Shocker: People leave firms when pay gets cut

posted at 6:05 pm on October 23, 2009 by Ed Morrissey

Who could have guessed at this outcome?  Um, just about everyone who ever worked in the private sector:

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.

But Thursday, he ruled only on slightly more than three quarters of the pay packages that were to be under his purview. The balance reflected executives who have left since he began his work in June or will be gone by the end of the year.

Many executives were driven away by the uncertainty of working for companies closely overseen by Washington, opting instead for firms not under the microscope, including competitors that have already returned the bailout funds to the government, according to executives and supervisors at the companies.

“There’s no question people have left because of uncertainty of our ability to pay,” said an executive at one of the affected firms. “It’s a highly competitive market out there.”

This is not exactly rocket science.  When firms have to cut compensation for any reason, the employees affected start looking for better opportunities.  The mere threat of cuts kick-starts the resumé-writing and networking process.  Monster.com probably did great business in the days and weeks after the Pay Czar clauses became widely known in the bailout program.

And who leaves first?  The people who can most easily find better-paying jobs elsewhere.  Anyone who has worked at a company that attempts to downsize through attrition (or through across-the-board compensation cuts) has experienced this firsthand.  The best and brightest find better-paying jobs elsewhere because they are the best and brightest.  What does that leave behind?  Usually, either people who can’t afford to check out because of their age, or people who simply can’t compete in the open job market because of a lack of marketable skills, accomplishment, or experience.

Of course, this describes exactly what has happened to the firms in which American taxpayers have invested hundreds of billions of dollars.  The Pay Czar clawback provisions have resulted in brain drains at all of the firms which have those investments.  Most of that damage was done before Kenneth Feinberg started contemplating the government approval of compensation plans, so the announcement this week of them will probably not have much further effect.

Every company sees its employee experience as a major asset, especially in management and executive positions, as well as the proteges who have begun to work their way up the ladder.  Thanks to the class-warrior policies of this administration and the bailout policies of the last, American taxpayers have lost a great deal of the resources that could have safeguarded these huge investments.

Update: Good line from Glenn Reynolds:  Mr. Galt’s corner office is now available.


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Comments

Brilliant.

JeffinOrlando on October 23, 2009 at 6:07 PM

Epic fail, Barry…..again.

Dr.Cwac.Cwac on October 23, 2009 at 6:08 PM

Let’s say you agree that the executives in charge of these companies deserve a pay cut, right? You can rationalize that…

A new executive will have to be hired to take his place. Who is going to take this job, knowing it pays far less than a different one he could get at a company not subject to these rules?

No one worth hiring. That’s who.

lorien1973 on October 23, 2009 at 6:08 PM

You think that’s bad? Wait till Obamacare gets passed. Bye-bye, doctors and specialists.

John the Libertarian on October 23, 2009 at 6:08 PM

But at lease envious Americans feel better

/

Right Fins?

CWforFreedom on October 23, 2009 at 6:09 PM

Maybe someone should have cut the pay of those working at the bailed out companies some years ago and they would have gone out of business before they could have done so much damage.

MB4 on October 23, 2009 at 6:09 PM

Ed, after the broohaha over the interview with the Pay Czar, did Garrett’s interview actually make any news? I haven’t seen anything about it at all.

lorien1973 on October 23, 2009 at 6:10 PM

It was just a matter of time when the government was able to set a minimum wage they would eventually set a maximum wage.

fourdeucer on October 23, 2009 at 6:10 PM

What’s the point of working for 1/10 of your previous salary and being pressed under the governments thumb when you’re already worth tens of millions of dollars. No wonder a lot of these guys will just decide to take a year or two off.

A new executive will have to be hired to take his place. Who is going to take this job, knowing it pays far less than a different one he could get at a company not subject to these rules?

No one worth hiring. That’s who.

lorien1973 on October 23, 2009 at 6:08 PM

Or a government employee.

BadgerHawk on October 23, 2009 at 6:10 PM

Barry is creating a great, step-by-step educational program for all to see exactly what not to do in a recession. Punishing private business and workers never grew the economy before, and it won’t now.

Loxodonta on October 23, 2009 at 6:11 PM

Of course they will. How else would Obama emasculate powerful companies except through hacking down the pay?

Now these eunuchs called “companies” will have to do the master’s bidding.

Fascism.

ted c on October 23, 2009 at 6:11 PM

Of course, this describes exactly what has happened to the firms in which American taxpayers have invested hundreds of billions of dollars.

