Top employees leave financial firms ahead of pay cuts
Grass is greener where bonuses are sky-high
By Tomoeh Murakami Tse and Brady Dennis
Washington Post Staff Writer
Friday, October 23, 2009
NEW YORK — Even before the Obama administration formally tightened executive compensation at bailed-out companies, the prospect of pay cuts had led some top employees to depart.
The administration had tasked Kenneth Feinberg, the Treasury Department’s special master on compensation, to evaluate the pay packages of 25 of the most highly compensated executives at each of seven firms receiving exceptionally large amounts of taxpayer assistance.
. . . At Bank of America, for instance, only 14 of the 25 highly paid executives remained by the time Feinberg announced his decision. Under his plan, compensation for the most highly paid employees at the bank would be a maximum of $9.9 million.
The bank had sought permission to pay as much as $21 million, according to Treasury Department documents.
. . . Feinberg did not detail how he plans to tackle the politically sensitive issue of nearly $200 million in bonuses due in March to employees at AIG Financial Products, the unit whose complex derivatives contracts led to the collapse of AIG last fall. Feinberg has urged the company to find a way to scale back the bonuses in hopes of preventing another round of public outrage.
The public is, of course, long on outrage and short on common sense, an ill-defined word at best . . . there being so little of it out there among the American public.
They ought to be outraged at a government that panders to public perceptions while it taps the public coffers supporting what should have been allowed to fail. There would be precious little need for executive pay restrictions, had Bank of America, AIG and the rest of the fraudsters been let go down the tubes.
Still . . . all these months (about to become years) later, there are no meaningful government restrictions on the outright criminality that brought world economies to their knees. Bank of America is my favorite example of “to big to die a natural death.”
My old daddy used to say that, “if you owe the bank $10,000, the bank owns you. If you owe the bank $10 million, you own the bank.” Wise man, my old daddy, even if the times and the numbers were more 1940 than 2010. The same is true in reverse.
Just over 100 banks have thus-far failed in America since 2007, without so much as a ripple. Presumably, their executives have gone elsewhere, wherever elsewhere might be for a failed bank executive.
Yet the bailed-out BofA style behemoths argue that $9.9 million annual salary is an affront to their dignity and worth. The Corn Belt Bank and Trust Company of Pittsfield, Illinois didn’t unravel world finance, and yet it disappeared without a whimper, sucked under by a system in which it had precious little control. I don’t know where Jeffrey K Stark, President of Corn Belt is busying himself today, but I doubt he’d be complaining about a compensation package.
The cold fact is that these dudes who are still at the wheel are the same guys who ran the bus into the ditch. Having had the taxpayer haul them back onto the road and pound out the dented fenders . . .
. . . they still insist on driving.
My old daddy, who grounded me for far less egregious activity, would have had a laugh at that. But a focus on executive pay is pissing on the tip of an iceberg and thinking it has an effect.