"Protect the jobs and benefits of workers and retirees when corporations file for bankruptcy by telling companies that they cannot issue bonuses for executives during bankruptcy while their workers watch their pensions disappear."
The federal government creates the rules that govern bankruptcy, which is when people or businesses go to court to declare they are unable to pay their creditors. Barack Obama pledged during the campaign that he would get new rules created so that corporations in bankruptcy would not be able to give their executives bonuses.
Such a restriction would have to be approved by Congress, but Congress has taken no action on the matter. So a year ago, we rated this promise Stalled.
As we indicated in our previous update, the Obama administration has taken steps to limit bonuses in other ways. The government has moved to limit compensation for banks and auto companies that were bailed out by the government in 2008 and 2009. But that's a separate issue from bankruptcy rules.
We asked the White House whether any progress was being made on this promise, and they were unable to provide any evidence that it was advancing. If any progress is made in the future, we'll change our rating, but after two years and with no sign of action, we're shifting this one to Promise Broken.
The federal government creates the rules that govern bankruptcy, which is when people or businesses go to court to declare they are officially out of money. Barack Obama pledged during the campaign that he would get new rules created so that corporations in bankruptcy would not be able to give their executives bonuses.
Such a restriction would have to be approved by Congress, but Congress has taken no action on the matter. In fact, legislation has not even been introduced.
Samuel Gerdano, executive director of the American Bankruptcy Institute, confirmed the results of our search. The institute is an association for professionals including attorneys, judges, bankers and accountants who work on bankruptcy issues. Gerdano said similar legislation had been introduced in the previous Congress, in 2007, but no such legislation is pending now.
The Obama administration has taken steps to limit bonuses in other ways. The government has moved to limit compensation for banks and auto companies that were bailed out by the government in 2008 and 2009. But that's a separate issue from bankruptcy rules.
Because there's no movement to create the new rules, we rate this promise Stalled.
E-mail interview with Samuel Gerdano of the American Bankruptcy Institute
Thomas, H.R. 3652 , introduced Sept. 25, 2007
The New York Times, Topics: Kenneth R. Feinberg (special pay master for rescued firms)