Doug Kanter/AFP/Getty Images
Jack Welch ran General Electric for 20 years and was one of the nation's highest paid CEOs. He says limits on executive pay are now warranted.
Jack Welch ran General Electric for 20 years and was one of the nation's highest paid CEOs. He says limits on executive pay are now warranted. Doug Kanter/AFP/Getty Images
Jack Welch, who ran General Electric for 20 years and was one of the nation's highest paid CEOs, says limits on executive pay are now warranted.
"I think without question once the federal government has to step in to bail out the private enterprise, you've got to modify the private enterprise pay packages," he tells host Alex Chadwick.
In 2002, Welch told NewsHour with Jim Lehrer that anyone who wanted to cap executive pay would be the "dumbest guy in town" because it challenges the free enterprise system.
In 1999, Fortune magazine called Welch the "manager of the century."
"Times and men's fortunes change," Welch tells Chadwick. "And we now are in a time of unprecedented difficulties." He says the "misalignment between bonuses and shareowners and the public" calls for changing the rules on executive pay.
"I'm the first to admit I never thought I'd say this," he says.
Republican presidential nominee John McCain has called for executives benefiting from the bailout to have compensation packages that aren't higher than $400,000 — the salary of the president of the United States. Welch says it won't be hard to find CEOs to work for this or less.
'Wall Street And Main Street Tied Together'
Welch says he likes the idea of infusing liquidity into the economy to alleviate the credit freeze. "Credit is tight as can be. People can't buy cars and lease them and finance them. People can't do a whole series of things. Some people can't meet payrolls because they can't get liquidity."
He says the debate between Congress and the executive branch should be wrapped up "fast" — within the next week. "Every day we wait and there's no credit available. And confidence is down. You are risking American jobs. You are putting people's 401(k)s at risk," he says.
"This is Wall Street and Main Street tied together at the hip," Welch says. "It may feel unfair; it may feel a lot of those things. But in the end, we can't let our hard-working people lose their jobs [and] lose their savings because we're angry. We've got to do the right thing."
Welch says he's concerned about a "very serious rapidly decelerating economy that could lead us to a very severe recession by the first quarter of next year."
He says we're now in a "dislocation," similar to the bailout of savings and loans in the 1980s, the Asian crisis in 1997 and "Black Monday," when the stock markets plunged in 1987. The recovery may be "U-shaped" rather than "V-shaped," he says, but he hopes that "partisanship falls to the wayside" during the debate about how to fix the economy.