NYT forum on banker pay

The link is here, including a contribution by yours truly and also by Yves Smith.


That Yves Smith is pretty smart.

OK, my understanding of that only compensation to the top 25 earners in the company is subject to being cut. How does this work? Does everyone get their bonus whacked or only the top 25? Why not employ a strategy of awarding huge bonuses to 25 schmoes and let the government take them away, while offering your truly valuable employed the 26th thru 50th biggest bonuses (at the rates you actually wish to pay).

Presumably this would lead to bad press and tooth nashing, but does anyone think the Government wants to end up engaging in protracted litigation with Wall Street?

As I read and hear the objections to these pay restrictions, I getting to the point of barfing.

First, the compensation can be in the millions IF THEY DELIVER LONG TERM PERFORMANCE for the firm. All they must do is make the firm more valuable by their action in four years.

Now if the only thing they can do, especially at those firms where the taxpayers own 80% of the firms, what good does it do to pay millions in bonuses based on the performance of the firm, and these are the top managers responsible for the performance of he firm, is deliver growth in stock price just long enough to cash out and then the stock tanks and the tax payer can't cash out their 80% ownership, then these are not the kind of leaders needed. And if they don't think they can do the job and need millions to try and fail, then screw them, they are useless leaders and good riddance.

Second, I hear "risk" mentioned over and over, as if these guys are really putting themselves on the line. Given the argument that the tax payers need these guys to take the big risk, I bet that 25 people from the US military with their special forces training, and other high tech training, who have the discipline to train for two months to go into a situation where they will really be taking risks where thousands, or even millions of lives are at risk if Cheney and Rove are to be believed, can be given two months of training to run divisions or do the trading at these companies. I'm sure that the top 25 could not be given two months of training to be sent to Afghanistan, especially getting paid the same compensation of those they replace in the military.

Frankly, I'm sure the money on Wall Street is as meaningful as the badges career military wear on their shoulders and chest. In fact, it might do American business a lot of good if bonuses were replaced by badges and medals worn on their business suits.

Then again, maybe I don't appreciate the cost of Wall Street trader coke habits, having dismissed such portrayals as fiction.

Mulp, news is that the Fed has bought outright $767 Billion in mortgage backed securities. Do banks need to take big risks when the Fed is willing to do that for them?

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