They Still Don't Get It

Wall Street bankers just don't get it.  The ill-guided stimulus spending bill contained a provision limiting salaries of the top 25 earners at banks that receive TARP funds (federal bail out money).  These banks are complaining that it is unworkable and will result in the loss of their best and brightest talent.  The New York Times quoted an unnamed HR executive at one of these corporate welfare recipients

 "To be put in a situation where you're limiting performance-based compensation is the dumbest thing you can do," said the senior executive at the investment bank. "Everything that shareholder advocates have been seeking for years is thrown out the window."

Another consultant was postulated of a coming brain drain.

What Wall Street doesn’t get is that they are insolvent and they can’t keep paying the salaries and bonuses in the manner they have when they are broke.  It would be one thing if they didn’t take taxpayer funds to do what they did, but when the government provides our money to help them, the recipients are obligated to spend the funds wisely.  Excessive compensation is not wise. 

Frankly, letting the banks fail is a sound choice, but our government doesn’t have the fortitude to let the banks fail.  Instead, we are keeping them on life support with TARP money.  If we are in essence supporting these banks, all the employees should be put on the government service pay schedule.  Especially the executives.  Limiting the salary and bonuses of only the top 25 earners is a gift.

Finally, a brain drain at these banks is not such a bad idea.  It these highly prized geniuses that created the opaque investment vehicles, gamed credit default swaps, and made loans to people who couldn’t repay the obligations, who got us into this mess to begin with.