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i don't get the outrage. if i borrow an exceptional amount of money, there are certainly terms attached to it. there are certainly talented individuals willing to work for 500k/year and the potential to have millions in options. if the outraged can find someone willing to pay them more, god bless them and good luck.
if the stronger banks drive the weaker banks (with value priced leadership) out of business, that's fine too. i don't think we are going to continue to see such mega consolidation after citi and after bank of america. there is probably a sweet spot beyond which further growth limits your ability to manage disparate interests and divisions well.
obviously ymmv
I think the whole idea of the government bailing out bad business models with my tax money is unacceptable.
I would much rather have all the executives fired. Then bring in executives from thos businesses that didn't fail and pay them what every they command.
Will that happen? Of course not. Instead, by limiting the pool of executives able to fix these companies to only the executives that broke them is like hiring the same incompetent roofer to keep coming back and "fixing" the job.
Nobody from good companies who didn't fail will come in and fix these companies. You are left with a pool of failed execs.
If you want fresh, good blood running these companies, you can't tell them how much money they can make. They won't come.
Look at primary care.
If given the option between two employers, one pays you 10X more, the answer, for most would be easy. Otherwise we would be paying each other in smiley faces and pats on the back.
Smiley faces don't pay the bills, unless of course, you accept my smiley face for you as payment in full.
I would look at it another way; maybe we need to force all these bankers with their immense talent to go work in other sectors of the economy. Maybe Wall Street has been attracting all the talent and that is detrimental to other areas of the economy like manufactuing.
From my perspective, how do you judge when someone is talented anyways? These guys couldn't see a train wreck coming or figure out they were lending money to people that had no income or assets. I would tend to tag someone as brilliant who could see this approaching disaster and guide his/her bank on a safe course; not these idiots that became blinded by the money and made short sighted and dumb decisions. There has to be some downside for these jokers, just as there are big upsides when they succeed. Of course the guys at GE who want to have the same rules would be for allowing bonuses, especially GE capital may be begging for some capital soon itself.
Finally in which universe is 500 grand a year not enough money?
The best and brightest are needed to lead in many areas other than banking. Why are the Big 3 auto execs still around, saying "woe 'R' us"? Why throw TARP money at a private equity firm from which shares cannot be purchased (i.e.Cerberus Private Equity, majority owner of Chrysler and GMAC, formerly GM's financing arm - also with a large business in residential mortgages/HELOCs).
Then there's the MNB... *sigh* So much to do, so few qualified people to do it...
The government is completely irrational. Would a bank give free money to the segment of population with the worst credit? Of course not. But that's exactly what our ridiculous government morons are doing. They are printing money like crazy, trillions, to throw at bad businesses with bad business models.
We should let them fail miserably and encourage the good ones to thrive.
With that said, now that the government has decided to give all the bad banks free money, by capping the salaries, none of the good bank executives will even consider jumping into their ship to with their great management skills.
You are left with bad executives managing bad business models with my tax dollars.
Perhaps a rule should be instituted. No executive that has worked at a TARP bank can accept more than 500K, but if new execs are hired from non TARP banks, they can collect as much as they want.
I would be A OK with that.
Otherwise, we are dealing with idiots giving money to idiots and me, the idiot tax payer accepts it as the law because the idiots say I have to.
For now they need to quit with the mega-salaries because it's pissing everyone else off.
The reason the economy is collapsing is because it has to. When houses sell for $500,000 when they are only worth $250,000, thats fake money based on fake assets based on real debt.
Spending $5 trillion tax dollars will not make a house worth $500,000 again. No matter how much you spend.
I am going on record now as saying there isn't a policy in Hell that will get us out of this economic mess by spending tax dollars. All it does is take money out of private hands and redistribute it through government hands.
And I know I can spend my money much better than the government can spend my money.
Let the bad companies fail. Let them wipe themselves out, declare bankruptcy and start over. And let the strong ones hire good employees and grow.
If you can't pay good blood what they command, they will never come offer their advice.
I think you really need to sit down and read the history of the Great Depression. The fact is Herbert Hoover made borrowing much more difficult at the exact time it was needed. The general consensus is it worsened (or pushed the US into it) the Depression. Remember FDR and his public works projects. I am not saying money wasn't wasted then. But, the opening of the public works projects gave a jump start to the economy (yes so did WWII but by far the worst of the depression was over by then). I must say much of our national park infrastructure, Tenn valley works, Hoover Dam are from that era. Your proposal is essentially what Hoover did. We know how that ended. You also fail to understand that ALL of the five major investment houses are either directly or indirectly (through being bought out) have TARP funds. Just where are these must have execs gong to go? The answer is nowhere. you also should read up on the Glass-Steagall act and how it was gutted by Phil Graham et alin the 1990's. To be fair and apolitical this was on slick willie's watch. Ole Phil needs to retire somewhere and not do any more damage to this country than he already has done with his screwed up policies.
"The fact that the Depression dragged on for years convinced generations of economists and policy-makers that capitalism could not be trusted to recover from depressions and that significant government intervention was required to achieve good outcomes," Cole said. "Ironically, our work shows that the recovery would have been very rapid had the government not intervened."
http://mjperry.blogspot.com/2008/11/some-lessons-from-great-depression.html
Again I think you need to do a little reading on this subject. The average recessions from 1900-2000 are around 13 months in duration. The Great Depression was 40+ months in duration before FDR was in office. The depths of the depression (as evidenced by national output) was in 1930-1932 under Hoover's tutelage, in which his policies mimiced what you proposed. Look, I don't want the scumbags who got us into the mess to get TARP money anymore than you do. I also don't think the inducing the second great depression is the answer either.