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Editor, The Konformist
FEBRUARY 6, 2009
Loopholes Sap Potency of Pay Limits
By MARK MAREMONT and JOANN S. LUBLIN
President Barack Obama's crackdown on Wall Street pay contains
loopholes, and may have limited impact in restraining compensation,
according to some executive-pay consultants and management attorneys.
Some compensation professionals already are pointing out potential
holes in the rules, including tactics such as changing executives'
titles or rearranging pay packages. Just as past attempts by the
government to restrict executive pay largely backfired, these people
warn, the new curbs also may have unintended consequences.
The plan, announced Wednesday, includes a $500,000 cap on annual
compensation for senior executives of companies that receive
future "exceptional" government aid. Additional compensation would
have to be paid in restricted stock or similar long-term incentive
arrangements, which the executives could cash in only after the
government is repaid, with interest.
Other recipients of future federal bailout money would have to place
tougher limits on severance packages and disclose luxurious perks,
such as the use of company jets. Annual compensation above $500,000
at these companies would be subject to a nonbinding shareholder vote.
"The mix of transparency and accountability is powerful and strikes
the right balance to allow banks to continue operating effectively
while operating under common-sense guidelines that rein in excessive
compensation," a Treasury Department official said Thursday.
Many applauded the moves as a useful step to curb Wall Street
compensation practices that may have led to excessive risk-taking.
But some critics identified weaknesses, suggesting the restrictions
be retroactively applied to companies that already have received
federal bailout cash. They noted that the most stringent restrictions
likely would affect only a few firms; others could avoid some of the
curbs by putting extra pay to a shareholder vote.
Some said the plan doesn't limit total compensation, because it
allows companies to boost awards of restricted stock.
"I am fearful that companies will look at this as an opportunity to
grant more restricted shares and stock options to executives who
already have an abundant amount of equity," said Jesse Brill, a
securities and compensation lawyer who is chairman of
CompensationStandards.com, an advisory Web site. He would prefer
barring executives from cashing in stock until age 65 or two years
past retirement to encourage long-term decision making.
Michael Kesner, head of compensation consulting at Deloitte
Consulting LLP, worries the plan allows executives to claim
restricted-stock awards once the company pays back the government,
and doesn't require companies to tie those awards to operating
results or share-price gains, as many companies now do.
"They're actually saying we don't care about performance," Mr. Kesner
Others said the preliminary restrictions released by the Treasury
Department are overly vague. For example, the $500,000 annual pay
limit applies only to "senior executives." James F. Reda, a New York
compensation consultant, said companies could give certain executives
lower titles or assign them to head subsidiaries.
"Now you're going to have executives ask not to be called a senior
executive," said Steven Hall, a New York pay consultant. He warned
that companies can't get too "cute," because they will embarrass
themselves before a hostile public and government. "Being cute ain't
going to work in the future," he said.
There also isn't a clear definition of what constitutes a luxury
perk. Companies could grant executives benefits such as medical
exams, tax gross-ups and personal tax advice, said Sarah Anderson, an
executive-pay analyst at the Institute for Policy Studies, a liberal
think tank in Washington. Gross-up payments from companies reimburse
senior executives for taxes the executives owe on company-provided
perks and other benefits.
The Treasury official said the department plans to issue more
detailed regulations, likely in a few weeks. He said each company's
perk guidelines will be vetted and posted publicly.
David Yermack, a finance professor at New York University's Stern
School of Business, said the initial guidelines don't address many
aspects of executive pay, such as deferred compensation and pension
Mr. Yermack also said it isn't clear if companies would be allowed to
boost executives' pay by repricing existing stock options. Such a
repricing could be worth millions of dollars in potential
Perhaps the broadest impact from President Obama's plan will stem
from its endorsement of advisory shareholder votes on executive-pay
provisions. Such "say-on-pay" votes have long been sought by
corporate-governance advocates, but only a small number of companies
have implemented such votes.
Some bankers and compensation consultants said they worry the plan
will prompt an exodus of talent from companies with regulated pay to
other firms. But Alan Levine, an executive-compensation attorney at
Morrison Cohen LLP in New York, said there will be plenty of
qualified people willing to run big banks at annual salaries of
"I think there's some guy at Citigroup who says, 'I don't care if I'm
only making a half-million dollars, I'm going to lead this bank to
recovery, and when we get out of this cloud, you're going to pay me.'"
