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Icahn: “Financial institutions Became Gambling Casinos!"
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Barack Obama clearly has big banks in his sights. And so does Carl Icahn!
On Wednesday President Obama imposed $500,000 caps on senior executive pay for the most distressed financial institutions receiving federal bailout money, saying Americans are upset with "executives being rewarded for failure."
The move comes in response to national outrage over the way Wall Street firms are behaving amid the financial crisis. Last week, the nation learned banks paid out a total of $18 billion in bonuses to their senior most employees -- despite the fact these banks accessed TARP money.
Let’s be clear. These CEO’s and VP’s still enjoyed a big payday, despite desperately needing taxpayer dollars just to stay afloat.
It was a move that the President called irresponsible and left many on Main Street shaking their heads and muttering comments that are too colorful to print here.
Billionaire activist Carl Icahn has been extremely outspoken on the issue of executive compensation. On his website IcahnReport he writes, “Executive pay is out of control!” And he tells Fast Money that “I think Obama and Geithner are on the right track,” although he’s questions whether we should legislate morality.
Essentially Icahn believes the trouble at banks, as well as many other firms, lies with boards of directors that are not properly held accountable. “They have lost their checks and balances,” he says.
"Financial institutions became almost gambling casinos…. and the boards allowed this," he adds. CEOs and boards were willing to assume almost any risk profile. And the risk never resided with the executives making the decision to take that risk. Instead it fell squarely on the shoulders of the shareholders -- and later the taxpayers.
Make no mistake "I put the blame on the boards," he adds.
Icahn feels strongly that there are too many laws on the state level that protect corporate management when they should protect shareholders -- and the public at large. He feels that's a disgrace and he's actively trying to change those laws.
You can join his crusade – click here for more.
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And in case you're wondering, there's no grandfather clause to Obama's pay cap. In other words it would apply to institutions that negotiate agreements with the Treasury Department for "exceptional assistance" in the future.
The restriction would not apply to such firms as AIG [AIG
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], Bank of America [BAC
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], and Citigroup [C
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], that already have received such help.
What do you think? Tell us now!
Trader disclosure: On Feb. 4th, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Macke Owns (TM), (DIS), (MS), (SDS), (AAPL); Finerman's Firm Owns (DNA) & (DNA) Calls; Finerman's Firm Owns (MSFT), (PM); Finerman's Firm Is Short (IYR), (IJR), (IWM), (MDY), (SPY), (USO), (BBT); Najarian Owns (BMY) Calls; Najarian Owns (CSCO) Call Spread; Najarian Owns (CAT) Call Spread; Najarian Owns (EEM) Call Spread; Najarian Owns (FCX) & (FCX) Calls; Najarian Owns (GDX) Call Spread; Najarian Owns (MSFT) & (MSFT) Short Calls; Najarian Owns (MS) & (MS) Short Calls; Najarian Owns (V) Call Spread
Icahn Owns (MOT), (YHOO)
CNBC.com with wires
Data is a real-time snapshot *Data is delayed at least 15 minutes
