Those of us who are asking whether a “czar”, who is not under Congressional oversight, is allowed under the Constitution to set wages in private industry have an answer by Michael McConnell:
The Pay Czar Is Unconstitutional
Kenneth Feinberg hasn’t been confirmed by the U.S. Senate.
So who is Kenneth Feinberg, and where did he get the power to set pay for executives at private firms?
As part of the hastily enacted and seldom-read legislation establishing the Troubled Asset Relief Program (TARP), Congress authorized the Secretary of the Treasury to “require each TARP recipient to meet appropriate standards for executive compensation.” To carry out this task, last June the Treasury promulgated an emergency “Interim Final Rule,” waiving ordinary requirements for a public comment period.
As part of this emergency rule, Treasury Secretary Timothy Geithner created the office of “Special Master” for compensation, delegated his TARP authority to set compensation standards to this officer, and appointed Mr. Feinberg (a lawyer and mediator) to this position, without obtaining Senate confirmation.
Therein lies the problem. The Appointments clause of the Constitution, Article II, section 2, provides that all “Officers of the United States” must be appointed by the president “by and with the Advice and Consent of the Senate.” This means subject to confirmation, except that “the Congress may by Law vest the Appointment” of “inferior Officers, as they think proper, in the President alone, in the Courts of Law, or in the Heads of Departments.”
There is no doubt that Mr. Feinberg is an “officer” of the United States. The Supreme Court has defined this term (Buckley v. Valeo, 1976) as “any appointee exercising significant authority pursuant to the laws of the United States.” Mr. Feinberg signed last week’s orders setting pay levels for executives at Bank of America, AIG, Chrysler Financial, Citigroup, GMAC, General Motors and Chrysler. They have the force of law and are surely an exercise of “significant authority” pursuant to an Act of Congress. He is not a mere “employee,” acting at the direction of a superior. That means his office is subject to the requirements of the Appointments Clause.
While somewhat more disputable, Mr. Feinberg’s is probably an “inferior” officer, defined as one subject to supervision and removal by a member of the cabinet. Although he has substantial discretion and independence, Mr. Feinberg reports to the secretary of the Treasury, who can fire him any time for any reason. This means that Congress could, if it wished, vest the appointment of the pay czar in the secretary, without any need for Senate confirmation.
But Congress has not done so. On the contrary, it vested the authority to implement TARP’s compensation provision in the secretary of the Treasury. The secretary may sub-delegate that power to someone else—but that someone must be an “officer” properly appointed “by and with the advice and consent of the Senate.”
Which, of course, he hasn’t. Otherwise he wouldn’t be a “czar”.
McConnell stresses,
Congress and Congress alone has power to dispense with the safeguard of the confirmation process.
Maybe it’s time one of those executives sues.
The President has authority to name as many presidential advisord as he alone may see fit, and pay them within the funds alloted to him by Congress. However presidential advisors have no executive power at all and the President has no authority at all to create executive power out of whole cloth merely by naming some presidential advisor.
Then had Obama ever attended a constitutional law class, he might have already known this.
Interlocking with this is a note by Carl over at No Oil For Pacifists:
Think Obama is right to slam bonuses for Wall Street execs? Well, what about bonuses for government controlled mortgage lender CFOs?:
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The pay package given to Freddie Mac’s new chief financial officer should have sent a message from Washington to corporate America about how executive compensation standards must change. Instead, it did just the opposite.
The government-controlled mortgage finance company is giving CFO Ross Kari compensation worth as much as $5.5 million. That includes an almost $2 million cash signing bonus and a generous salary that could top $2.3 million.
The Federal Housing Finance Agency, which oversees Freddie Mac, approved the pay package. A spokeswoman pointed to a statement that justified the agency’s approval of the pay, which was done in part because the amount was comparable to what others in the financial services industry make.
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BTW, the other federal-guaranteed mortgage lender, the Federal Housing Authority, likely soon will require a bailout, just like Fannie and Freddie.
And thus we see what Dems are really all about:
“Rules for thee, but not for me”
I’ve been wondering for a while now if these goofy czars were constitutional, and, for that matter, where the money is coming from to pay for them and their staffs. Anybody?
The money to pay them comes from our tax dollars, which of course fills me with joy.