Senator Chris Dodd (D-CT) snuck a last
minute provision into the so-called stimulus bill that restricts bonuses and
incentive-based compensation far more than wanted by the Obama Administration. Not only that, the Dodd provision is
retroactive.
Democrats hate pay for
performance. That is why they are such ardent supporters of unions, where
rewards are given out for longevity instead of accomplishments, or by the
dispensation of union bosses. Liberals strive to be the moral arbitrators
of who deserves what, and to decide who deserves what based on political
consideration. Liberals believe that two people who have the same job
should be paid the same, even if one accomplishes twice as much.
Congress summoned the heads of the
8 largest banks for a public flogging this week. But you know what?
None of the CEO's dragged before Barney Frank's show trial were
responsible for their company's misfortunes. Stan O'Neil, Chuck Prince,
Robert Rubin, John Thain and their ilk were nowhere to be found.
Is the right answer to flog the "new
guys" who have recently come on-board and are working hard to fix the mess
and get our major financial institution back on track? For the Democrats, it is about vengeance, not
solutions.
I am reminded of what happened at
the end of WWI. The allies were so bent on revenge that they imposed
crushing financial reparations on Germany. The allies
undermined Germany's ability
to rebuild and as a result the Weimar
Republic gave way to Hitler's National Socialist Party. Instead of working in good faith to
rebuild Europe, the Treaty of Versailles sowed
the seeds of WWII. Vengeance trumped solutions.
Meanwhile, Chris Dodd has still
not come clean on his sweetheart mortgage deal he got from Angelo Mozilo at
Countrywide. He recently promised to refinance his mortgages. But
guess what? Even with rates coming down dramatically, he still won't be
able to get a legitimate mortgage with terms as good as what he corruptly got
from Countrywide. I haven't noticed any pay restrictions on either Chris
Dodd or Barney Frank.
Some of the banks that come under
the most onerous pay restrictions didn't even need, or want, taxpayer money. Jamie Dimon (who at least one idiot Congressman pronounced
"demon") of JP Morgan Chase doesn't need the money. Wells Fargo
doesn't need the money. They were made to take it by Paulson/Geithner so
that there would not be a stigma for banks taking federal dollars. But
they too were in front of financial crisis instigator Barney Frank's committee.
Wall Street bonuses are down enormously this year. For many of the positions in these financial firms,
the bonus is 50% of compensation. Missing
out on half your compensation is a huge hit.
Traders or deal makers that don't perform don't get paid. If you don't
produce, you don't make a good part of your compensation plan. The top
performers get the top dollars, and in most companies a relatively small number
of people produce an outsized amount of the results.
Right now Wall Street needs every
talented producer it can muster. Financial companies need to generate
profits. They can't do that without top talent.
Vikram Pandit, Citigroup’s new
CEO, who is working for a salary of $1 and is trying to salvage Citigroup from the
disgraced Mr. Prince, is now eligible for a maximum bonus of $0.33, compliments
of Senator Dodd.
I have no problem reining in the
absurd compensation of the CEO's of these companies. Most of them have
plenty of money to "ride out" these tough times. But punishing
the rest of the people that are needed to get profits back on track is
counterproductive. It is liberal monetary morality that will just make
the recovery slower. Vengeance trumping solutions.