Posted on 10/23/2009 4:15:23 PM PDT by SeekAndFind
NEW YORK (Fortune) -- There's no need to fear a Wall Street brain drain -- despite the crackdown on pay by Washington.
On Thursday, White House pay czar Kenneth Feinberg outlined compensation restrictions at seven firms that got special bailouts, and the Federal Reserve proposed to review pay practices at 28 unnamed giant banks.
Critics warn that reining in pay makes it hard to keep talented employees. Hemmed in, institutions like AIG (AIG, Fortune 500),Bank of America (BAC, Fortune 500) and Citigroup (C, Fortune 500) could lose their best people.
These firms would then perform even more abysmally, if that's possible, leaving them hard pressed to repay tens of billions of dollars of taxpayer-backed loans.
Still, we say Godspeed to this "talent." After all, the traders and suits in the corner offices don't exactly have an unblemished track record. In 2008, Citigroup, BofA and Merrill Lynch (since acquired by BofA) posted a grand total of $51 billion in losses.
Yet even as they were running themselves into the ground, the firms managed to pay out more than $12 billion in bonuses -- including 1,606 million-dollar-plus bonuses, according to a report from the New York attorney general's office.
"Even a cursory examination of the data suggests that in these challenging economic times, compensation for bank employees has become unmoored from the banks' financial performance," the report said.
Meanwhile, it's hard to imagine that defection-hit firms would have a lot of trouble finding qualified replacements in the current job market.
Unemployment has doubled nationally since December 2007, when the recession started. Securities industry employment has fallen 10% nationwide and 14% in New York from a mid-2008 peak, according to Bureau of Labor Statistics data, costing some 90,000 jobs in the U.S.
(Excerpt) Read more at money.cnn.com ...
Pay back my money and then you can get that bonus.
Nothing more than a 90% Income Tax Rate. Hope these people feel as well when they come after their income.
Pray for America and Our Troops
Next, the Pay Czar will take a look at cutting by 50% the salary of one Colin Barr.
Now how are you feeling about that, Colin?
what a simplistic...perfectly childish premise. no wonder we’re being subjugated by the media.
Since the Taxpayer Bailed ‘em out, I’d say the Taxpayer is their most important and best performing employee.
Since we have 140 million workers
and
WallStreet gave out 140 BILLION in bonus’s
each worker in the USA should get 1000 dollars
because I’m sure Wallstreet wouldn’t want to lose its best employees.
The fact is, it is all an inside game and merit has precious little to do with it.
Yes, like, say, from somewhere like Eureka College.
This concept is ridiculous. Where exactly are the dead weight losers going to go except the financial world? Only Washington DC and if can can destroy that, well goody gumdrops.
http://hotair.com/archives/2009/10/23/shocker-people-leave-firms-when-pay-gets-cut/
Shocker: People leave firms when pay gets cut
by ED MORRISSEY
Who could have guessed at this outcome? Um, just about everyone who ever worked in the private sector:
Even before the Obama administration formally tightened executive compensation at bailed-out companies, the prospect of pay cuts had led some top employees to depart.
The administration had tasked Kenneth Feinberg, the Treasury Department’s special master on compensation, to evaluate the pay packages of 25 of the most highly compensated executives at each of seven firms receiving exceptionally large amounts of taxpayer assistance.
But Thursday, he ruled only on slightly more than three quarters of the pay packages that were to be under his purview. The balance reflected executives who have left since he began his work in June or will be gone by the end of the year.
Many executives were driven away by the uncertainty of working for companies closely overseen by Washington, opting instead for firms not under the microscope, including competitors that have already returned the bailout funds to the government, according to executives and supervisors at the companies.
“There’s no question people have left because of uncertainty of our ability to pay,” said an executive at one of the affected firms. “It’s a highly competitive market out there.”
This is not exactly rocket science. When firms have to cut compensation for any reason, the employees affected start looking for better opportunities. The mere threat of cuts kick-starts the resumé-writing and networking process. Monster.com probably did great business in the days and weeks after the Pay Czar clauses became widely known in the bailout program.
And who leaves first? The people who can most easily find better-paying jobs elsewhere. Anyone who has worked at a company that attempts to downsize through attrition (or through across-the-board compensation cuts) has experienced this firsthand. The best and brightest find better-paying jobs elsewhere because they are the best and brightest. What does that leave behind? Usually, either people who can’t afford to check out because of their age, or people who simply can’t compete in the open job market because of a lack of marketable skills, accomplishment, or experience.
Of course, this describes exactly what has happened to the firms in which American taxpayers have invested hundreds of billions of dollars. The Pay Czar clawback provisions have resulted in brain drains at all of the firms which have those investments. Most of that damage was done before Kenneth Feinberg started contemplating the government approval of compensation plans, so the announcement this week of them will probably not have much further effect.
Every company sees its employee experience as a major asset, especially in management and executive positions, as well as the proteges who have begun to work their way up the ladder. Thanks to the class-warrior policies of this administration and the bailout policies of the last, American taxpayers have lost a great deal of the resources that could have safeguarded these huge investments.
Too bad some of these companies didn’t have the smarts to lose some of this great talent before it lost them so much money.
Not yet. But the Washington Post just did.
So, any day now.....
(Dinosaur Media Death prediction.....)
I am so sorry that you seem to actually believe that the talent at Bear Stearns left to go to Lehman because they could get a bigger bonus, that is before before they moved to Freddie Mac, and Wachovia for more security, before going to Bank of Scotland for the golf courses.
Sometimes the right answers are simple. Not always. Not even usually. But sometimes. This is one of the times.
parsy, who is for shipping the whole Wall Street bunch to the Chicomms
Actually, Harvard had the best financial advisers in the business. Year after year, they did better than any of the other top universities.
Then, a few years ago, some of the alumni got stirred up, and protested that these advisers were being paid too much. So, they cut their pay and they all left. Then they brought in what has proven to be a gang of jerks to run their endowment. That was a false economy, I’d say.
Sure, there are a lot of crooks and incompetents working on Wall Street. But there are also a few good people. Guess who is going to leave after these 90% pay cuts. Especially since Bank of America just had to go out and find a few decent executives, and now they are going to be punished for signing on and will probably go elsewhere. In fact, in this tough job market only the really competent guys are going to be hired elsewhere—not the ones who bet on garbage derivatives.
Most of the trouble was caused by the government. CRA, faulty regulation, and government working with certain investment companies to screw the public. Cutting the salaries of the few remaining people who know what they’re doing in the weaker firms isn’t going to help. Espcially since Obama and Company haven’t the foggiest notion how to run anything.
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