A Long Look at Banker Compensation
Today’s NYT magazine has a long, well done interesting piece on Kenneth Feinberg, the government’s special master for executive compensation, titled What’s a Bailed-Out Banker Really Worth?.
Anytime I read a discussion on compensation, bonuses, and bailouts, I am astonished as to how much of the general discontent over these issues traces back to the original bailout.
The no strings attached giveaways, the refusal hold people accountable, the paniced over-reaction by Treasury and Fed chairs. All these factors led to the present situation.
Regardless, pour a tall cup of coffee and see Steve Brill’s take on this . . .
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Source:
What’s a Bailed-Out Banker Really Worth?
STEVEN BRILL
NYT, December 29, 2009
http://www.nytimes.com/2010/01/03/magazine/03Compensation-t.html
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January 3rd, 2010 at 9:31 am
Societies need more Ken Feinberg’s and less Hank Paulsen’s, but greed and quid pro quo are latent motivators.
January 3rd, 2010 at 10:01 am
Yes why would we compensate someone who’s “function” in society is to risk destroying other peoples wealth several hundred fold more than we compensate someone who make burgers for hungry people. Is there any moral argument for this absurd differential we put on the value of some peoples efforts vs other peoples efforts.
January 3rd, 2010 at 10:10 am
Agreed, DeDude. If a space alien visited the US, he would summarize our priorities as:
Things we hold most dear:
The ability to fleece others
The ability to throw a ball
Having certain amounts of flesh deployed in certain strategic locations
Today
Things we don’t give a rat’s @ss about:
Education
Kids
Compassion
Tomorrow
January 3rd, 2010 at 11:48 am
just finished putting the seasons stuff away for another year here at the castle .. (outside must wait for the weather .. lights snow-ice and sub-zero don’t work for my flesh and branches) .. all while following my fav Sunday Morn tv and about 10 minutes of the follow-up brain-washing .. seems we are just about to get down to the business of being animals again .. combatting / prosecuting / storage of terrorists (all sorts) is costly .. hum – we’ll be forgiven for it .. cause we’re just animals at heart .. stuck in a 6000+ year system .. eye for eye .. run or get eaten & be smart / play the system .. just get at it already .. rip off that band-aid and move on .. the system is counting the minutes to re-growth
faceciousness off .. just say no to Pottersville and the world according to Biff
January 3rd, 2010 at 12:07 pm
@franklin411,
I wonder what films featuring extraterrestrials you have been watching. Most of the time they want to destroy earth, take all the resources, enslave us, kill all the humans and/or eat us up. Rarely do the spend time analyzing out priorities. However, your space aliens wouldn’t make it to the movie theater.
January 3rd, 2010 at 12:40 pm
Bernanke said, in effect, that Greenspan had nothing to do with the housing bubble:
http://www.nytimes.com/2010/01/04/business/economy/04fed.html?hp
January 3rd, 2010 at 12:50 pm
“Bernanke said, in effect, that Greenspan had nothing to do with the housing bubble: ”
The Fed protects their own. It’s like the Senate that way — even for Senators on opposites sides of the fence, the most important thing is that you are fellow Senators, members of the club. You protect each other. That’s why no Democratic Senator was willing to campaign against Lieberman when he lost the Democratic primary in Connecticut and turned traitor by running against the Democratic candidate.
If Bernanke admitted that Greenspan was on the hook for the housing bubble, wouldn’t that put Bernanke on the hook for the next bubble? He ain’t gonna admit that any Fed chairman is ever responsible for anything like that.
January 3rd, 2010 at 1:50 pm
Glass Steagall- did wall street and washington learn anything from repelling this? Did you see the interview with Sandy Weill today- he is damn proud of his work repellilng Glass Steagall- and even has an award
January 3rd, 2010 at 1:51 pm
this was going to go to your new topic, sorry
January 3rd, 2010 at 2:03 pm
To answer the titled question: “Nothing.”
Only in the land of Wall Street make-believe is a banker, one of those champions of “free market capitalism,” considered to have “talent” after they have to beg for a taxpayer-sponsored bailout.
The whole of the US populace should focus on one and only one point: People who bring down their companies don’t have “talent.” People who bring down their entire industry, don’t have “talent.” People who bring down the entire US economy have even less “talent” than the previous two classes of people put together.
Therefore, any arguments from the banking grifters that they’re going to “lose talent” should be viewed with the greatest of skepticism by the public. They have no “talent” to be losing. Even if these people did exhibit some “talent” in the past, their failures have outweighed their previous successes, and losing these people should be seen as a positive development – for the banks, the financial sector and the whole of the US.
January 3rd, 2010 at 2:13 pm
The lesson is that we should have let the seven companies fail and then we would never have to read this article about Feinberg.
January 3rd, 2010 at 2:15 pm
One other thought on the article as they come to a conclusion that the boards of directors is where this issue really needs to be solved:
The incestuous nature of boards in the current US business environment is a thing of national shame. There is NO way that any person can competently serve on more than one board of a large (> $1B revenue) company, even if they have no other job. There is no way that a person who is already a C-level executive in their own company can service competently on a board of another company, much less several.
The first step that should be taken in reforming boards of directors (and therefore the executive pay issue) is to mandate that no person can serve on more than one board of directors of any public traded corporation in the US. If you’re a C-level exec and you’re serving on your own company’s board, then you’re done. If you’re a large shareholder in a company and you’re serving on the board of the company in which you have a large interest, you’re done. This would force corporations to bring in a lot more outside talent and perspectives onto boards of directors.
January 3rd, 2010 at 2:21 pm
“A.I.G. alone spent $3 million on two compensation consultants and two Wall Street law firms, according to A.I.G.’s vice chairman Kelly. (Of course, most of that money ultimately came from taxpayers, who now own 80 percent of A.I.G.)”
LOL. Tax ‘em to high heaven.
January 3rd, 2010 at 3:13 pm
Interesting article. Is a “pay czar” a proxy for board representation ? It is the responsibility of the board of directors of a company to hire & fire the CED and set his compensation. If the US government is effectively the majority owner of these bailed-out companies, it has authority and responsibility to determine board composition. I wonder why there isn’t more focus on board involvement in various decisions that have led to many of the current problems ?
January 4th, 2010 at 11:03 am
How any of these bailed out retail or investment banks get D&O insurance is beyond me.