Invested? I suppose it all depends on what the meaning of sex is and what the meaning of invested is and what the meaning of is, is.

MB4 on October 23, 2009 at 6:11 PM

Maybe that’s why Schumer wants to expand the Pay Czar’s power to all publicly traded companies.

lorien1973 on October 23, 2009 at 6:13 PM

The embodiment of stupidity lives in the White House.

jimmy2shoes on October 23, 2009 at 6:13 PM

In fact, Smith cited Sen. Chuck Schumer, D-NY, and others who believe the government should expand its authority to limit compensation beyond just TARP recipients. “If we can do this with people that we bailed out,” he said, “why wouldn’t we make these suggestions or make this law across the board and put a governor on compensation for everybody in private enterprise?”

But they are definitely not socialists.

lorien1973 on October 23, 2009 at 6:14 PM

As far as I am concerned those at the bailed out companies (which should have been allowed to die) and the Obama administration deserve each other. And don’t be surprised if they get whatever pay they lost, and maybe even more, through the front door, through the back door.

MB4 on October 23, 2009 at 6:15 PM

No one worth hiring. That’s who.
lorien1973 on October 23, 2009 at 6:08 PM

Or a government employee.
BadgerHawk on October 23, 2009 at 6:10 PM

Lorien covered that. :|

Patrick S on October 23, 2009 at 6:15 PM

Well, DUH!. I’m sure these execs can easily find gainful employment at any financial institution in the UK, Hong Kong, or China. Good job, Barry! I’m sure the shareholders thank you, too. Idiot!

Fed45 on October 23, 2009 at 6:17 PM

Excuse my non-PC impertinence… but isn’t forcing someone to work for no wages called SLAVERY???

Who would have thought that Obama would bring back slavery in America??? How’s that ‘hope and change’ workin’ for you???

landlines on October 23, 2009 at 6:18 PM

Maybe someone should have cut the pay of those working at the bailed out companies some years ago and they would have gone out of business before they could have done so much damage.

MB4 on October 23, 2009 at 6:09 PM

Isn’t that what Barry’s doing now? Putting companies across the country out of business so that future governments don’t have to bail them out? Instead, there just won’t be any private sector.

How many more months of Stimuless can we afford?

Loxodonta on October 23, 2009 at 6:18 PM

BTW, someone remind me again what the President makes? And who is responsible for his salary? And also, someone remind me again the salary Weezie was paid when she “worked” for that hospital.

Fed45 on October 23, 2009 at 6:19 PM

But at lease envious Americans feel better

/

Right Fins?

CWforFreedom on October 23, 2009 at 6:09 PM

Good one.

redwhiteblue on October 23, 2009 at 6:22 PM

Well, at least they’re leaving the companies that taxpayers have a stake in. I mean, it’s all about screwing the taxpayer, right?

hawksruleva on October 23, 2009 at 6:22 PM

Wow, this brilliant administration (and now Schumer) wants to kill the goose that lays the golden egg of tax revenue.

onlineanalyst on October 23, 2009 at 6:22 PM

Of course, this describes exactly what has happened to the firms in which American taxpayers have invested hundreds of billions of dollars.

Ummmmm…usually I decide when and where to invest MY money. I don’t recall making the decision to invest my money in these companies.

Fed45 on October 23, 2009 at 6:22 PM

BTW, someone remind me again what the President makes? And who is responsible for his salary? And also, someone remind me again the salary Weezie was paid when she “worked” for that hospital.

Fed45 on October 23, 2009 at 6:19 PM

The President makes way less than any of the folks that Steinberg was looking at. But he’s already rich from Chicago politics and book deals.

hawksruleva on October 23, 2009 at 6:23 PM

Ummmmm…usually I decide when and where to invest MY money. I don’t recall making the decision to invest my money in these companies.

Fed45 on October 23, 2009 at 6:22 PM

This is more like organized crime. Money was taken from you through the threat of force, and then given to these guys.

hawksruleva on October 23, 2009 at 6:24 PM

BTW, someone remind me again what the President makes?

Fed45 on October 23, 2009 at 6:19 PM

I believe the polite term is horse manure.

Loxodonta on October 23, 2009 at 6:25 PM

One thing is becoming abundantly clear . . . everybody in that Obama regime shares the dreaded “dumbass” gene.

rplat on October 23, 2009 at 6:25 PM

More non-PC impertinence:

The Constitution of the United States declares that “no one shall be deprived of property without due process of law.”

