Meritorious Losers
by digby
Today on The Situation Room Blitzer and his guests discussed the Obama administration's initiative to limit executive pay of those who took the TARP bailout. Republican Mary Matalin launched immediately into the usual wingnut spin and said that it's a "feel good" initiative that only makes people more worried about how much this president is interfering in the private sector. Democrat Jamal Simmons said that it's a double edged sword. He acknowledges that the politics of setting pay limits on executives is a no-brainer because the public is furious. But he then goes on to say this:
Simmons: We are now investors in these banks and we want to have the best talent that's available to take them out of the red and operating into the black and keep them healthy because it's good for the system or we wouldn't have saved them.
Blitzer: We're talking about those companies, you see the logos, turn around and you can see, you know Chrysler, GM, the automotive center, but then Bank of America, Citi and AIG. These are companies that received billions of dollars either in loan guarantees or direct cash. And does the federal government have right to tell them, "you know what? We have a right to control your salaries of the 25 top executives?"
Matalin: That's what happens when you have this kind of unholy alliance, in this case. Jamal's exactly right. These guys probably would not be getting these bonuses if there wasn't some merit to them...
Simmons: There must be some performance there.
Matalin: and we are the investors. Well said!
Simmons: You want these companies to work Wolf. The thing is, I've talked to a lot of people in New York about this and people who are on Wall Street and what they will tell you is, if they can't work someplace and get rewarded, they'll go work someplace else.
Wolf: You know what you'll see my interview in the next hour with the watchdog, the inspector general for the TARP money, Neal Barofsky, who makes thep oint that over hte past year since the disaster, the economic debacle of over year ago, nothing in terms of regulation or oversight has been done to make the situation potentially any better.
Simmons: And that's a totally different question. That's a question of regulation and making sure it's operating out of a structure that's going to minimize risks for the investors and for the people who's deposits they hold for the commercial banks. That's totally different than who are you going to reward for good behavior and managing a company well.
Matalin: That's right. These potentially meritorious workers are going to be penalized because this government could not get it together to pass the kind of reform which Republicans agree with too. Why should they be penalized for our inadequacies here in our nation's capital?
Simmons: That said though, the billions of dollars though that they're handing out ... the banks ought to be a little bit smarter though about ratcheting back their own pay packages to make this less offensive to the American people.
I like Simmons, but he needs to spend less time with the ruling class. His comments are self-serving Randian nonsense. (And any time Mary Matalin is doing cartwheels agreeing with you should ask yourself if you are saying the right thing.)
Nobody deserves that kind of money in this economy, much less from companies that have just been bailed out by the US taxpayers. And these ridiculous pay incentives are part and parcel of the problems that got us an epic global meltdown in the first place. As for these fabulous "meritorious" workers leaving to find other work, I say let them go. The uniqueness of the talent of top executive is largely a myth, mostly perpetuated by elites to justify their obscene percentage of the national wealth. (And anyway, if they are so great, why aren't they working for Goldman already?)
Last night, Frontline had a great program called "The Warning" about Brooksley Born's attempt to regulate derivatives back in the 1990s and the extreme resistance she came up against from "The Committee To Save The World." They circled the wagons and shut her down.
One of the things that struck me most forcefully about it was the commentary of Arthur Leavitt, former SEC Chief who was right in the middle of it. He said he personally knew Greenspan, Rubin, Summers and the rest very well, had socialized with them, worked with them for years. In an interview about the series he repeats his thoughts about Born at the time:
Didn't know Brooksley Born. I was told about Brooksley Born. I was told that she was irascible, difficult, stubborn, unreasonable. I've come to know her as one of the most capable, dedicated, intelligent and committed public servants that I have ever come to know. I wish I knew her better in Washington, and I wish my view of her was more rounded by personal exposure. ...
In my life I've had so many occasions of finding my impressions were incorrect and revising them, depending upon the circumstances, depending upon what stage of life I happen to be or what other factors were bearing on it. You've asked me about these people, and I've come to know all of them reasonably well. I've got to say to you that I have just huge affection and admiration and trust in Brooksley Born.
It's to his credit that he admits now that he made a mistake which is more than anyone else does.
But what this really speaks to is the very close knit club to which all these Wall Street/Bankers/Regulators belong and how they reinforce their prejudices and skewed belief systems as much out of social solidarity as greed or ideology. (In Born's case, there was likely a large dollop of sexism as well.) They know each other and trust each other, whereas those from outside the charmed circle just aren't seen as reliable.
It's human, but it's dangerous for policy makers to think that way. And Jamal Simmons, a good guy, showed today just how that sort of clubby CW becomes an article of faith among political players on all sides as well. Just because Wall Street dudes are telling you that they'll up and quit and go to other companies if their pay is cut, doesn't mean anybody else wants to hire them. If they do, I say let them go. There's plenty of top talent in this country that would be happy to work for less than these egomaniacs.
Update: Simmons has been remarkably easy on the bankers for some time. Odd.
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