Ironically, the public's reaction may hinge on how Wall Street and the broader financial community reacts.
Historically, Americans have opposed pay caps and generally looked unfavorably on government -- particularly federal government -- efforts to interfere with market-based valuations of talent / labor. In a nutshell, the public favors a minimum wage but believes "the sky's the limit" regarding compensation; if a board of directors, business partner or negotiated contract says you're worth $10 million a year in salary and bonus, then you deserve $10 million year.
Given the above, the public would typically oppose the $500,000 cap, which applies until federal funds have been repaid. Further, some Americans, but probably not a majority, would even oppose the cap for banks / financial institutions that have received federal bailout funds.
But what might turn that sentiment around? Bailed out bank executive comments asserting that $500,000 in annual compensation is not enough money.
That stance -- some would call it audaciousness and arrogance -- undoubtedly would be enough to push public opinion decidedly in favor of the cap for bailed out banks, and perhaps for other measures as well.
The reasons are obvious enough: economically speaking, times are tough, particularly for the typical person, with unemployment rising and lay-offs and home foreclosures at high levels. Many Americans are struggling to earn even a modest income -- at any job -- and the thought of executives 'complaining' that they couldn't possibly live on $500,000 a year may be enough to trigger what political scientists call an 'issue-public,' which would lead to a series of political reforms with much larger consequences, economic and otherwise.
Hence, the view form here argues: bailed out executives, lay low, accept the $500,000 cap and run. Or, pay back the federal bailout money.
Financial Editor Joseph Lazzaro is writing a book on the U.S. presidency and the U.S. economy.
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Reader Comments (Page 1 of 1)
2-04-2009 @ 7:54PM
Chris said...
I saw this in the Wall Street Journal last week, written by a reporter there.
http://www.gotoguy.com/?p=560
2-05-2009 @ 12:08AM
BHarrison said...
And just ponder the fact that all of this world wide economic
disaster basically arose from the FRAUDS that were orchestrated and
perpetuated by the Financial Institutions and the corporations of the
USA. They created a phony boom which generated a manufacturing boom
in China and the rest of the world . . . and which resulted in a
TRILLION DOLLAR balance of trade in China's favor. Then when the
economic house of cards collapsed, the USA and world economy
collapsed.
On the national news the other night, it was stated that 9 out of 10
of the CEOs of failed/failing corporations STILL held their CEO
positions in the corporations; and they are still collecting their
obscenely exorbitant salaries and compenstations.
Isn't there something drastically WRONG when those who orchestrated,
oversaw, and petetuated FELONY CRIMINAL FRAUDS are NOT indicted and
prosecuted for their FELONY ECONOMIC CRIMES? Congress was the
PRIMARY CULPRIT in allowing and enabling these speical interests to
commit these FRAUDS; and now Congress is not taking effective actions
to address these CRIMES or these CRIMINAL CEOs.
It is up to the American people to pressure their Congressmen for
actions in these matters . . . or to implement recall elections to
remove the CORRUPT Congressmen.
2-05-2009 @ 9:53AM
tom eisenberg said...
I couldn't agree more. Why is vikram pandit still at citigroup or ken lewis still running bank of america, not to mention the board members at citi should be sued along with the defunct lehman. And dick parson's is now the chairman of citi, wasn't he a director during the collapse!! What kind of oversight did they provide. and the politicians like barney frank and schumer who forced banks to lend to poor people who could never pay back the mortgage. The wall street boom was based on a lie, credit default swaps, the future will not be profitable, but yet the past crimes or scams , however you term it , are not punished, so everyone thinks the system is rigged. Also these bonuses make everything more expensive for the average family trying to get by on 100,000 dollars a year in the nyc metro area! iv'e called congressmen , pundits who criticize the bailouts and crazy executive pay, haven't heard back, trying to start a protest movement, carrying picket signs one day a week outside merril's office or some other high profile financial group, but no one seems to want to help me form anything, maybe because i'm just an average investor and not on tv. Where is the outrage about robert rubin making 100 million with citigroup over the last 8 years while the taxpayers have save that company from going bankrupt. Am i missing something? , how is that not a ponzi scheme, not to mention, stan o'neal, charles prince, marty sullivan at aig, montag, kraus at merrily. Some people call it class warefare, i'm upper middle class and have a few million still even after the market has cut my portfolio by 40 %, of course that includes my nyc apartment. it is not class warfare it is simply a call for consequenses for shady unethical financial trickery. make these executives give back alot of this money to charities or the taxpayers. They will still never have to worry about lacking any comforts with a few less millions and the shareholder taxpayer might actually have confidence in the financial system again. tom, yes i'm a little envious but i'm also disgusted by the greed, why is robert rubin not being villified in the media. It seems the only villain is bernie madoff, these other guys are not as evil , but they strike me as being not alot better.
2-05-2009 @ 1:10PM
Iridium said...
The problem I have with executive compensation is that the game is rigged in favor of the CEO. Its the I'll scratch your back if you'll scratch mine philosophy.
There isn't even a word to describe how overpaid many of these people are. I don't know how you can justify paying someone $10 million per year with bonuses.
If I valued my work at the same rate they value a CEO of today I would be worth $100 million per year.
Truly if I design a product that sells $5 million worth for the company shouldn't I be entitled to at least $1 million of that. That being just one product. Over my design career I have probably created products that have over $100 million in sales total. For that I get a small salary and the executive of the company gets over a million.
The truth is that most CEOs aren't even worth $.10, it is the people under him that create worth. When I sit in meetings with CEOs I always wonder what they actually do. I see them come into a meeting for 2 minutes then talk on the phone. Everyone else works to get a project done on time, busts thier ass. The CEO goes off somewhere and does whatever he does and the other people in the company make him money.
I truly believe they get paid millions to do nothing of actual consequence. The only thing they are good at is manipulating figures and hyping stock. When it comes to actual business operations they can't do a thing. This is why business is imploding now that the stock con game has been unveiled.
2-06-2009 @ 8:34AM
Strwalker said...
"Bankers" and "smart" in the same sentence ... tsk, tsk...
Seriously, this is like teaching whores to lift their own skirt...
(Apologies to all the fine ladies of the night the world over for the simplistic comparison to these scumbags in 3-piece suits.)