1,000 UK bankers hit exits over pay

NY Post ^ | December 7, 2009 | Paul Tharp

[CutePuppy]

In a London preview of Wall Street's bonus nightmare, more than 1,000 investment bankers have quit Royal Bank of Scotland to work at rivals due to curbs on their paychecks, according to people familiar with the situation.

Wall Street banks fear top talent would flee en masse for greener pastures if Uncle Sam's pay czar, Ken Feinberg, and Congress try to put more ceilings on bonuses and pay at financial firms.

In the UK, the rules are modeled after US actions to curb pay at firms bailed out by the government.

RBS will soon be about 84-percent owned by the British government due to recent bailouts.

The protest exodus at RBS -- first reported on the Web edition of the Times of London -- involved less than 5 percent of its banking professionals.

.....

[CutePuppy]

Recently increased taxes in UK is another factor, many bankers are leaving for greener pastures in Switzerland and elsewhere.

[max americana]

Not many, but 5% as reported by the TOL web edition. Good for them to do what they think is right but the economy sucks, so opportunities are minimal.

[Rembrandt]

Geithner and The Obahamster are yukking it up over this.

[CutePuppy]

Yep, but it doesn't take that many. Losing just 5% of best and brightest to competition can make a difference between success and failure of institutions, especially the ones that need the most help, and where the pay is largely based on merit, i.e., a fraction of what the person brought in.

Penny wise, pound foolish?

And the ever-present potential for selective cronyism or favoritism on part of "pay czar" ?

Feinberg Said to Lift $500,000 Cap for AIG Executives - BL, 2009 December 08, by Hugh Son

Kenneth Feinberg, the U.S. paymaster for rescued companies, will exempt some executives at American International Group Inc. from a $500,000 salary cap after at least five employees threatened to quit because of the limits, people familiar with the matter said.

Feinberg may issue a ruling as early as next week on pay limits for 75 of the bailed-out insurer’s executives, the people said. Last week, five executives said they were prepared to resign if their compensation was significantly cut, according to the people, who declined to be named because the talks are ongoing. Two have since retracted the threat, the people said.

“It’s the equivalent of saying, ‘We’re going home and we’re taking our toys with us,” Frank Glassner, CEO of Veritas Executive Compensation Consultants LLC, said yesterday in an interview. By paying more in salary, AIG is “increasing what may be considered guaranteed pay.”

Feinberg, the Obama administration’s special master for executive compensation, said in October that base salaries at AIG wouldn’t exceed $500,000 a year except in cases where there was “good cause” to pay more. Treasury Department and Federal Reserve officials have urged him to strike a balance between curbing excessive pay and retaining key employees. .....

AIG General Counsel May Depart After Protesting Cap - BL, 2009 December 09, by Hugh Son

American International Group Inc. general counsel Anastasia Kelly, who threatened to quit over government-imposed pay limits, may depart as early as this month, said three people familiar with the matter.

Kelly, 60, said in a Dec. 1 letter she was prepared to leave AIG by year-end because of impending compensation restrictions, and the insurer hasn’t sought to keep her, said the people, who declined to be identified because an announcement hasn’t been made. Michael Leahy, a lawyer who works at AIG’s New York headquarters, is among candidates being considered to succeed Kelly, said one of the people.

AIG was rescued last year in a U.S. bailout that has swelled to $182.3 billion, placing the company under the jurisdiction of Kenneth Feinberg, the Obama administration’s special master for executive compensation. .....

[Trod Upon]

I foresee the rise of a Chinese or Indian banking giant, flush with new talent thoughtlessly discarded by the West.

[YHAOS]

Greedy SOBs

[FromLori]

If they were the best and brightest that sure isn’t saying much since they crashed the worlds economy. Let em go here too the losers who took our tax dollars don’t deserve to be rewarded for failure. Like Bunning said this Fed is like the one from Jeckyl Island.

Audit: Taxpayers lose $61B on AIG, auto bailouts

http://news.yahoo.com/s/ap/20091209/ap_on_bi_ge/us_bailout_extension

AIG General Counsel Who Protested Meager $500K To Have Her Bluff Called, Get Sacked

It appears the only thing worse in this world than a measly $500,000 salary is getting no salary at all. And that’s exactly what is about to happen to AIG General Counsel, Anastasia Kelly, who before joining the bankrupt firm, was a GC at such reputable organizations as MCI/WorldCon (sic) and Fannie Mae. To paraphrase the objections against a very prominent Treasury Secretary recently, the question is not whether or not she will leave the job, the question is how she got it in the first place. Kelly, who recently was protesting the $500k salary cap imposed by Pay Despot Ken Feinberg, yet was in Benmosche’s black book, will likely be out of the organization, presumably involuntarily, by year end. We are confident that with the economy rocking she will be able to find a job that pays her much more in line with her true skills... which based on her track record hopefully involves more than leading three sequential companies straight into bankruptcy.

http://www.zerohedge.com/article/aig-general-counsel-who-protested-meager-500k-have-her-bluff-called-get-sacked

[CutePuppy]

Inasmuch as any General Counsel can be "leading three sequential companies straight into bankruptcy," let's consider that Anastasia Kelly was :
EVP and GC of Fannie Mae from 1995 to 1999, just before Jamie Gorelick's reign (Vice Chairman, 1997-2003);
at MCI from 2003 to 2006, after the WorldCon (sic) blowup and part of the "cleaning crew" of that company;
at AIG since 2006, well before Joseph Cassano in London office of AIG was writing billions of pounds in CDS "insurance".

