Wednesday, October 21, 2009

Pay Cuts

Hahaha. Get 'em, Ken:

Executives at seven bailed-out companies including Citigroup Inc. and Bank of America Corp. will have their pay cut about 50 percent after negotiations with Kenneth R. Feinberg, the Treasury Department’s special master on compensation, two people familiar with the matter said. Cash salaries for the 25 highest-paid employees will be slashed 90 percent under Feinberg’s plan, which will be announced this week, one of the people said today on condition of anonymity. Employees at the derivatives unit of American International Group Inc., blamed for insurer’s near-collapse last year, can receive no more than $200,000 in total pay, one of the people said.
Good. Jerks. The best part is this:
All perks such as limousine service and private aircraft valued at more than $25,000 must be approved by Feinberg, one of the people said.
Add: This is going to make for some interesting conversations. "Hello, Ken? This is Johnny Risktaker, I trade MBS for Citi. I need to fly my mistress to the South of France for the weekend on a private jet. No biggie. Whaddya say?"

9 comments:

yequalsx said...

I'm confused by your remarks. Are they sarcastic? You've before defended Goldman pay due to the need to retain talent. Is this a change in position? My apologies if I've misunderstood your position.

Anonymous said...

Goldman Sachs has paid back their TARP obligation. The others that have been targeted by Feinberg are still having their tuition paid by Mommy And Daddy, i.e, the taxpayer.

If a lad is going to college, but Mommy and Daddy are footing the bill - the lad must obey Mommy and Daddy when they say -

"No - you cannot buy a new fully tricked out Alienware M17x laptop with the all of the top end upgrades, which will put the laptop over $5,000 all in. Your 2007 Acer will do just fine. We'll spring for some more RAM, if you really need it ..."

It's kind of like that ....

RBB

yequalsx said...

But we don't want these banks to fail, right? Taxpayers have money invested in these companies and we want to make a profit on this investment. Surely, then, if there truly is a need to retain talent then limiting pay thusly constitutes an unsound policy.

Anonymous said...

Okay EoC, if you won't let Ristaker jet off with his hottie to the South of France, can he finagle two seats on a bus to visit the Citigroup credit-card center in the South of South Dakota - Sioux Falls?

Anonymous said...

1. Failure will occur if they are not profitable.

All of these guys went into 2008 making millions and their firms lost billions. High pay does not assure profits.

You don't need to be paid $20 million/yr. to ask the question "Has the firm taken on too much risk? And if so, what do we have to do to mitigate this risk?"

2. If, for example, there are 100 of these type of positions on the street - you are implying that there are only 100 or maybe 105 people who can do the job. This is not true. There are probably 300 people who could do these jobs - but since there are only 100 seats, they get squeezed out.

Many go on to start boutique firms and etc.

I'm sure that many of the 200 who did not get a seat the first time around will gladly step in at a temporarily reduced rate and get their foot in the door knowing that this TARP restriction will not last forever. They may feel that after it is played out, they are in a position to make more than they would on their own (or make the same, but with less hassle) and/or get to do broader things with the benefit of being part of a multi-billion dollar firm.

It is no different than a firm getting market share via price cutting. After the market share is obtained - the prices get pushed back up to what the market will bear.

Anonymous said...

RBB =

"Anonymous October 23, 2009 12:51 AM"

Anonymous said...

Goldman still has $22bn of govt-g/teed debt outstanding. Please stop pretending they have 'paid back' the taxpayer. They have not. Ditto JPM.

Anonymous said...

And to that last post let me add that Goldman has received $160mm of aid from NY taxpayers for their office move, and are eligible for another $161mm.

Anonymous said...

@ Anonymous October 26, 2009 8:52 PM

Re: the $22bn of govt-g/teed debt outstanding. Why do you think Mr. Kenneth Feinberg is not concerned about this?