I disagree with this. It is trivial to reign in compensation in an environment where shareholders actually care about the companies they are investing in. What is broken, IMO, is that shareholders have stupidly abdicated their own responsibility for the money they handle. This also applies to bondholders as well, of course, but shareholders are last in line if things blow up so they have (or should have) the greatest incentive to PAY ATTENTION. But that would require work, and who wants to work when the AUM percentage rolls in week after week after week no matter what you do.
why don't you read the previous posts carefully. he who pays the piper calls the tune. you borrow money you accept the lender's conditions.you accept gov't money you accept gov't conditions.
Without taking sides on the issue, because I am now a daytrader and proud of it, I will say this which I haven't really heard said well yet, but I'm sure we'll see it somewhere in the press tomorrow. Wall St.'s high paid bankers/traders are the second highest cost for these firms. If you look at any company's Income Statement it will show revenue then cost of goods/service below. This is mainly salary and the cost of producing your product. IBM will show something like 100B rev and 70B cost. 30B EBITDA. Look at any bank or what used to be brokerage, say GS, and it will show 50B rev and 6B cost. 44B EBITDA. (GS biggest cost would be 30B+ in interest paid). Point being: Different formula for these types of firms. Their biggest cost obviously is their cost of balance sheet, but their cost of goods is the ability of their people to produce revenues. 'Intellectual Assets' that produce these 'normally/historically' huge rev's. We are all out on a 'witch hunt' to 'get' firms that pay out about 10% of revenues in salary to those responsible for them. (hedge funds pay out 20% of revenues, which is why these guys leave WS to go there). You go on Yahoo financial and see that most firms pay out 75%+ for their cost of goods. Yes, its good work if you can get it, but we are talking about apples and oranges here with the way these firms operate. This is why the 'smartest' folks from Stanford/Harvard/Yale etc... go to Wall St. right? Obama smart guy no doubt, he knows this, but is playing the popular opinion thing. Is he misleading the public for popularity? He says that bonus payouts are 'disgusting' or something. Bet his classmates from Columbia and Harvard are not too happy with today's events, he needs to realize soon that the election is over. Just food for thought.
It seems some overly exuberant capitalists are missing the point. If the company did not receive TARP funds, pay them. Once the company returns TARP funds, pay them. Not a bad idea if you ask me.
I'm an Obama supporter. Yet, I must admit that the executive pay caps seems a bit infantile. The administration is coming across as being anti-business and that is the worst way to solve the crisis.
http://www.npr.org/templates/player...n=1&t=1&islist=false&id=100241763&m=100241753 Why only cap salary? Why not take away their last year bonuses they looted while drowning their company?
anyone who takes the entire house and senate and calls them Bush or Obama is an idiot,as a matter a fact anyone who is pro rep or dem is also an idiot or at least a chump,this article screams ,lie,lie ,lie, it emphasizes the provisions which the house and senate have proposed and ignores the fact that they are still giving our money to the flim flam con artist.s who laughed at us last time when we gave them cash and turned around and doled it out to all the people who scammed us and put our economic reputation in ruin in the first place,does anyone not see that the the house,senate ,brokerage firms,SEC,Fed,Fannie,Freddie ,US Treasury, and the rest of them dont give 2 shits about the U S taxpayer....and if another dime goes out the door in the name of saving these bastards,then Obama's plan of building a new government with the existing lawyers who built the existing peice of crap thats on the hill now is doomed ( not that it ever had a chance) We need to take these crooks dow n hard and expose the frauds in washigton who were in cahoots,passed the laws.,if we nail one of em,the rest of the rats will jump ship....The fact that it's not already happening means the new sherriff is just the same as all the rest