Wall Street Pay Cuts Stoke Debate About Washington’s Reach

Investment houses and banks are made up of people and the services they provide. If you restrict the firms that accepted TARP then the top executives/producers will leave to other firms. This reduces the value of the governments investment into these firms.

The other factor will be that execs at firms will try to pay it back before they should as it affects them. This may leave the banks in a weak financial system.

But they needed the bailout so they can't complain. A firm shouldn't have to "depend on the kindness of strangers" (Buffet) and if they do don't complain about the conditions.

 

The only "debate" is offered up by those affected. You know, the same brilliant minds who positioned their company to fail. Oh, and for some reason, a bunch of folks who think that if they support the absurdities of modern capitalism, they may one day do well enough to afford a two-story foyer, granite countertops, and a jetted tub, just like rich people. Of course, it was with the help of both groups that we find ourselves here... the Masters of the Universe couldn't control their own greed and lots of people went ahead and used the products provided by those greedheads to get granite countertops when they could only afford formica.

 

For some reason this post made me laugh, maybe because I am one of those people brought granite countertops and sub-zero appliances.

Regardless, US government should be able to do this since tax payers are now the big share holders. What they really need to do is get rid of some top guys there, like citi's.

 

It is about time that pay czar did something other than talk.

 

I'm sure you have a sensible 30 yr mortgage at a reasonable ratio and no HELOCs.

 

You can't go wrong with granite

I have no problem with this. The argument that these guys will leave for greener pastures is a bit laughable. These guys were incompetent at best and criminals at worst so who the hell cares if they leave? They should have all been fired a long time ago.

 

The question is how these companies are going to become profitable and pay back TARP when all the smart people will just choose to go to healthy banks without restrictions or hedge funds.

The government should break these companies up and sell the pieces.

 

I think "smart people" are way over rated with respect to the financial industries. The problems occurred exactly because the investment bankers were completely and totally sure of exactly how incredibly smart they all were. What the financial industry needs is dependable people, rational people, calm people, and wise people.

Let all the smart people congregate in some place that isn't "too big to fail" where they can build monuments to the hubris of their supposed intellects which we can use as an epitaph when they fail and aren't bailed out by the government. They can all then use their "monumental intellects" to emulate Jesse Livermore, the original "smart guy". Hiring the self described "smart people" hasn't worked out too well for Wall St.

 

And why would these dependable, rational, calm, and wise people go to these companies that will pay them so much less than JP Morgan or a hedge fund?

 

Because they are dependable, rational, and calm and won't quit the jobs that they have had for the last decade or two because of a short term reversal in "personal employment market conditions". They "invest" in their careers as they invest their money - with only cursory concern for short term market conditions. They are wise enough to not chase each individual high and low of the market, unlike the "genuses" who live each and every swing in conditions like a crack head chasing the next hit from the crack pipe.

 

Because they'll be up higher at Citi than JP Morgan. It's an opportunity for younger talent to move up. Would you rather by a junior analyst at JPM or a senior analyst at Citi? A senior analyst at JPM or a VP at Citi? When Citi comes out of it's government ownership, you now have had a huge career advancement that you couldn't have had elsewhere. And you have the potential to be much more highly paid.

 

This only include the top 25 managers, it doesn't have anything to do with people who does most of the actual work. Even at 90% discount these guys are still making a bunch.

 

I don't think it's smart or dumb, I think it's a difference of being a short term, self rewarding thinker and a long term company value thinker.

If you want to retain good people you incentivize them to make good long term decisions and build value, not by giving them cash bonuses for short term income manipulations. If these guys were given bonuses of common stock that didn't vest for 5 years or even at retirement, they wouldn't have been inventing derivative schemes without understanding their long term implications.

If you will remember most of these banks and investment firms were laying off large numbers of employees, and I'm guessing they weren't the bonus boys. Also, there are a stream of MBA graduates every year so I don't think the brain drain argument is all that valid. Banks can be run effectively with people who just loan money and collect mortgage payments.

 

If they can get these other glamorous jobs at non-failed firms, why haven't they left already? Altruism? hahhahaha.

 

I have very mixed feelings about this. I would've liked the market to have set the pay for these guys commensurate for the success of their businesses they ran but the compensation seems to have been largely divorced from actual success. To me this is like saying we have to pay a coach whose team finished 20 games out of first the same as a coach whose team finished first because if we don't we have no shot at getting a coach in the future who can get the team to finish 10 games out of first.

 

Exactly. Wall Street is like the Mob. Once you're made, you're in. There's little competition.