Obama undermining Const'l core: rule of law

"Will the Rule of Law Survive Obama?" October 22nd, 2009 at 8:50 am by David Frum

"May I associate myself with the remarks of the esteemed Professor Bainbridge?
The Obama administration has shown a shocking disregard for the rule of law when contract rights interfere with the administration’s ability to reorder the American economy as it sees fit.

"First it was the AIG bonuses. Then the Chrysler and GM bondholders. Now executive compensation.

"From the New York Times:
"Responding to the furor over executive pay at companies bailed out with taxpayer money, the Obama administration will order the firms that received the most aid to slash compensation to their highest-paid employees, an official involved in the decision said on Wednesday.
The plan, for the 25 top earners at seven companies that received exceptional help, will on average cut total compensation this year by about 50 percent. The companies are Citigroup, Bank of America, American International Group, General Motors, Chrysler and the financing arms of the two automakers.

"Some executives, like the top traders at A.I.G., will face tight limits on their pay. In addition, the top-paid employees at all the affected companies will face new limits on their perks.
The plan will also change the form of the pay to align the personal interests of the executives with the longer-term financial health of the companies. For instance, the cash portion of the executives’ salaries will be slashed on average by 90 percent, and the rest will be replaced by stock that cannot be sold for years.

"It’s unsurprising that a public that has had to pay billions to rescue firms from bad investment decisions would resent paying big checks to senior executives. It’s certainly conceivable that the form of compensation imposed by Ken Feinberg - more stock, less cash, with delays in the date the stock can be sold - might have encouraged more responsible behavior had it been in place beforehand.

"But as Bainbridge puts it:
"[M]any (most?) of the compensation deals the Obama administration is shredding were set in employment contracts. Granted, some of those employment contracts were signed after the law setting up pay “czar” Kenneth Feinberg’s position and empowering him to review pay packages at TARP firms.

"But a lot of them are pre-existing contracts and it’s those contracts that are the main concern.
Feinberg in fact is trumpeting his success at forcing so-called renegotiation “even for contracts over which he did not have explicit authority.”

"The bottom line thus is that Obama is having his minion coerce TARP executives and employees into ripping up contracts Obama doesn’t like so as to assuage the populist public...."

http://www.newmajority.com/will-the-rule-of-law-survive-obama