Opinion: Paying for failure
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Today’s editorial about the Obama administration’s move to limit pay for top execs at the financial firms receiving federal loans and investments didn’t exactly stand up for Wall Streeters’ right to live in luxury. Instead, it criticized the limits a bit before acknowledging that they’re a political necessity. The bonuses and perks were draining public support for the government’s rescue efforts -- along with the lack of tangible results -- so they had to be curtailed.
Nevertheless, some readers have seized on one of the piece’s criticisms of the plan: ‘If anything, it could make it harder for banks to dig themselves out of their current holes by driving away talented leaders.’
Here’s a typical reaction from reader John G.:
If Ben Roethlisberger had the same ‘talent’ as these financial giants, the Steelers would have lost the Superbowl to my neighborhood’s Pop Warner team.
Totally understood, but bear in mind that the folks who ran many of these firms aground have already left the building. American International Group replaced its CEOs twice since things turned ugly in 2007. So did Citigroup. (Check out this graphic by Forbes for more examples.) More important, even if you believe the current c-level officers are all a bunch of bozos, the pay limits will drive away potential replacements. If you were running a successful company and making millions a year, why would you take a huge pay cut to help out a flailing bank? Wouldn’t it be ironic if the pay caps improved the job security of top executives on Wall Street by insuring that no one could be enticed to take their place?
AP Photo/Ron Edmonds