Phred Dvorak contributed to this article.
Write to Mark Maremont at mark.maremont@... and Joann S. Lublin
Printed in The Wall Street Journal, page C1
Medical marijuana supporters fuming over Westside dispensary raids
Three actions by DEA teams Tuesday point up the continuing conflict
between federal and state drug laws. Some had hoped an Obama
administration would change the dynamic.
By Corina Knoll
February 4, 2009
A raid by federal agents of several Westside medical marijuana
dispensaries has generated outrage among advocates of the drug, some
of whom had expressed hope that the federal government would halt
such crackdowns once President Obama took office.
At least three groups of officers with the Drug Enforcement
Administration simultaneously served search warrants on dispensaries
Tuesday about noon, said Sarah Pullen, a DEA spokeswoman.
"I can't get into details as to the probable cause behind the
warrants except for the fact that they're dealing with marijuana,
which is illegal under federal law," she said.
State law, however, is a different matter. In 1996, California voters
passed Proposition 215, which legalized marijuana for seriously ill
patients and reduced criminal penalties for possession. But that
conflicts with federal law.
Medical marijuana advocates were hopeful when Obama, while on the
campaign trail, said he supported prescriptions for medical marijuana
as long as the drug was regulated and that he didn't plan to use
Justice Department resources to circumvent state laws. Tuesday's
raids showed that, so far, things haven't changed.
"The local government is trying to implement Prop. 215, but while
they're doing that we've got the federal government intimidating
property owners and raiding facilities," said Don Duncan, co-founder
of Americans for Safe Access, which promotes safe and legal access to
marijuana. The group is planning a noon rally today at the L.A.
"What would be best for the people in California is if the federal
government backed off and let the local government regulate this
L.A. City Council members placed a moratorium on new medical
marijuana dispensaries in 2007 while they weighed whether to tighten
city regulation of them.
"Until we get something on the books, we're going to have more of
these conflicts," Councilman Dennis Zine said.
Federal agents make a handful of dispensary raids each year in Los
"DEA has a legal right to do what they're doing," said Charlie Beck,
chief of detectives at the Los Angeles Police Department. "Is it
At the heart of the controversy are places like the Beach Center
Collective in Playa del Rey, where an employee said DEA officers
confiscated so much property Tuesday that it would not be able to
"They took everything," said the 32-year-old employee, who asked not
to be named out of fear of prosecution.
"You name it, they took it -- right down to the television. The
computer, patient files, medicine, cash in the register -- that's it,
Margaret Dooley-Sammuli, deputy state director of the Drug Policy
Alliance Network, said it's up to the Obama administration to resolve
After Obama praises torture ruling, civil liberties group appalled
Wednesday February 4, 2009
'Hope is flickering,' ACLU declares
The American Civil Liberties Union, which has generally been harshly
critical of President George W. Bush and praiseworthy of President
Barack Obama, has fired a torpedo across the Obama bow.
After the British High Court ruled that evidence of a British
resident's rendition and harsh interrogation at the Pentagon's
Guantanamo Bay prison must remain secret because of threats made by
the Bush administration to halt intelligence sharing, the Obama
Administration offered a terse statement seemingly expressing support
to the BBC.
"The United States thanks the UK government for its continued
commitment to protect sensitive national security information and
preserve the long-standing intelligence sharing relationship that
enables both countries to protect their citizens," a spokesman said.
In response, the ACLU's executive director, Anthony Romero, shot off
a letter to Secretary of State Hillary Clinton asking the Obama
Administration to clarify their position. Romero also issued a
sharply-worded three sentence statement to the press, saying Obama
has now offered "more of the same."
"Hope is flickering," Romero said in a statement. "The Obama
administration's position is not change.. It is more of the same.
This represents a complete turn-around and undermining of the
restoration of the rule of law. The new American administration
shouldn't be complicit in hiding the abuses of its predecessors."
The ACLU called on Clinton to "reject the Bush administration's
policy of using false claims of national security to avoid judicial
review of controversial programs."
Romero's letter to Clinton follows.
