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Politics : View from the Center and Left -- Ignore unavailable to you. Want to Upgrade?

To: Sam who wrote (102540)	1/31/2009 9:53:22 PM
From: Win Smith	Read Replies (1) \| Respond to of 542213

Oh boy, that takes us up to a little more than half of Wall Street's bonus budget this year. President Obama called "shameful" a Thursday report from the New York comptroller that showed Wall Street firms awarded $18.4 billion in bonuses in 2008, one of the worst years ever on the Street. With U.S. unemployment at 7.2 percent and climbing, 401(k) accounts dwindling, bankruptcies piling up and foreclosures still spreading, many Americans might agree with Obama. washingtonpost.com I think shameful is an extremely mild term for this BS. In the reaching for rationalizations department, the WaPo was apparently sold this brilliant bit of logic by somebody's PR flack: Lost in the heated rhetoric of the comptroller's $18.4 billion bonus total for 2008 was this fact: Even though that number represented the sixth-highest bonus year on record, it was down 44 percent from the total amount of bonuses paid on Wall Street in 2007. The falloff is proportional to the drop in the Dow Jones industrial average from its high of 14,164 in October 2007 to 8000, where the Dow closed yesterday. A naive outsider might expect maybe bonuses should be tied to profits, which would put the fat cats way out of the money this year. A naive outsider is no match for this kind of logic, though. The Post did manage to come up with a contrary voice, though, who, in contrast to the "proportional falloff" flack above, was willing to be quoted directly. Can or should anything be done about executive bonuses? Yes, said Nell Minow, chairman of the Corporate Library, a research firm on corporate governance, who noted that Wall Street bonuses are forcing her to "keep recalibrating my outrage." Minow, an expert on boards of directors, noted that boards approve all bonuses. All too often, she said, they were not rigorous enough in their review or smart enough to understand their company. As an example, she cited Bear Stearns, the first big investment bank to fail and a voracious consumer of subprime mortgages, which the bank packaged and sold to great profit. Bear Stearns executives got their bonuses based on the quantity of mortgages they securitized, Minow said, not the quality. Further, she said, even though the BearStearns board set up nine criteria on which to evaluate executive performance, it could award bonuses even if none were met. Minow said all executives should follow the bonus structure of former Chrysler chief Lee Iacocca and former Disney chairman Michael Eisner, who took their bonuses in "steeply escalated" stock options over several years, betting on themselves and on their company. "You want to get rich? Fine. We want you to get rich; the sky's the limit," Minow said, "But you're going to get rich by doing a really great job. No one complains that Bill Gates made too much money -- he created value." And if you destroy value in breathtaking quantity? Just line up for another $trillion or so from the government. I'm tempted to go to that other thread to find some inspiring Ayn Rand rationalization for this garbage, but not that tempted.