People who think they will have trouble getting jobs don't complain about salary of $500K established by a government "pay czar" who has the flexibility to lift it for those he sees fit.

Anastasia D. Kelly

Born: c. 1949

Gender: Female
Race or Ethnicity: White
Occupation: Attorney
Party Affiliation: Republican

Nationality: United States
Executive summary: EVP at American International Group

    University: BA, Trinity College Washington (1971)
    Law School: JD, George Washington University Law Center (1981)

    American International Group EVP and General Counsel (2006-)
    MCI EVP, General Counsel, Corporate Secretary (2003-06)
    Sears Roebuck EVP, General Counsel, Corporate Secretary (1999-2003)
    Fannie Mae Senior VP, General Counsel, Corporate Secretary (1995-99)
    Wilmer Cutler & Pickering Partner (1985-95)
    Carrington Coleman Sloman & Blumenthal Associate (1981-85)
    Martin Marietta Employee Benefits Director
    Member of the Board of Fortress Global
    Member of the Board of Owens-Illinois (2002-)
    American Bar Foundation
    Corporate Counsel Association Vice Chairman
    District of Columbia Bar
    Equal Justice Works Vice Chairman
    George W. Bush for President
    John McCain 2008
    Keep Our Mission PAC
    New Republican Majority Fund
    State Bar of Texas

[CutePuppy]

s/b at AIG since 2006, well before after Joseph Cassano in London office of AIG was writing billions of pounds in CDS "insurance".

[paul51]

Some how I expect the banks will survive such a loss of ‘talent’.

[CutePuppy]

... involved less than 5 percent of its banking professionals.

Since the definition of "banking professional" is pretty loose and must include a good number of clerks and assistants, it is likely that not many more than the top 5% are paid over the limits established by US or UK "pay czar".

Greedy SOBs , indeed...

[101voodoo]

"Yep, but it doesn't take that many. Losing just 5% of best and brightest to competition can make a difference between success and failure of institutions,...

Back in the day it was said (and probably still is said), "80% of the (productive) work is done by 20% of the employees" It was true where worked as a part of senior management and I am sure it is true today.

[CutePuppy]

The classic Pareto Principle, aka 80/20 (sometimes 90/10) rule... applies to many events or situations.

Capital goes where it's welcome and stays where it's well treated. Same is true of (most) people.

[101voodoo]

It makes such perf snse. You have to wonder how it can be the clowns in Government cannot see that which is so obvious?

[CutePuppy]

You have to wonder how it can be the clowns in Government cannot see that which is so obvious?

It's not that they can't see the obvious, it's rather obvious to see that...

"It is difficult to get a man to understand something when his job depends on not understanding it" - Upton Sinclair
"Our worst enemies here are not the ignorant and simple... our worst enemies are the intelligent and corrupt" - Henry Graham Greene

[YHAOS]

"Greedy SOBs , indeed..."

Sorry . . . didn't realize such an obvious sardonic crack necessitated an /s tag.

[Winniesboy]

top talent would flee

Ever since the banking crisis broke, I have searched diligently among the copious commentary on the subject in the hope of discovering some clue to what 'talent' is required to be a successful investment banker. I'm still none the wiser.

[CutePuppy]

Sorry . . . didn't realize such an obvious sardonic crack necessitated an /s tag.

Same here. I just added a bit of emphasis... hope you didn't mind :-)

[CutePuppy]

It could depend on the sources of commentary, or the definition of copious, 'talent' and successful.

I am still none the wiser on what the definition of "czar" and, even more specifically, "pay czar" is or should be in, ostensibly, a capitalist society.

[Night Hides Not]

If they were the best and brightest that sure isn’t saying much since they crashed the worlds economy. Let em go here too the losers who took our tax dollars don’t deserve to be rewarded for failure.

I couldn't agree with you more.

There's a very simple way of dealing with the "best and the brightest" on Wall Street: take away their ability to leverage their positions by up to 40-1. Make them maintain no less than 20% equity on each and every position they hold, with stringent margin calls when they fall below 20%.

Also, bar depositor cash in the calculation of a bank's net capital (for trading purposes), because it's not capital. Depositor cash is simultaneously an asset and a liability for a bank. Yep, they have it on hand, but it's not the bank's money.