So by what authority does der Obamafuhrer confiscate wages already earned in accordance with a valid contract? And isn’t application of laws/regulations retroactively also prohibited by our Constitution???

landlines on October 23, 2009 at 6:26 PM

Why leave…? Why give up any salary to some clown who was not confirmed by the Senate and whom Obama said he “didn’t know what the Pay Czar was doing, but approved of it anyway.”

I would have told him to go fornicate a goat, and then in front of every news camera in the nation, insist he point to the line in the Constitution of the United States where he has the power to tell me to do anything.

Seven Percent Solution on October 23, 2009 at 6:27 PM

The President makes way less than any of the folks that Steinberg was looking at. But he’s already rich from Chicago politics and book deals.

It’s close to half-million dollars/yr, isn’t it? So, except for his book deals, he’s getting rich off the taxpayers it seems.

Fed45 on October 23, 2009 at 6:27 PM

You think that’s bad? Wait till Obamacare gets passed. Bye-bye, doctors and specialists.

John the Libertarian on October 23, 2009 at 6:08 PM

Mine is quitting. His last day of practice is mid November. He’s been my Dr for 5 years now and I’m heartbroken.

Ann NY on October 23, 2009 at 6:29 PM

But at lease envious Americans feel better

/

Right Fins?

CWforFreedom on October 23, 2009 at 6:09 PM

…except that they have to hide their faces when the Sunday School lesson gets to the “Thou Shalt Not Covet” Commandment…

landlines on October 23, 2009 at 6:30 PM

They Pay Czar has linked the success of companies stock to the pay of those evaluated.

How about we tie the Pay Czar’s pay to the turnover of those who’s pay he is managing. If turnover in those positions is over 15%, then he doesn’t get paid.

barnone on October 23, 2009 at 6:30 PM

Across all of history, the figure whom Barack Obama most resembles is Wile. E. Coyote.

Beep beep.

beatcanvas on October 23, 2009 at 6:30 PM

…except that they have to hide their faces when the Sunday School lesson gets to the “Thou Shalt Not Covet” Commandment…

landlines on October 23, 2009 at 6:30 PM

No problem . Religion only matters when they are trying to get Obamacare passed

CWforFreedom on October 23, 2009 at 6:34 PM

Just wait until the Obama administration sets up the proposed Bureau for Economic Justice which will attempt to raise all low salaries and lower all higher salaries. Just wait!

Dhuka on October 23, 2009 at 6:34 PM

hey, if you are one of those Wall Street Rain Makers, Masters of the Universe, and you can earn your $500,000 salary by making a few phone calls on a Friday afternoon, then why not?

If members of congress can earn their salary by working two days a week, why not everyone else?

Once you have produced enough, take the rest of the year off.

Skandia Recluse on October 23, 2009 at 6:35 PM

“Stupid is as stupid does” Mrs. Gump.

Let’s say you agree that the executives in charge of these companies deserve a pay cut, right? You can rationalize that…

A new executive will have to be hired to take his place. Who is going to take this job, knowing it pays far less than a different one he could get at a company not subject to these rules?

No one worth hiring. That’s who.

lorien1973 on October 23, 2009 at 6:08 PM

Except they were forced to take the TARP money, remember. They were not allowed to leave the meeting until they did.

Other than that I agree with you 100% Oh, and all the rest of the people there will leave too. Even the IT guy who lost his $700 bonus.

But there are plenty of homeless people in Central Park that could use the work.

dogsoldier on October 23, 2009 at 6:36 PM

Economics 101. I guess they didn’t offer that class at Harvard or Columbia. If they did they must be awfully embarrassed by Odumbo.

rjoco1 on October 23, 2009 at 6:37 PM

Let’s say you agree that the executives in charge of these companies deserve a pay cut, right? You can rationalize that…

A new executive will have to be hired to take his place. Who is going to take this job, knowing it pays far less than a different one he could get at a company not subject to these rules?

No one worth hiring. That’s who.

lorien1973 on October 23, 2009 at 6:08 PM

Not to mention the fear that by accepting a position at a targeted company, you’re setting yourself up to have your (comparatively pitiful) salary clawed back if you do something the Pay Czar doesn’t like.

SouperConservative on October 23, 2009 at 6:37 PM

Mine is quitting. His last day of practice is mid November. He’s been my Dr for 5 years now and I’m heartbroken.

