I reported many stories for USA TODAY on the Justice Department's 9/11 Victim Compensation Fund and its administrator, the experienced New York negotiations lawyer Kenneth Feinberg. He did a fine job. Now he's President Obama's executive-pay czar in connection with the Treasury Department's TARP bailouts of banking institutions. And again he's demonstrating an instinct for fairness as well as for politics.
Feinberg today is imposing mandatory cuts amounting to 50% in the exorbitant compensation of top executives at the biggest financial institutions that have received taxpayer funds and have yet to pay the bailout money back. The move will strike a populist chord with a public that has been seething for months about the absurd and out-of-touch way these executives compensate themselves. The government may not be able to touch the insiders at Goldman Sachs and other firms not now covered by TARP; their billions in bonuses will continue to stick in the collective national craw. But taxpayers want to see the government asserting itself as the de facto owner of other giant institutions that royally screwed up their own balance sheets and the economy of the world.
It was amazing to see Sen. Mitch McConnell, the lemon-faced Kentuckian who's the top Senate Republican, endorse the compensation limits. If even Republicans are saying nice things about this obvious governmental intervention into free markets rather than denounce it as socialism, the political currents must be running mighty strongly against the fat paydays for the overweening incompetents of the financial world.
Effective take-home cash at the TARP-dependent banks will now be limited to $500,000 a year (additional cash can be deferred) -- a munificent sum in the eyes of most earners, but chicken feed to Wall Street. Complicated new rules will restrict compensation in stock, too.
Opponents of the new regulations say they will cause the most talented people at the TARP banks to jump ship for more money at the unregulated institutions. My answer is: What talented people? We're talking about the Masters of the Universe whose blind hubris ran their companies into bankruptcy or near-bankruptcy. Anybody who would hire these demonstrated losers is asking for trouble.
Further, it's hard to identify sympathetically with professionals who have chosen a career of making money by, well, making money -- figuring out ever more arcane and allegedly ingenious ways for their institutions to invent profits, and taking a big cut of those profits in the form of bonuses, a corporate-jet lifestyle and multimillion-dollar salaries.
What real value do any of these institutions add to the economy? What do they produce? Their money comes from other people with money, who go on to resell bizarre products to even more people with money until the ultimate consumers with the least money and sophistication buy these investment products and in many cases lose everything while the originators walk away laughing.
Try getting a real job and making something the world needs, guys. Meanwhile, as you labor on at $500,000 a year, try your best to make the living room rug in the Hamptons last another year.
