Bush Warns Wall Street on Pay

President Bush did more than upset traffic during his visit to Lower Manhattan yesterday. During a speech delivered in the heart of the financial district, where compensation packages routinely reach into the tens or even hundreds of millions of dollars, Mr. Bush announced that he would ask corporations to curb excessive executive pay.“America’s corporate boardrooms must step up to their responsibilities,” he told an elite corporate crowd gathered for the event. “You need to pay attention to the executive compensation packages that you approve. You need to show the world that American businesses are a model of transparency and good corporate governance.”The comments received a muted reaction from an audience that included the CEO of the New York Stock Exchange, John Thain, and the CEO of the Bank of New York, Thomas Renyi, who earned a combined $14.4 million in 2005, according to Forbes magazine.Mr. Bush, striding into New York City on a one-day visit from Washington, blithely ignored the advice of a Wall Street Journal editorial yesterday against intruding on executive compensation. The Journal board argued that a bill in the Senate that would place limits on deferred executive compensation would create additional tax burdens for others.The president did stop short of asking for congressional action. “Government should not decide the compensation for America’s corporate executives, but the salaries and bonuses of CEOs should be based on their success at improving their companies and bringing value to their shareholders.” he said.The remarks come during a growing public outcry over the gaudy salaries brought home by business leaders. Last month, the chief executive of Home Depot, Robert Nardelli, was ousted with a severance package worth about $210 million.Mr. Bush’s State of the Economy address, was delivered at Federal Hall, where Alexander Hamilton once led the Treasury Department. He spoke at a meeting hosted by the business group Association for a Better New York.The president’s remarks coincided with upbeat economic news. The American economy grew a better than expected annual rate of 3.5% in the fourth quarter of last year, according to the Department of Commerce. Yesterday, the Federal Reserve left the nation’s key interest rate unchanged at 5.25%, citing the improving economic environment and lessened concerns about inflation.With his approval rating at about 30%, Mr. Bush seized on the opportunity to boast about his administration’s economic record, including cutting taxes to stimulate growth and easing regulatory burdens.“There is one undisputed leader in the world in terms of economy, and that’s the United States of America,” Mr. Bush said to applause.“Since we enacted major tax relief into law in 2003, our economy has created nearly 7.2 million new jobs. Our economy has expanded by more than 13%. That expansion is roughly the size of the entire Canadian economy,” Mr. Bush continued.Last week, Mayor Bloomberg — who introduced Mr. Bush at yesterday’s event — and Senator Schumer released a report warning that New York City’s status as the world’s financial capital is in jeopardy and America stands to lose between 4% and 7% of its share of the global financial market if no action is taken. They made a series of recommendations, including changes to the Sarbanes-Oxley law designed to combat corporate fraud and the possibility of capping punitive damages in corporate litigation.The president said yesterday he would seek to ease the burdens of excessive litigation and modify the way Sarbanes-Oxley is implemented, without changing the law itself. “The principles of Sarbanes-Oxley are as important today as when they were passed. Yet complying with certain aspects of the law, such as Section 404, has been costly for businesses and may be discouraging companies from listing on our stock exchanges,” Mr. Bush said.Looking ahead, Mr. Bush said he would focus on extending free trade, and improving the education system to mitigate a growing separation of wealth in America. “The fact is that income inequality is real. It has been rising for more than 25 years,” Mr. Bush said.Echoing statements from his State of the Union address last month, Mr. Bush said he would seek to extend government-support health care to the poor, disabled, and elderly, and said he would seek to develop cleaner energy alternatives and reduce America’s dependence on foreign oil.Following his address, amid something of a security lockdown in the Financial District, Mr. Bush made an unannounced visit to the floor of the New York Stock Exchange.Mr. Schumer, in Washington, said the president’s rosy picture of the economy ignores the economic challenges facing the middle class.“If you really spend time out in middle class America — if you descend from the president’s economic view at 30,000 feet to the real communities of Main Street America — you know that all is not well with the middle class,” he said. “We are at a real crossroads economically, and I believe we need to lay out a new vision that both accepts the economic forces at work and acknowledges and deals with the new challenges they present to American families.”A senior fellow at the Cato Institute, Daniel Mitchell, said that he was surprised the president had used the “negative rhetoric of inequality” when he called for curtailing executive pay.“I’m disappointed that the White House wasn’t making the argument about economic dynamism,’ but rather spoke of action that could slow the economy,” Mr. Mitchell said. “In reality, what’s important is that if you have a fast growing economy.”

Bush Warns Wall Street on Pay

Bush Warns Wall Street on Pay

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