Ann NY on October 23, 2009 at 6:29 PM

I am sure the trolls like Decider are smiling… That deep, deep smile of economic justice…

They are leveling the playing field, Ann… Sorry if some of us have to get run over by the steamroller… It’s all about the “fairness”…

Khun Joe on October 23, 2009 at 6:38 PM

What does that leave behind? Usually, either people who can’t afford to check out because of their age, or people who simply can’t compete in the open job market because of a lack of marketable skills, accomplishment, or experience.

Like our president?

Ditkaca on October 23, 2009 at 6:39 PM

The administration will be happy when there is just one firm so there are no other opportunities elsewhere.

jukin on October 23, 2009 at 6:40 PM

Almost half the BofA executives scheduled for pay restrictions have already left.

Surely we can draft them into the Army and compel them to remain at their jobs.
Wikipedia:
Third, President Truman let it be known that he was considering nationalizing the steel mills under Section 18 of the Selective Service Act. Truman made the decision to invoke Section 18 in mid-June. In order to overcome the legal objections to the Act’s use which had been raised in early April, the government began placing direct orders for steel on June 12.[128] On July 19, the New York Times reported that Truman was expected to invoke Section 18 within a week.[129] The threat of another government takeover of the steel mills—this time on solid legal ground, with adequate preparation by the government, and with the appearance of even-handedness (steelworkers would be drafted and ordered to work in the mills)—brought the manufacturers to the bargaining table again.[4][130]

You know Rahmbo is thinking about it…

Realist on October 23, 2009 at 6:40 PM

I’m sure that there are deserving Democratic Party activists just perfect for these positions…

Realist on October 23, 2009 at 6:45 PM

Well, at least they’re leaving the companies that taxpayers have a stake in. I mean, it’s all about screwing the taxpayer, right?

hawksruleva on October 23, 2009 at 6:22 PM

You really think if this goes through he will stop there? I wouldn’t be surprised if any dealings with the government, including contracts and tax breaks will be a reason for them to regulate pay.

Ann NY on October 23, 2009 at 6:46 PM

I don’t think we have until Nov.2010, at the rate this admin. is destoying this country it will just take a few more months. Then when we crash and burn and from the ashes
arises this Marist Utopia, God help us.

NOBODY knows what Obummer’s Czars get paid, thats a secret.

concernedsenior on October 23, 2009 at 6:46 PM

Pay peanuts ….

OldEnglish on October 23, 2009 at 6:58 PM

When I first heard that leaks about the limits on the news my first response was, how many people will be turning their resignations tomorrow and leaving before the week is out?

thmsmgnm on October 23, 2009 at 7:06 PM

The people in DC, they are our employees! Even the Czars work for us! How did we let it get this far?

It’s like hiring a janitor in a Fortune 500 company and giving him an unlimited expense account with no accountability, key to the petty cash drawer (he changes the lock so he is the only one with access), authority to fire anybody he doesn’t like, hire all his buddies whether they have any experience, etc…

How do we stop this? It’s disheartening to see and depressing to imagine it is only going to get worse before it will get better

Ditkaca on October 23, 2009 at 7:07 PM

The law of unintended consequences strikes again, as surely as gravity.

This is why central planning is so horribly inefficient, as compared with a market economy. The market factors in real-world consequences when determining price, while government and ivory-tower academics think that good intentions will trump reality. Morons.

Splashman on October 23, 2009 at 7:09 PM

Let’s say you agree that the executives in charge of these companies deserve a pay cut, right? You can rationalize that…

A new executive will have to be hired to take his place. Who is going to take this job, knowing it pays far less than a different one he could get at a company not subject to these rules?

No one worth hiring. That’s who.

lorien1973 on October 23, 2009 at 6:08 PM

But, Lorien, that’s the whole point. That’s exactly how the Federal government operates. The “Naval Health Clinic” here at the base I work at staffs its urgent care center with civilian contractor doctors. The job doesn’t pay anywhere close to what a doctor can make in private practice, so guess what kind of doctors we get? Low bidders. People who can’t get a job anywhere else because they’re not any good, they have a thready work history, they’ve been investigated too many times, etc. The same thing holds true for the engineers at the facility I work at. I’ve been told by more than one of them that the only reason they work for the Federal government is because they didn’t go to a good engineering school, or their GPA was barely passing. If they were worth a damn, they’d be making about three times as much working for a private firm.

uncivilized on October 23, 2009 at 7:14 PM

So the “good” employees at these Wall Street firms are leaving. The question must be asked what were they “good” at? Creating opaque financial instruments to generate profits while sticking someone else with the risk? Paying off politicians and regulators to look the other way? Good at shutting off lending in the face of massive amounts of free government money so they can make easy bucks throwing that money in the stock market? Good at angling for government handouts directly and indirectly? Look at any of these companies’ latest earnings reports. How much of their profits were due to government backstops and “mark to fantasy”?

