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All Pinzur, All The Time

Friday, February 13, 2009

Talent or TARP: You Make the Call

As every media outlet, clothes outlet, and electrical outlet has noted, the United States of America and the rest of the world is currently in the midst of a severe crisis. Does not the term crisis mean enough, let alone having to note that it is severe. Have we ever seen a crisis that was only minor? Executives of these financial companies have claimed that the financial crisis is across their industry. One caveat the government is looking to require on said companies who are fighting for TARP money, is capping salary and bonuses. This is stemming from many Wall Street firms doling out billions of dollars in bonuses at a time when the firms have performed embarrassingly awful. One of the problems the financial executives are claiming with capping pay is that those companies will lose their top talent.

If this issue is industry-wide epidemic, would not each company be stuck with requiring TARP funds and therefore a cap would be instituted on each company, and the talent would have no where to go. Also, if we are saying if a company is not interested in taking TARP funds since they have maneuvered themselves in a way to be solvent without TARP funds, and therefore not have to cap pay, should not those companies benefit from this? These companies are not asking for financial help since appropriate financial constraints must already be in place. These are the companies that should succeed.

Meanwhile if the Bank of Americas and Citibanks of the country are scared to lose top talent due to financial constraints, then they need to choose between the TARP funding or not. These companies inappropriately exposed themselves, and the top personnel permitted certain employees to continue participating in deals and transactions that benefit themselves in the short-term and are not in the best interests of the company and shareholders, and without the proper review of transactions, top management should have to deal with the consequences.

We are supposed to be living in a free market society. If it were a free market, these banks should be allowed to fail. Now, I agree that we need to help with bailing out these illiquid banks, but requiring certain restrictions is the least of what Congress should be requiring. The problem stems from the prior use of TARP funds where it was given to each company with little to no restrictions and the use of the funds are unknown while the bill is passed on to John Q. and Jane M. Taxpayer. Pay restrictions capped off at $500,000 is a fair amount while the company’s loans are outstanding with the federal government.

And then there was this article published in the New York Times about how $500,000 is a lot of money for much of the country, but $500,000 in New York City just does not go as far. Although I concede their argument that $500,000 does not go as far in New York City as it does elsewhere in the country, but the suggestions as to where they spend their money are ridiculous. Stating that their way of life requires multiple lavish lifestyles most of us will never know of outside of television. Once again, our economy and country is encountering an economic period unseen since the Great Depression, that if they are to lose some of what they would live as a normal lifestyle when they are laying off thousands of workers who now can barely afford to live at all, is a completely asinine argument. Some of the arguments are $35,000 on evening gowns for the social parties they apparently have no choice but to attend, $12,000 on a personal trainer, multiple Brooks Brothers suits at $1,000 each (since last years suit is no longer good), and a chauffeur between $75,000 to $125,000. These executives should have to decrease their spending in this economy, while many of the rest of us struggle to live, until these companies can pay off their several billion dollars of loans back to the federal government, and should have to deal with the consequences of their indulgences. Does anyone else think this article was written by the CEO of the New York Times who has a few friends in the banking world? This article is inane and the New York Times, one of the world premier newspaper, should apologize to its readers and the rest of the country for publishing it. It belongs in the Enquirer well before it should be in the Times.

http://www.nytimes.com/2009/02/08/fashion/08halfmill.html

1 Comments:

  • Good post, I 100% agree and can only think about a former boss of ours having a lavish office in Colorado, commuting to Chicago once every couple months and pulling huge bonuses while we got nothing..

    By Blogger CKBigBoy, at 8:44 AM  

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