This story just hit the news: “Pay czar” will not cap compensation, reveal names. (Apologies for using the idiotic Glenn Beck term “Czar” to describe an adviser to the President, but Reuters felt it was appropriate to use Glenn Beck’s framing, so I have to in order to report on it.)
According to the Reuters story,
President Barack Obama’s “pay czar” said on Friday he will not cap compensation for the top employees at bailed-out companies, and will not reveal names, when he releases the first wave of decisions within a few weeks.
If this report is accurate it undermines commitments being made at the G20 to do something about the problem of excessive compensation for executives at financial firms — an incentive to take risks that endanger the world economy.
An example of the problem is oil-futures-trader Andrew Hall. As I wrote here in the post, The Bonuses and the Damage They Do,
Irresponsible behavior leads to bonuses for Wall Street while working hard and playing by the rules leads to unemployment and foreclosure for Main Street.
[. . .] the top bonus-getter this time around is Andrew J. Hall. Hall “earned” it by helping to run up the price of oil last year. Hall is getting a $100 million bonus. (Thanks to previous years’ bonuses Hall already owns a 1000-year-old castle called Schloss Derneberg. Go look at some of the pictures of what these nice Wall Street bonuses can buy.)
Does this report mean that the taxpayers are really going to pay Hall the $100 million he made by running up the price we pay for oil – thus helping set off the recession? Remember, this is taxpayer money paying these bonuses.
If true, this is terrible news. As I wrote in The Bonuses and the Damage They Do,
The Damage Done: While the bonuses are the largest ever, for public trust in their government and elected leaders this may equate to some of the most damage ever. People see these bonuses being handed out, paid for with taxpayer money, and they understand that their money is going out to the very people who destroyed the economy and their dreams. This kind of unfairness and injustice can tear apart the fabric of society. We are seeing elements of this in the disruptions at the Town Hall meetings on health care. People are angry at the way they are being treated, and the corporate right is channeling that anger into further demands for deregulation and favors for a few at the top.
PLEASE tell me I read this report wrong, or that it is being misreported!