You all act as if these pompus idiots who ran the world economy into the ground were a benefit to these firms.

With massive unemployment, I wouldn’t worry about finding smart honest people who would be willing to work for 200k a year.

Stop treating Wall Street as a free market. It’s not and never has been. Government employees don’t deserve multi-million dollar bonuses. I doubt people would be quoting Ayn Rand in here if the story were about workers quitting from the Post Office because $200k wasn’t enough to keep them.

For people who put down elitists, conservatives sure have no problem idolizing Wall Streeters simply because they have Ivy League degrees and nice suits. It’s like they deserve to make millions a year because they have a Wharton degree and can intimidate people on the phone.

John9400 on October 23, 2009 at 7:18 PM

And just think without the bailout these emplyees would have been dealt with by the marketplace. they would have been beggers in the street and the new best and the brightest seeing the risks involved would have been more prudent with other peoples money. Capitalism it is a harsh justice but it is justice not revenge like this admin is doing

unseen on October 23, 2009 at 7:22 PM

Universities receive tons of tax-payer supplied Federal money.

Shouldn’t the all wise government cut professor’s salaries also?

Dhuka on October 23, 2009 at 7:33 PM

Definition of Equality:

Where it’s impossible to make everyone equaly happy, but it is easy and encouraged to make everyone equally unhappy.

Not perfect, but I’m working on it…

alohapundit on October 23, 2009 at 7:47 PM

What the h*ll did they expect when they decided to take money from the gubmint? A free ride?

That is what you get for taking taxpayer money…the gubmint calls the shots.

Next time, be more prudent before begging Uncle Sam for money.

Gothguy on October 23, 2009 at 7:58 PM

Why isn’t the Pay Czar looking at the bloated Congress and making the decision to reduce their pay? Why isn’t there outcry about the enormous and overpaid staffs of Senators and Congressmen and the White House? There are millions of dollars being wasted every day right there in Washington D.C.

maryo on October 23, 2009 at 8:01 PM

A huge portion of profitability is from Investment Banking and Trading, which are relationship businesses and the employees take their clients business with them. (As traditional commercial banking firms have learned the hard way when they have taken over investment banking firms.)

The stories of firms like Thomas Weisel Partners, and Wasserstein Perella, show how quickly a major firm can be built up by the star bankers of a company acquired by a poor owner…

The Pay Czar indicated today that he’ll be going after executives #26-100, which will certainly cut into the heart of the investment banking groups of the major banks. These people team up and form new firms which will provide better service to their clients and a more financially rewarding environment for their bankers

phreshone on October 23, 2009 at 8:01 PM

Ill be honest here. If the bankers that caused this problem with there 1.4 quadrillion derivatives want to leave, be my guest. They can go to China and blow up there economy.

Octavia on October 23, 2009 at 8:08 PM

All animals are equal, but some animals are more equal than others

George Orwell, Animal Farm
When those in power are more equal, those not in power are equally miserable.

maryo on October 23, 2009 at 8:09 PM

Banc of America can’t retain a recruiter to hire tallent.. They would be drafting employment agreements that are worthless.

seven on October 23, 2009 at 8:14 PM

Medved started talking about how this was a brilliant move by the prznit. I turned him off for good.

BDavis on October 23, 2009 at 8:32 PM

This was predictable in other ways too. Vacancies to be filled with Obama zombies. A major toe hold for the planned government takeover.

Mason on October 23, 2009 at 8:32 PM

Goverment Motors does not have CFO!! No one wants the job.

Dire Straits on October 23, 2009 at 9:06 PM

So the “good” employees at these Wall Street firms are leaving. The question must be asked what were they “good” at? Creating opaque financial instruments to generate profits while sticking someone else with the risk? Paying off politicians and regulators to look the other way? Good at shutting off lending in the face of massive amounts of free government money so they can make easy bucks throwing that money in the stock market? Good at angling for government handouts directly and indirectly? Look at any of these companies’ latest earnings reports. How much of their profits were due to government backstops and “mark to fantasy”?

You all act as if these pompus idiots who ran the world economy into the ground were a benefit to these firms.

With massive unemployment, I wouldn’t worry about finding smart honest people who would be willing to work for 200k a year.

