointed to their measures as examples of "smart regulations" that enhance "oversight, transparency, accountability." And he remarked, "All we're trying to say is you've got to be accountable to somebody. And it's that measure of accountability that I think is part of what has made America strong, and we have to get back to those kinds of values." But Geithner's right-hand man was not long ago paid well to undermine those values. How Patterson has gone from serving Goldman Sachs to serving the Obama administration is a tale that could use some more transparency.
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11 Comments so far
Show All"Change you can believe in."
Like the tooth fairy.
The check's in the mail.
Don't worry I'm on the pill'
I did not have sex with that woman Monica Lewinsky.
What a bunch of crooks and liars you voted into office.
Well, the honest people can't make it past the primaries.
The Scottish Historian Alexander Tytler said;
"A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by a dictatorship. The average age of the world's greatest civilizations from the beginning of history has been about 200 years. During those 200 years, these nations always progressed through the following sequence:
1. From bondage to spiritual faith;
2. From spiritual faith to great courage;
3. From courage to liberty;
4. From liberty to abundance;
5. From abundance to complacency;
6. From complacency to apathy;
7. From apathy to dependence;
8. From dependence back into bondage."
I think we are somewhere between #6 and #7. Wake up people!
Obama can appear on TV and look graceful, smart and affable, which he is. He can do some common sense things to reverse the worst public stupidities of the Bush administration.
Meanwhile Summers, Geithner and Emanuel stay very busy defending Wall Street and our fellow war criminals. That's called "delegation".
Joe
The appointments of Geithner and Summers said it all.
RoR, 9:41: I have seen the quote but also saw an analysis trying to verify authenticity and being unable to do so through web searches. Doesn't mean it isn't apt.
Suggestion for Obama: Stop reading about Lincoln, who put brainy, divisive people in his cabinet to benefit from their knowledge and also to have a finger on the pulse of the Other Side, but he was a seasoned, canny fighter. Since you are a relative beginner in the Big Time of Nasty Washington, I suggest you read about Andrew Jackson's successful fight to get rid of the Central Bank ... akin to our current "Federal" Reserve; read the best of Eisenhower as a War-time General and Supreme Commander of our own and allied European forces; read Naomi Klein's scrupulously referenced THE SHOCK DOCTRINE, if you haven't already; read about John Adams' love and respect and use of The Law; spend a weekend with Ralph Nader, Noam Chomsky and Howard Zinn at Camp David, with your very smart, Harvard-degreed attorney wife, Michelle, present; ditto with Vladimir Putin, a sophisticated, intelligent, global martial artist if ever there was one; read the last visionary speeches of JFK, read about FDR and how he thought and acted; get some unaffiliated-with-Israel Progressives and true liberals in your Cabinet and Administration, and please read all the 911-TRUTH sites and see the various A-rated 9-11 documentaries, because chasing phantoms and going after an allegedly dead Osama is so passe, but the lives of our young military people are not. Let's not waste anymore of them in questionable to absurd causes.
You have a reputation, Mr. Obama, of being able to bring diverse factions together and with an amicable style, eventually get them pretty much on the same page. But this is not the Harvard Law Journal or the Illinois State Legislature or a three-year stint as a Junior Senator. You are in the Big-Time of National and Global matters, including the dangerously imminent effects of climate change. You have enormous power in your hands, and you are representing ALL of the people. So far, however, you are hanging out mostly with the Wall Street gang, and stuck-in-old-theory economists, and minions with the strongest of connections to Israel, which reduces your connection with The People of this Land and with a whole segment of intelligent, highly conscious people who view politics and economic systems very differently than the faltering standard systems of now. It seems with your chosen few, you are backing yourself against a wall and are becoming increasingly isolated and insulated from The People.
We DO want you to succeed, President Obama, not only just because we do, but it's our collective necks on the block with the axes in the hands of the financial elite, the old-guard elitists, and some Zionist crazies governing or affiliated with Israel and entrenched also in the U. S. of A. And yes, there are Muslim crazies too and Fundamentalist crazies of all kinds who carry their fanaticism with them wherever they go. They will always be around.
However, it has been proven now in sociological studies that if the so-called ordinary people are provided with the facts and the truth, and asked to solve problems in small-group settings that their collective common sense finds innovative ways to solve those problems better than the so-called experts.
Try us. You'll like us.
/cm
Use the referendum Barack.
Goldman Sachs was the second largest contributor to Obama's 2008 presidential campaign, delivering $980,945.
http://www.opensecrets.org/pres08/contriball.php?cycle=2008
This is yet another example of Obama saying one thing and doing the opposite.
A bigger problem, which dwarfs executive compensation, is deregulation. Where is Obama's plan to undo the Gramm-Leach-Bliley Act, for example? He promised to do so on the campaign trail. Has anyone heard anything about it since Obama became president? I haven't.
http://econ4obama.blogspot.com/2008/09/obama-vs-mccain-on-gramm-leach-bliley.html
[Don't know what's wrong with the above link. The end of the address is gramm-leach-bliley.html]
Most of Congress, and the Corporate Media have successfully diverted, and distracted everyone's attention from the real problem: Financial bailouts for failed businesses. The bonus issue is important, but is secondary to the real problem. The leading man, Obama, and his supporting cast, Geithner,Summers,and Bernanke, are succeeding in transferring massive amounts of money into the hands of their class cronies on Wall Street. When will we ever learn, and organize to actually do something about these criminals. Folks! Focus on the real problem before its too late.
It goes hand in hand. If these AIG clowns didn't get a bailout and were left to go bankrupt as well as they should, they wouldn't be able to pay out those obscene bonuses to those hooligans.
Bring America Back !!!!.....Abundantly clear the Obama Treasury Staff intended to install the loopholes allowing the big AIG bonuses.
****As Obama states: "The buck stops here, I am the President" !
===Ergo, he takes blame for the backdown to the too-Big AIG !
****He backed down to the Neocon war machine and has not ended
the wars in Iraq or Afghan.
****He backed down to Big Telecons when he voted for the FISA immunities,
forgiving criminal wiretaping, and various constitutional privacy violations.
****His Justice Dept keeps appealing whistleblower cases in the courts to
keep real patriots from winning the Justice they received in lower courts !
****He backed down on oil-drilling in the Atlantic=='remember drill baby drill !
************It will be interesting to see how he backs down to Big Pharma,
Big AMA, Big Med and Big Insurance on healthcare reform in America?? That looks so very inevitable and===most will bet whatever it is will look like Hillary Clintons "mandatory healthcare" abomination !!
At 64 days into his Administration it seems Prez Obama is pretty willing to
accept the nickname of 'Back-Down Barak'... his oratory and speeches are
as inspiring as hell, but sure ain't anything to back them up yet !!
Attaboy Backdown, you are doin' one hell of a job inside the Beltway, but
so far, Michelle is doing a much better one !