$ 3.1billion dollars was paid to the top five Chief Executive Officers of Goldman Sachs, Morgan Stanley, Merrill Lynch, Lehman Brothers and Bear Stearns during the five year period 2003/2007.That’s $ 620 million a year shared by the five CEOs who led their firms either to outright collapse or close to bankruptcy. It should be noted, also, that the excessive compensations were no limited to the CEOs of the five firms. The CEOs of AIG, Citicorp, Wachovia, Washington Mutual, Country Wide and many other failed or semi-failed companies and commercial and investment banks have been equally compensated for similarly miserable performances.
It appears that for the CEOs of all these failed corporations management and investing expertise were not only business school’s skills, but also a manifestation of their superior intelligence. It was this perception of superior ability what led them to think that gambling their shareholders’ resources, without rules or supervision, were not only the best money games in existence but also the best possible way to justify their obscenest paychecks. And why not? While their gambling worked Goldman, Morgan Stanley, Merrill, Lehman and Bear Stearns had combined earnings of $ 93 billion, profits that enriched their CEOs beyond what anyone in his right mind imagined --- this because their compensation was “tied to performance”.
Although I know that Chief Executive Incompetence is more relevant than Executive Compensation, what I am most concerned about in this fast-moving financial crisis is that there is too much talk about the need to approve a bail out package that is so fundamentally flawed that few citizens want and even fewer understand. Not to mention that there is not enough factual information or the availability of a plan B.
At this critical juncture is imperative to get a resolution as to how to fix the problem and postpone for later the urge to deal with the reasons as to how we got here and who must bear the blame. I have the feeling that the American people already know the identity of those responsible. And if the primary concern right now is to prevent the banking system (the credit markets) from collapsing, why is it that the experts dealing with the issues insists on a proposal (a bail out package mixing rotten apples with good apples) that is designed to invest taxpayers money in banks and firms notorious for their mismanagement instead of placing these funds with banks throughout the country that have been prudently managed? There are more than 7,000 commercial banks in the United States and 90% of them (the good apples) are not contaminated by sub prime loans and thus perfectly able to maintain the credit market going.
I admit, I am frightened by the thought that this crisis, one that is primarily a banking crisis now will rapidly become an economic and financial crisis and will wind up being significantly more costly and painful than what is currently predicted, especially in the jobs and financials markets. And of course America’s middle class will have to swallow the costs of a bail out package that is huge in dollars and promises and shockingly poor in assurances that an efficient follow thru is in place.
HZ
It appears that for the CEOs of all these failed corporations management and investing expertise were not only business school’s skills, but also a manifestation of their superior intelligence. It was this perception of superior ability what led them to think that gambling their shareholders’ resources, without rules or supervision, were not only the best money games in existence but also the best possible way to justify their obscenest paychecks. And why not? While their gambling worked Goldman, Morgan Stanley, Merrill, Lehman and Bear Stearns had combined earnings of $ 93 billion, profits that enriched their CEOs beyond what anyone in his right mind imagined --- this because their compensation was “tied to performance”.
Although I know that Chief Executive Incompetence is more relevant than Executive Compensation, what I am most concerned about in this fast-moving financial crisis is that there is too much talk about the need to approve a bail out package that is so fundamentally flawed that few citizens want and even fewer understand. Not to mention that there is not enough factual information or the availability of a plan B.
At this critical juncture is imperative to get a resolution as to how to fix the problem and postpone for later the urge to deal with the reasons as to how we got here and who must bear the blame. I have the feeling that the American people already know the identity of those responsible. And if the primary concern right now is to prevent the banking system (the credit markets) from collapsing, why is it that the experts dealing with the issues insists on a proposal (a bail out package mixing rotten apples with good apples) that is designed to invest taxpayers money in banks and firms notorious for their mismanagement instead of placing these funds with banks throughout the country that have been prudently managed? There are more than 7,000 commercial banks in the United States and 90% of them (the good apples) are not contaminated by sub prime loans and thus perfectly able to maintain the credit market going.
I admit, I am frightened by the thought that this crisis, one that is primarily a banking crisis now will rapidly become an economic and financial crisis and will wind up being significantly more costly and painful than what is currently predicted, especially in the jobs and financials markets. And of course America’s middle class will have to swallow the costs of a bail out package that is huge in dollars and promises and shockingly poor in assurances that an efficient follow thru is in place.
HZ
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