Stop treating Wall Street as a free market. It’s not and never has been. Government employees don’t deserve multi-million dollar bonuses. I doubt people would be quoting Ayn Rand in here if the story were about workers quitting from the Post Office because $200k wasn’t enough to keep them.

For people who put down elitists, conservatives sure have no problem idolizing Wall Streeters simply because they have Ivy League degrees and nice suits. It’s like they deserve to make millions a year because they have a Wharton degree and can intimidate people on the phone.

John9400 on October 23, 2009 at 7:18 PM

Doesn’t matter if they were “good at it” or not. The shareholders of these companies will determine who they want running the company. The fed govt has no authority to determine what a company should pay it’s employees. I understand that the convoluted logic of Barry says that because they unwillingly received tax payer money (and some wanted to pay it back and Barry would have nothing of that) that that means the Fed Gubmint can regulate their pay and that Barry thinks their salaries are “obscene”. Again, that’s not for him to decide, it’s the shareholders that need to “worry” about finding someone willing to work for $200K.

And to extend your Post Office example, frankly, given Barry’s performance thus far I think his taxpayer funded salary is “obscene”.

Fed45 on October 23, 2009 at 9:10 PM

Let’s hope that they all get together and team up so they can get in on the ground floor of carbon credit trading. They can make billions of dollars there with Dear Leader’s blessing.

darwin-t on October 23, 2009 at 9:16 PM

Who could have guessed at this outcome? Um, just about everyone who ever worked in the private sector:

Yes, well we know he’s never really worked in the private sector. So he’ll happily carry on trying to deliver his wealth destroying plans. He really has no clue.

Superb timing seeing as how we are in a massive recession.

Anders on October 23, 2009 at 9:27 PM

Maybe someone should have cut the pay of those working at the bailed out companies some years ago and they would have gone out of business before they could have done so much damage.

MB4 on October 23, 2009 at 6:09 PM

Who cares if Wall Street ‘talent’ leaves?
If lower pay lures some of Wall Street’s finest away, so be it. It’s not as if the best and brightest were doing a good job to begin with.

MB4 on October 23, 2009 at 6:44 PM

Exactly. Reading your posts was a breath of fresh air.

In a world without the gov’t teat, these self important morons would have failed along with their company for all the business world to see, thereby losing attractiveness to other employers. In an effort to avoid consequence,they flop down with knees up in front of the government. These companies deserve everything the White House does to them.

(and some wanted to pay it back and Barry would have nothing of that)
Fed45 on October 23, 2009 at 9:10 PM

This is a marginally valid point. Some of the cutthroats realized they were dealing with cutthroats every bit as opportunistic as themselves, and tried to back away from the deal.

Ed, seems you and others here are arguing that losses should be public and profits should be private.

agape,
robb

wuzrobbd on October 23, 2009 at 9:51 PM

1. Infatuation — “I want it.”
2. Justification — “I must have it!”
3. Appropriation — “IT’S MINE AT LAST!”
4. Obsession — “Precious!”
5. Resale — “Make me an offer.”

Once you have their money, never give it back

Kini on October 23, 2009 at 10:07 PM

Doesn’t matter if they were “good at it” or not. The shareholders of these companies will determine who they want running the company. The fed govt has no authority to determine what a company should pay it’s employees. I understand that the convoluted logic of Barry says that because they unwillingly received tax payer money (and some wanted to pay it back and Barry would have nothing of that) that that means the Fed Gubmint can regulate their pay and that Barry thinks their salaries are “obscene”. Again, that’s not for him to decide, it’s the shareholders that need to “worry” about finding someone willing to work for $200K.

And to extend your Post Office example, frankly, given Barry’s performance thus far I think his taxpayer funded salary is “obscene”.

Fed45 on October 23, 2009 at 9:10 PM

Not sure if you noticed, but the US government is the largest shareholder in some of these companies. The US government also provides TRILLIONS of dollars worth of debt guarantees that keep these companies alive.

These companies have failed. And these executives have failed. “Oh, they wanted to give back some money!” But they want to keep the government guarantees and the free money from the Fed.

Do you realize how BoA and C are making their money right now? Why is it that the Fed has pumped so much money into the economy and yet we’re seeing deflation instead of inflation? Because instead of lending that money out, all the banks are using it to roll the dice in the stock market. And THIS is what you want to reward with free market multi-million dollar salaries?

People on HotAir need to wake up and realize that the Stock Market is and has been a ponzi scam. It’s not just about Obama and what he’s doing now. The big banks were screwing our economy over before Obama ever got there.

