Senate Democrats to Fat Cats: No Pay For You!

The papers this morning are dominated by news that an $787 billion economic stimulus bill got the final go-ahead from Congress Friday nigh, and is on its way to the White House to be signed into law. Both the Wall Street Journal and the New York Times zero in on a provision inserted by Senate Democrats (specifically Sen. Christopher Dodd of Connecticut) that will "prohibit cash bonuses and almost all other incentive compensation for the five most senior officers and the 20 highest-paid executives" at large companies that receive, or have received, money under TARP. The provision "could severely crimp pay packages at big banks, where top officials commonly get relatively modest salaries but often huge bonuses," the WSJ writes.

The NYT reports top economic advisers to President Obama "adamantly opposed the pay restrictions." Behind closed doors, they said that the Senate "went too far and would cause a brain drain in the financial industry during an acute crisis."

In a separate article, the WSJ reports that not a single Republican backed the package in the House. Seven Democrats joined 176 Republicans in opposition and 246 voted for it. In the Senate, where it was passed 60-38, three Republicans voted for the bill along with the 57 Senate Democrats. Nonetheless, the Washington Post hails the passage as an "early triumph for Obama" as it provides a down payment on much of his domestic agenda, "including his pledges to upgrade the nation's aging roads, bridges and electricity grid; overhaul health-care record-keeping and invest billions in alternative energy research to reverse climate change and wean the country from foreign oil."

Bloomberg reports that U.S. stocks fell Friday and remained low even after Congress passed the stimulus plan. In fact, the past week's losses—the S&P sagged 4.8 percent—were "the market's worst weekly retreat since November." Spurring the drawback was Wells Fargo's revised fourth quarter losses, "which were wider than first reported because of costs tied to securities holdings." The bank's shares fell 6.2 percent. Bank of America and JPMorgan also lost more than 5 percent.

However disquieting, the news was good for private equity firm Carlyle Group, which has "lined up about $1 billion to invest in banks as the Obama administration seeks to attract private capital to troubled financial institutions," according to Bloomberg in another article. Carlyle plans to raise as much as $3 billion for the new fund this year. It raised $600 million in October of last year. Chip MacDonald, a partner with Jones Day, puts in his two cents: "Private equity will figure prominently in bank consolidation this year. Buyout firms have greater knowledge of the rules and regulators are taking a more pragmatic approach to applying them."

A day without disheartening news about the auto industry is not really a day in the news at all. The WSJ writes that GM will soon offer the government two costly alternatives: "commit billions more in bailout money to fund the company's operations, or provide financial backing as part of a bankruptcy filing." According to Treasury Department officials, the company likely require at least $5 billion to keep operating beyond the first quarter. Coming up on the government-imposed Feb. 17 deadline for the companies to unveil a debt-restructuring plan, Bloomberg spotlights the talks between GM and Chrysler and the United Auto Workers to end a 54-year-old benefit that ensures almost full pay during layoffs. Already, the companies have agreed to eliminate the "jobs bank," a 25-year-old program that paid UAW employees their full salary to report to work even if they have no thing to do.

Finally, Business Week and the NYT go with the same Associated Press story by Deborah Yao about Sirius XM Radio, which said Friday "that it could file for bankruptcy as early as Tuesday if it cannot successfully negotiate with the holders of its debt." The company still has about $175 million in debt due tomorrow even though it has exchanged $172.5 million of debt maturing in December for new debt due in 2011.