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closeWho would have thought that the United States of America would have someone from Washington, D.C., tell business executives on Wall Street what they could earn? Is there anyone else bothered by this notion of a smack down?
Kenneth Feinberg, the gentleman who was selected by the U.S. Treasury Department to oversee the slashing of executive pay packages on Wall Street has been given a unique position in American economic history.
I don’t want to take anything away from Mr. Feinberg. In the past, he’s been charged with managing noteworthy tasks.
A lawyer by trade, Feinberg recently administered the Hokie Spirit Memorial Fund, designed to help victims’ families after the Virginia Tech mass shooting two years ago. Before that, he was special master of the federal September 11th Victim Compensation Fund.
In recent days, anti-capitalists, and even a few fiscal conservatives have given me an earful in defense of this idea that we’ve got to have somebody stick it to the executives that stuck it to us.
The special pay master’s job was included in a provision of the stimulus bill that made its way through Congress in the first quarter of this year.
The “grim compensation reaper” is responsible for barring the 25 most highly paid employees at firms that received rescue packages from banking bonuses or incentive payments.
According to Victoria McGrane with Politico, at the urging of Treasury Secretary Timothy F. Geithner’s department, Sen. Christopher Dodd, D-Conn., included the key stipulation for such a czar.
Yes, that’s the same Chris Dodd who created a loophole for AIG executives to collect $165 million in bonuses. ABC news reported that in 2008, AIG gave political contributions to Sen. Dodd, totaling $103,100. That’s more money than AIG sent to Barack Obama or John McCain.
Sen. Dodd and the Treasury allowed AIG to get their bonuses, citing fear that there could be lawsuits for breaking existing work agreements.
I perfectly understand the wrath some taxpayers feel about having to bail out these seven financial firms in the first place. That is understandable, but we sent billions of dollars to help the companies survive and now the very employees who are needed to operate the businesses successfully are being penalized.
The Washington Post reported this week that a fair number of these top-level executives have departed for greener pastures. They found someone else to pay them what they are accustomed to earning. I say bully for them.
Fourteen of 25 highly paid executives at Bank of America had already found another financial firm to help guide.
Feinberg has only ruled on a little over three quarters of the salary packages that are to be examined.
If the main objective was to salvage the companies because it was thought to bring about stabilization of the U.S. economy, then by all means support the staff and keep the top brass happy. You aren’t going to do that by slicing their pay.
Or, if the object lesson is to demoralize the staff and management team, bringing them into some kind of sweeping repentance, then cut, slash and drive them to their knees. When the firms come back in several months asking for additional assistance, don’t be shocked.
While I don’t believe the Feinberg foray will have a long term impact on Wall Street or it change its culture, Americans ought to be concerned that such an idea of a special master can be designated by representatives of the people so frivolously.
Capitalism was great, wasn’t it?
Kenny Burgamy serves as a marketing consultant for Atlantic Southern Bank and Mid Georgia Ambulance and is co-host of the Kenny B. Charles E., “Mix in the morning” radio program.
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