It’s funny that some people think the financial companies are the victims in all this. How good can Wall Street PR be that they wreck the world’s economy through wild gambling, get the taxpayers to bail them out, and then get “fiscal conservatives” on blogs everywhere to defend their huge bonuses?

John9400 on October 23, 2009 at 10:39 PM

That’s why they’re putting these restrictions on everyone. Equal opportunity shafting.

Ortzinator on October 23, 2009 at 10:39 PM

I strongly recommend all the readers on this forum get out there and read the economic blogs to see what is going on right now. Here’s a good place to start:

http://globaleconomicanalysis.blogspot.com/2009/10/where-hell-is-outrage.html

Mish is one of the most politically conservative economic bloggers out there. You don’t have to be a populist lefty class warrior is be angry as hell about what Wall Street is doing to our economy as we speak.

John9400 on October 23, 2009 at 11:02 PM

Thursday, he ruled only on slightly more than three quarters of the pay packages that were to be under his purview. The balance reflected executives who have left since he began his work in June or will be gone by the end of the year.

Since the pay czar’s workload has been cut by almost 25% it’s only reasonable that his paycheck will be cut by the same 25%.

RJL on October 23, 2009 at 11:21 PM

You think that’s bad? Wait till Obamacare gets passed. Bye-bye, doctors and specialists.

John the Libertarian

Yeah, but on the bright side, the nations of the world who only have America’s best interests at heart will emit a mighty sigh of relief that finally…FINNALY…America has decided to screw its citizens too.

xblade on October 23, 2009 at 11:25 PM

Do you people not get that this is what he wants?

Get the talent out of there and the system fails. . . yeah communism!

– The Cat

MirCat on October 23, 2009 at 11:42 PM

Frankly, a lot of executives who are so valued shouldn’t be. They’ll go mess up the next company.

AnninCA on October 23, 2009 at 11:45 PM

John9400 on October 23, 2009 at 11:02 PM

From the link –

Bloomberg reports that Treasury Secretary Timothy Geithner’s closest aides earned millions of dollars a year working for Goldman Sachs, Citigroup and other Wall Street firms. Bloomberg adds that none of these aides faced Senate confirmation. Yet, they are overseeing the handout of hundreds of billions of dollars of taxpayer funds to their former employers.

The gifts of billions of dollars of taxpayers’ money provided the banks with an abundance of low cost capital that has boosted the banks’ profits, while the taxpayers who provided the capital are increasingly unemployed and homeless.

The political system is unresponsive to the American people. It is monopolized by a few powerful interest groups that control campaign contributions. Interest groups have exercised their power to monopolize the economy for the benefit of themselves, the American people be damned.
– Paul Craig Roberts (Assistant Secretary of the Treasury in the Reagan administration)

MB4 on October 24, 2009 at 12:44 AM

Several comments on here about \”the talent\” leaving. What talent? The talent that destroyed these banks? Here\’s my take on this…..I agree the government should not be determining the pay structure of any private organization. However, these banks acted in bad faith and the country as a whole is suffering because of it. These executives who make these decisions are being rewarded for making bad decisions in the form of million $$ bonuses, regardless of results. I think the shareholders are the ones who should rein in these executive salaries, but clearly they are not doing that…nor do they seem to be willing to do so. I believe these banks should have been allowed to fail for many reasons but the main one being oversight responsibility of the shareholders. If they lose everything they, as well as shareholders in other organizations, are more likely to pay attention to what is going on with the leadership of these organizations, including what they are paying those big salaries for. If these banks were allowed to fail, the shareholders would be implementing the same pay structure (or one similar to) what the government is now doing. And this is not a bad thing. A bonus should be paid for results – long term and short term. A bonus should NOT be a guarantee!I believe these banks need to focus on hiring people who are motivated more by a challenge and \”bragging rights\” than they are by money (and those people do exist). They need to hire people who are interested in fixing a very broken company and turning it around. Those individuals know that if they can fix these banks, they money will come. That\’s who they need to be hiring. Let the guys looking for the quick buck go to the competition and ruin their company.Which leads me to my next point…why the hell would anyone want to hire these guys coming out of these failed banks? they are as toxic as the toxic securities they created. These guys will just destroy their company too. I would be cautious of investing in any company that would hire these yahoos. They have a track record of lacking long term planning skills. They are definitely NOT what I would call \”talented\”. I would stay as far away from them as possible.