February 4, 2009
The Honorable Hillary Clinton
U.S. Department of State
2201 C Street, N.W.
Washington, D.C. 20520
Re: Clarification Requested on Position of the United States on
Blocking Disclosure by a British Court of Its Report on Allegations
Dear Secretary Clinton:
The American Civil Liberties Union strongly urges you to clarify the
position of the United States on the publication of the full judgment
in a lawsuit brought by a Guantanamo detainee, Binyam Mohamed, in a
British court. Earlier today, the High Court in Great Britain
published a judgment denying publication of its report detailing
allegations of torture. The High Court stated that the United States
had threatened that full publication of the court's judgment would
jeopardize intelligence cooperation between the two countries.
Remarkably, the court reported that the British government claimed
the U.S. position had not changed, despite the inauguration of
President Barack Obama. We urgently request that you clarify the
position of the United States in this matter.
Two of the British justices severely criticized the position of the
United States in working to block publication of the judgment in the
torture case. Lord Justice Thomas and Justice Lloyd Jones stated
today that: Indeed, we did not consider that a democracy [the United
States] governed by the rule of law would expect a court in another
democracy to suppress a summary of the evidence contained in reports
by its own officials ... relevant to allegations of torture and
cruel, inhumane, or degrading treatment, politically embarrassing
though it might be. We had no reason ... to anticipate there would be
made a threat of the gravity of the kind made by the United States
Government that it would reconsider its intelligence-sharing
relationship, when all the considerations in relation to open justice
pointed to us providing a limited but important summary of the
The court's opinion specifically stated that attorneys for British
Foreign Secretary David Miliband told the court that the United
States' threat on the effect of publication on intelligence
cooperation was continued by the United States, despite the
inauguration of President Obama.
Specifically, the justices stated that, "it was submitted to us by
Mr. David Rose that the situation had changed significantly following
the election of President Obama who was avowedly determined to eschew
torture and cruel, inhuman and degrading treatment and to close
Guantanamo Bay. We have, however, been informed by counsel for the
Foreign Secretary that the position has not changed."
The claims made by the British justices that the United States
continues to oppose publication of the judgment in the Binyam Mohamed
case--to the point of threatening the future of U.S.-British
intelligence cooperation--seems completely at odds with both the anti-
torture and transparency executive orders signed by the President. We
strongly urge you to clarify the position of the United States and
remove any threat related to the publication of the court's full
Please let us know if you have any questions regarding this matter.
Anthony D. Romero
Director, Washington Legislative Office
cc: Joan Donoghue, Acting Legal Adviser
February 6, 2009
White House Faith Office to Expand
By JEFF ZELENY and LAURIE GOODSTEIN
WASHINGTON President Obama signed an executive order Thursday to
create a revamped White House office for religion-based and
neighborhood programs, expanding an initiative started by the Bush
administration that provides government support and financing to
religious and charitable organizations that deliver social services.
"No matter how much money we invest or how sensibly we design our
policies, the change that Americans are looking for will not come
from government alone," Mr. Obama said. "There is a force for good
greater than government."
In announcing the expansion of the religion office, Mr. Obama did not
settle the biggest question: Can religious groups that receive
federal money for social service programs hire only those who share
The Bush administration said yes. But many religious groups and
others that are concerned about employment discrimination and
protecting the separation of church and state had pushed hard for Mr.
Obama to repeal the Bush policies.
Meanwhile, other religious groups were lobbying to preserve their
right to use religion as a criterion in hiring. Some religious social
service providers warned they might stop working with the government
if they were forced to change policies.
Instead of deciding the issue, the president called Thursday for a
legal review of the policy case by case before determining whether
religious groups can receive government money and selectively hire
employees based on their religious beliefs.
Mr. Obama told an audience in Ohio last summer, "You can't use that
grant money to proselytize to the people you help and you can't
discriminate against them."
Joshua DuBois, a 26-year-old Pentecostal minister who led religious
outreach for Mr. Obama during the presidential race, will direct the
new White House Office of Faith-Based and Neighborhood Partnerships.
Mr. DuBois said in an interview, "The president is still very much
committed to clear constitutionality and legality in this program.
He's committed to nondiscrimination."
But Mr. DuBois said that after Mr. Obama gave his speech in Ohio "we
have realized there's a tremendous lack of clarity in this area, so
we'll review on a case by case basis."
"If we are consistently finding the same thing, and presenting the
same recommendations to the president," he said, then the
administration might seek to recommend a change in the law.
Asked whether his office would work with religious groups outside the
mainstream, like the Church of Scientology, that may seek government
grants for social services, Mr. DuBois said: "There's no picking or
choosing or cherry-picking of groups. That was allowed before, but it
will not be the practice moving forward."
