Away we go.
Let me express my irkedness with this inevitable populist rhetoric from Obama:
That "nearly $20 billion" came from the NY State Comptroller, who was looking at bonuses paid in New York City and environs, motivated by the notion that those bonuses are part of the NY State and City income tax base.
So, a few points - that figure does not include the non-New York operations of, for example, Bank of America, a bail-out recipient.
It does include the bonuses of the NY office of foreign firms, although I did not notice the US bailing them out.
It includes any firm with an NAICS 523 classification code, which is to say, any NY State or city based hedge fund, private equity group, NYSE specialist or mutual fund. Again, I don't recall such firms petitioning for a bail-out.
Finally, even among the firms that did take bail-out money it is not unreasonable to make a distinction between the bonuses received by top management (OK, top mis-management) and the bonuses received by the shock troops down the line. The original TARP legislation singled out the top five executives for special compensation rules, and I certainly agree that the question of why Bob Rubin and the top crew at CitiGroup are getting might deserve bonuses is a legitimate topic of discussion. But I have little doubt that somewhere in Citigroup there lurks a foreign-exchange trader who was utterly divorced from the decision making behind the mortgage melt-down, was very profitable, earned a large bonus, and could find employment at a bonus-paying hedge fund in a matter of hours. Does it really strengthen CitiGroup to deny this person the bonus they would have received in a normal year? Federal meddling will have much more impact on where these people work than it will on how much they get paid.
Given the resources of the White House and Treasury I don't think I am asking too much when I implore them to use the bonus figure for firms that actually received bail-out money when engaging in their populist posturing, rather than a NY State report that mixes apples and oranges.
That said maybe the research effort would be utterly wasted, since apparently this is just populist posturing. From the WaPo:
Obama's officials have said they will clearly lay out the conditions for any government investment. While relatively healthy firms are unlikely to face stiff restrictions on executive compensation, companies that need more dramatic government assistance would face more punitive terms, a source said.
Under the original rescue program approved by Congress in October, executives at financial firms for the first time faced federal limits on their multimillion-dollar pay packages. But those restrictions were unlikely to significantly reduce executive pay, analysts and banks said at the time.
The law largely focused on banning "golden parachute" payments to departing executives under certain circumstances. But most banks participating in the Treasury's capital purchase program were permitted to offer senior managers severance packages worth up to three times their average annual earnings. That amounts to a very large sum in most cases, the analysts said.
THIS IS MORE LIKE IT:
Sen. Claire McCaskill proposed a law on Friday that would prevent executives from making more money than the U.S. president until their companies no longer rely on the $700 billion Troubled Asset Relief Program (TARP).
McCaskill, an early endorser of President Barack Obama's candidacy, gave an angry speech on the Senate floor in which she said an average of $2.6 million dollars had been paid in bonuses to executives from the first 116 banks that got money from the TARP rescue plan.
Well. In the longer run, restricting compensation may be a good way to force banks back to their traditional businesses of taking deposits and making loans; executives who want to run a hedge fund and be paid accordingly can quit and go do so, without implicit government support or FDIC insurance.