Wednesday, February 04, 2009
Uber-bank analyst Meredith Whitney really needs to read some of the works of Paul Kennedy and/or Kevin Phillips to understand why some might view today's comments on Wall Street compensation as being not too different from Erin Burnett's views expressed recently on Meet the Press and skewered by new-favorite website The Daily Bail in this memorable ripost:
Ms. Whitney is apparently under the mistaken impression that history began in 1982 and that smart college kids have some inalienable right to move directly to Wall Street after being handed their diploma and then proceed to buy their first of many Maseratis before they've reached the age of thirty.
While it's true that, as Ms. Whitney says, "no one goes to Wall Street to save the world" it is equally true that no one on Wall Street should be permitted to destroy the world...
If, as she continues, "compensation is the motivating factor for our people" and what we are now dealing with is the result of their highly motivated efforts over the last few years, maybe we shouldn't be paying them so much money.
Maybe they're a little too motivated.
It's amazing how someone so smart could be so absolutely ignorant of the bigger historical perspective - skip directly to about 12:20 for the discussion on compensation.
There's more in this summary at Bloomberg:
Wall Street pay is getting scrutiny after New York banks and securities firm paid $18.4 billion in bonuses for 2008 while the six biggest New York-based financial companies lost a combined $42.4 billion and got $90 billion in government bailout funds. JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said yesterday that “pay got a little exuberant.”And ... what's wrong with that?
President Barack Obama will today announce a cap of $500,000 on compensation of top executives at companies that receive significant federal assistance, according to an administration official who requested anonymity.
The failure to pay employees well may drive away “the best and the brightest,” Whitney said.
“If you can’t compensate your employees, they’re going to go somewhere else,” she said. “You’re going to get a different variety of folks who are going to come in.”
They'll somehow be less competent at bringing the system crashing down?