Executive pay and Wall Street bonuses are the root of all evil. You might even put them in the axis of evil. And our fearless good-guy government leaders in the US and Europe have addressed the evil head-on, chastising anyone who makes “a lot of puddin“. Recently, even going so far as to enforce pay freezes and caps. This might sound suspiciously socialist, even Russian.
Unfortunately someone forgot to tell the government that they were getting half those bonuses in taxes . Yes, The Government, you get a 50% cut of all that bonus money. To which I say “THE GOVERNMENT, HOW DARE YOU ACCEPT SUCH EXORBITANT PAY! YOU ARE RECKLESS! AND YOU DIDNT EVEN SAVE ANY OF IT??? DISGUSTING”. And WHOOPS The Government, you just capped your own tax income. And in places like the UK, where financial services tax income is 25% of the budget, it’s going to mean that you, The Government, will have to lever up (read: print money) to make up the short fall.
Banks won’t lever up. They have decided that lending isn’t a good return on investment right now. But most banks have decided that adding some leverage to pay their top performers bonuses in an awful market is a good return on investment. The Government has decided the opposite. Of course, the Government is the same body that thought that THEY, career politicians of varied backgrounds, could do a whole lot better allocating mortgage resources than the free market via the mandates they put in place for Fannie Mae and Freddie Mac.
For one side when they do a bad job, their firms and their entire industry end up on the brink of non-existence. For the other side when they do a bad job or are completely wrong, whether it be 9/11, Iraq, aiding the Great Regression, printing money or messing up the recovery, they get much MORE money and much MORE power. If Dick Fuld had worked for congress, he would have been promoted to Chairman of the House Financial Services Committee.
If the Government does follow through all the way and take away or freeze bonuses for Wall Street executives, we think it’s only fair that they should also give something back to those very same Wall Street executives. I have some suggestions.
- A cut of every lobbying dollar that politicians get after leaving public office
- A cut of every speaking fee politicians receive after leaving public office
- The ability to travel on a whim at the expense of taxpayers, specifically in support of potential new employment
- A new requirement that poor performance is rewarded with promotions and tenure, whereas in finance in the past those things were rewarded with being fired or a dramatic reduction in bonuses
- The ability, once in an executive position, to “redistrict” your supervisors in a way that ensures that you have supervisors who are most likely to favor you with continued employment
- And last, but not least, coupons for Washington DC’s high end brothels which are rumored to be the nicest on the East Coast