ramrants on October 24, 2009 at 1:08 AM

Economics 101. I guess they didn’t offer that class at Harvard or Columbia. If they did they must be awfully embarrassed by Odumbo.

rjoco1 on October 23, 2009 at 6:37 PM

I am thoroughly convinced Barry did not take one Econ, Accounting, or remotely related business class during his education

Fed45 on October 24, 2009 at 3:23 AM

These companies have failed. And these executives have failed. “Oh, they wanted to give back some money!” But they want to keep the government guarantees and the free money from the Fed

Actually no they didn’t fail. They weren’t allowed to fail. The gubmint made sure of that. Which was the stupidest thing Bush, Barry, and Congress ould have done and what has kept the economy from not turning around faster than it should have. They actually should have been allowed to fail. You don’t clear debt out by replacing it with more debt. You clear out debt by allowing companies to declare bankruptcy. I don’t disagree these companies screwed up and got greedy. But, the solution of bailing them out only made things worse.

Fed45 on October 24, 2009 at 3:29 AM

But at lease envious Americans feel better

/

Right Fins?

CWforFreedom on October 23, 2009 at 6:09 PM

Envious-American, the ultimate hyphenated-American.

The Democrat Party seems to be full of them.

VelvetElvis on October 24, 2009 at 6:57 AM

Update: Good line from Glenn Reynolds: Mr. Galt’s corner office is now available.

Close to what I thought when I heard the pay cut news. You have to wonder if all the “I Hate Fox News” distraction is because the Obambi Inept-istration is building a giant sound-disruptor machine in the middle of the Midwest.

HAnthonyWayne on October 24, 2009 at 11:22 AM

I don’t see where this article says anything at all about the “best and the brightest”. It says “top” employees and is specifically referring to rank, not ability. Wasn’t it just a few months ago that we were complaining about the government rewarding companies that were failing? “Let them fail,” we said. Well, who do you think was at the helm of these companies? You’d only be correct if you said “top executives”.

I don’t know where you, Ed, got the idea that the “best and the brightest” always end up at the “top”. I generally meet the “best and the brightest” around the middle of a company.

If the question is, “Should government control exec’s wages?” then fine. Let’s discuss. But you are specifically saying that the really smart people will leave and I see it as the rats abandoning ship.

Leonard210 on October 24, 2009 at 12:10 PM

Goldman was a top Obama supporter. Morgan Stanley another booster.

This government mandated pay cut — only at firms stuck in the TARP — aligns perfectly with these firms’ ambitions to best their remaining competitors, poach top talent, and increase their top and bottom lines.

Corporatism lives. Freedom dies.

Anil Petra on October 24, 2009 at 12:13 PM

Some people have a blinkered view of this and go back to whether or not these Wall Street guys “deserve” the bonus. To quote William Munney, “‘Deserve’ has got nothing to do with it.” If you sink 14 billion into a bank to “save” it and then incentivize the people who are supposed to manage the “saved” firm to flee, and de-incentivize any new talented individuals to replace them, you are cutting off your nose to spite your face. Leave it to the government to give a firm 14 billion dollars and then go in and piss all over anyone expected to manage that 14 billion and pat itself on the back that that 14 billion was spent wisely.

The other silly argument is that this perspective is tantamount to “worship” of these individuals. I hate Alex Rodriguez and think he’s overpaid. But if he were batting for my team — even if he were in a terrible slump — at no point would I think that I would get better performance from him if I took away 90% of his pay and set that as a future limit on anyone else who might replace him. This doesn’t mean I worship the guy. It doesn’t mean I even like him. It doesn’t mean I think he “deserves” it at some irrelevant metaphysical level. It just means I am dealing with reality and might win some ballgames this way, but I am guaranteed not to if I try things the other way.

shazbat on October 24, 2009 at 12:44 PM

ramrants on October 24, 2009 at 1:08 AM

You made the point I was trying to make a few comments below, but you did it much better than I.

Conservatives have been pushing the line that money buys “talent” for decades. It doesn’t. They were at the forefront of increasing government workers wages to attract better “talent”. Well, here in CA some elementary school teachers can make 6 figures. I can’t even begin to imagine what kind of talent that will produce in the next generation of school kids. (Yeah, right.)

Leonard210 on October 24, 2009 at 2:38 PM

Another point:

These companies were not “bought”….they are NOT “investments”….they were, in fact, STOLEN from their stockholders!!!!

The White House is running a Chicago-style PROTECTION RACKET!!!

landlines on October 25, 2009 at 12:48 AM