The president also announced the formation of a 25-member advisory
council that includes religious leaders and heads of nonprofit
groups, among them, several evangelical Christians, the president of
Catholic Charities U.S.A., a rabbi, a Muslim community organizer and
the openly gay director of a nonprofit group.
Mr. Obama, who spoke about his Christian faith frequently during his
presidential campaign, said Thursday at the National Prayer Breakfast
that religion should not be "wielded as a tool to divide us from one
He called on believers of all faiths to set aside divisions "to lift
up those who have fallen on hard times."
"No matter what we choose to believe, let us remember that there is
no religion whose central tenet is hate," Mr. Obama told an audience
of Republicans and Democrats, diplomats and members of the
clergy. "There is no God who condones taking the life of an innocent
human being. This much we know."
Mr. Obama signed the executive order on Thursday away from the view
of television cameras or an audience.
Jeff Zeleny reported from Washington, and Laurie Goodstein from New
Obama: "Everybody thinks they're economists"
February 6, 2009
The Associated Press reports:
President Barack Obama says in Washington these days, everyone's an
economistor thinks they are.
Obama introduced a team of outside economic advisers Friday at a
White House ceremony in which he also renewed his demand that
Congress act quickly on his economic recovery package.
As the country struggles with the worst financial crisis since the
Great Depression, Obama said there has been no shortage of advice on
how to solve the nation's woes.
"You've got some economists and some folks who think they're
economists. By the way, these days everybody thinks they're
economists," he joked.
Obama made his funny while announcing members of his Economic
Recovery Advisory Board or more precisely, the board cobbled
together by his globalist masters. It will be run by none other than
Paul A. Volcker, the former Fed mob boss who thinks Americans have
been living beyond their means for too long. "It is the United States
as a whole that became addicted to spending and consuming beyond its
capacity to produce," Volcker lectured the Economic Club of New York
in April, 2008. "It all seemed so comfortable."
It will all become exceedingly uncomfortable and sooner before later
if Volcker and the globalists have their way.
"As previously announced, the inestimable Austan Goolsbee will serve
as the Board's Staff Director and Chief Economist," reports Jake
Tapper for ABC News.
Austan Goolsbee is the guy who told the Canadians back in April of
2008 during the election campaign that Obama really didn't mean it
when he declared he would "renegotiate NAFTA." It was just a parlor
trick designed to fool the American people.
"Obama adviser Austan Goolsbee told a recent CFR meeting that `free
trade is not the enemy,'" the Washington Post reported on November 3,
"Goolsbee is widely reported to have told Obama not to back a
compulsory freeze on home mortgage foreclosures to help the
struggling middle class in the current depression crisis, as demanded
by former candidate John Edwards," Webster Tarpley wrote on February
4, 2008. Tarpley also reveals Goolsbee's connection to the elitist
occult Skull & Bones club.
It is apparently a joke to Obama and his handlers that so many
Americans are now talking about economics. Obviously, we should leave
the economy up to Obama's board of establishment insiders, never mind
the appointed boss of this globalist coterie of corporatist
economists has stated you are living too high on the hog.
Here is the full list of folks who will be punching your meal ticket:
1. William H. Donaldson, former Chairman, SEC
2. Roger W. Ferguson, Jr., President & CEO, TIAA-CREF
3. Robert Wolf, Chairman & CEO, UBS Group Americas
4. David F. Swensen, CIO, Yale University
5. Mark T. Gallogly, Founder & Managing Partner, Centerbridge
6. Penny Pritzker, Chairman & Founder, Pritzker Realty Group
7.. John Doerr, Partner, Kleiner, Perkins, Caufield & Byers
8. Jim Owens, Chairman and CEO, Caterpillar Inc.
9. Monica C. Lozano, Publisher & Chief Executive Officer, La Opinion
10. Charles E. Phillips, Jr., President, Oracle Corporation
11. Anna Burger, Secretary-Treasurer, SEIU
12. Richard L. Trumka, Secretary-Treasurer, AFL-CIO
13. Laura D'Andrea Tyson, Dean, Haas School of Business at the
University of California at Berkeley
14. Martin Feldstein, George F. Baker Professor of Economics, Harvard
15.. Jeffrey R. Immelt, CEO, GE