WHITE HOUSE MASTER TO SLASH EXEC PAY
For the second time this week, I find myself agreeing with the Obama administration, but I will impugn their motives anyway. First, why do I agree? This headline reminds me of what the very prescient George Will said in an April 2008 commentary about what was going on at the Fed, which was bailing out Bear Sterns at the time:
Congress could pass a law saying: No company benefiting from a substantial federal subvention (which would now include Morgan) may pay any executive more than the highest pay of a federal civil servant ($124,010). That would dampen Wall Street's enthusiasm for measures that socialize losses while keeping profits private.Amen, brother. (Small error, the top pay is more like $196,700 but that's still chump change to these bankers.) These guys loaded up on risk like there was no tomorrow and expected the Fed and the Congress to bail them out, which institutions promptly obliged. Where are the consequences that will change future behavior? Further, I hope this accelerates the pay back of the TARP/porkulus money, and stops further bleeding from the Treasury on this front. This is predatory government, when big special interests capture the government institutions that supposedly regulate them. This is the kind of thing that animates the left, and you can understand why. (I am thinking about a post to help you lib/cons understand the left.)
On to impugning motives. The administration's action comes not out of any sense of preventing future calamity, but out of the leftist emotion of rage at those making more money than themselves. It's all just populism to compete with Glenn Beck, who has been kicking their tails of late. Fortunately, for the American tax paying public, Team Barry has not thought this through and will probably be outraged when these firms find ways to return the filthy lucre that got their execs pay cut in the first place.
Kenneth Feinberg, Treasury Official in charge of Executive Compensation:"We're cutting your pay, even if it increases the deficit."
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Linked in a post showing up later today.
ReplyDeleteThanks KT.
ReplyDeleteI'd argue that it isn't just the left looking to punish large corporations. When we bailed out the auto companies, there were certainly restrictions placed on the auto industry. So why should it be any different for banks?
ReplyDeleteKelly,
ReplyDeleteThanks for commenting, I agree with you. We need some kind of consequences for taking on too much risk. Mervyn King, governor of the Bank of England said as much yesterday. Bankers that believe they run banks "too big to fail" load up on risk with the belief that they will be bailed out if they fail. If the risks pay off, then they become even bigger and even more immune to normal pressures.
Taking the bail-out money was dancing with the devil, what did they expect?
ReplyDeleteAmen, Road-Dawg.
ReplyDelete