Obama Tackles Fat-Cat Pay

A $500,000 salary and no bonus beyond ordinary stock dividends. That's the limit to executive pay for bailed-out companies under a new plan expected to be announced today by President Barack Obama and Treasury Secretary Timothy Geithner, the business pages trumpet today. "The new rules would be far tougher than any restrictions imposed during the Bush administration, and they could force executives to accept deep reductions in their current pay. They come amid rising public fury about huge pay packages for executives at financial companies being propped up by federal tax dollars," the New York Times writes. The good times, it appears, will be over. Bloomberg cites an Obama administration source, who informs that "the rules will force greater transparency on the use of corporate jets, office renovations and holiday parties as well as golden parachutes offered to executives when they leave companies."

The pressure on banks to show their austere side is growing. Yesterday, Wells Fargo hastily canceled a four-day convention in Las Vegas for its top mortgage bankers to quell a PR uproar, the Wall Street Journal reports. The bank, the recipient of a $25 billion government cash infusion, decided to cancel after word of the trip leaked out and "television networks and bloggers pummeled the bank," the newspaper reports. Another bank under fire, Citigroup, said it would not back out of its $400 million marketing deal with the New York Mets, but it may seek to renegotiate part of the deal, the WSJ writes in a separate story. The Mets brass must be relieved. They just spent $36 million to re-sign starting pitcher Oliver Perez.

The so-called "bad bank" rescue plan is one step closer to reality ... in Britain. In a statement that is bound to anger everyday Britons, U.K. Chancellor Alistair Darling on Tuesday said "taxpayers may have to buy toxic assets from Britain’s banks to help stimulate lending, adding a 'bad bank' scheme to the government’s existing plans to insure banks against unexpected losses," the Financial Times reports. But it would just be to save "one or two institutions," he added. Britain recently announced creating a type of insurance policy for its ailing banks to keep them from failing, a plan that Darling sees as preferable to buying up corrosive bank assets.

Back in the U.S., the bad-bank plan is getting hit with further criticism. Yesterday, Sen. Charles Schumer told Bloomberg that "the bad-bank option is prohibitively expensive and could value the securities at too low a level, spurring a wave of bankruptcies." He, too, prefers an insurance scheme. What will the Obama administration ultimately decide on for its next bank-saving trick? According to the Washington Post, the "Obama administration's emerging rescue plan for the banking system would amount to financial triage, with the Treasury Department playing the delicate role of deciding which of the trillions of dollars in troubled assets plaguing the economy to buy, guarantee or leave in the hands of banks." There's a catch, however. "The high-stakes approach would dramatically increase the investment of taxpayer money in the financial industry, and the potential losses," the newspaper writes.

Just when you thought the music biz couldn't go through any more reinvention, along rolls talk of a Ticketmaster-Live Nation merger that "would consolidate two of the most powerful forces in the music industry under one roof," writes the WSJ. Live Nation Ticketmaster, as it would be called, would create a powerhouse that could "manage everything from recorded music to ticket sales and tour sponsorship." With the old guard of record labels on the wane, a combination of the world's biggest concert promoter with the world's pre-eminent ticketing and artist-management company would be so dominant that it would require review by antitrust authorities, adds the WSJ.

Still in the world of deals, Warren Buffett is adding Harley Davidson to his portfolio of "iconic American corporate brands," in the words of Breaking Views.com (via the NYT). The sage of Omaha is buying up $300 million in company debt in Harley's financial services unit, which provides loans to dealers and consumers and has been tanking along with the rest of the auto industry. But while Buffett is big on Harley Davidson, he appears less enamored with his biographer, Alice Shroeder. For over a decade before she was hand-picked by Buffet to write Snowball, Schroeder hosted a dinner and Q&A with the Berkshire Hathaway boss at its annual meeting. This year, amid rumors that Buffett is unhappy with some aspects of the book, the dinner has been canceled.

Harley Davidson may yet ride out the recession, but things look bleak for those other iconic American brands, GM, Chrysler, and perhaps even Ford. January new-vehicle sales for the Big Three fell to their lowest level in 27 years, with Chrysler down 55 percent, GM 49 percent, and Ford 40 percent from the same time last year, the WSJ writes. Decreased consumer spending and corporate demand were to blame, as automakers cited "sharply lower purchases by fleet operators such as car-rental concerns, as well as the inability of many consumers to obtain car loans." Detroit's malaise sent auto dealers and parts suppliers scurrying to Washington in search of federal aid, the Detroit News reports. The whole industry is so depressed that "the U.S. auto market is no longer the world's biggest." According to one GM industry analyst, "[T]his is the first time China has passed the U.S. in monthly sales."

And, finally, Europe's largest budget airline, Ryanair, has been a pioneer in turning cheap flights into respectable profits over the years. Its incorrect hedge on fuel prices in the last quarter, however, triggered a 128.7 million euro loss. Never mind. The budget flyer is planning to return to profitability, and it will do so in part by instituting a 30 pound ($43) charge on each duty-free item that doesn't fit into a passenger's single allotted piece of carry-on hand luggage, the Guardian reports. CEO Michael O'Leary "has admitted that the airline cannot eliminate hand luggage entirely but justifies the extra charges as 'behavioural' because lower baggage handling costs would ultimately lead to lower fares."