I know that there is a lot of blood in the street and it is a very painful time for many who have taken big hits recently in the market. Many of my smart friends cashed out and I hope stayed out. Hope we don't see flying lessons any time soon. With Richard Grasso's 187 million dollar pay package from the NYSE fresh on my mind, I started looking up some of the executive pay packages of the CEO's who have been in the middle of the current crisis - according to the AFL-CIO website. These are 2007 figures:
Richard Fuld - CEO Lehmen Brothers Holdings Inc.
$22,052,273
Martin J. Sullivan - CEO AIG, Inc.
$14,330,736
E. Stanley Neal - CEO Merrill Lynch
$24,306,586
Daniel Mudd - Fannie Mae
$14,231,650
Richard Syron - Freddie Mac
$18,289,575
Although I am sure that these fine gents were worth every penny of compensation, I am reminded of the old adage that the easiest way to rob a bank is to own one.
*
Yosemite morning
Tuesday, September 16, 2008
Wall Street - Greed Is Good
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2 comments:
Thought that you would like to see today's Opinion Page piece from the New York Times on the current and spectacularly tragic "bubble burst." As a senior-level banking and finance attorney for over 25 years, and knowing your own backgrounds, I think that you will only agree with the "gut-feeling" which I had for many years (while doing approximately $20 billion in lending facilities of every stripe and complex "derivative" variant, at the highest level)that the industry was a "playground for abuse" and should be "regulated to the teeth." We (with Citibank in the lead) spent years in litigation, chipping away at the Glass-Steagall Banking Act of 1933 in order to tear down the (clearly needed) "wall" between the commercial lending and the investment banking sides of financial institutions. Successfully, I might add. And with the inevitable - if "long-time-fused" - and predictable bad results. The regulatory safeguards to the financial markets which the New Deal put into place were, first, "balkanized," and then, particularly under Reagan, "demonized" until they were basically eviscerated. Again, with predictable results. The S&L Crisis of the 1980's followed the ideologically driven deregulation of that industry with the passage of "DIDAMCA" in 1980, and produced a roughly $160.1 billion "bloodbath" which the taxpayers were then saddled with. Now, as "The Great Communicator" and figurehead for "Its Morning In America” used to say, in his folksy “Norman Rockwell” manner, “Well…[here][we] go again.” Once again, ideology trumps (hard) reality, with the inevitable results. Laissez-faire economics – that Eighteenth century “wet dream” that people and markets, left to themselves, would always, in the end, produce “the greatest good for the greatest number,” always turns out to have been a compensatory and rationalist wish-fantasy for the bloody, emotional, ideologically driven Seventeenth century. It is, if you will, “whistling past the graveyard” after a particularly awful night. But you cannot avoid either taxes, or death.
“That government is best, which governs least,” said, of all people, Thomas Jefferson.
One hundred and eighty years later, this was translated and corrupted – ignoring the fact that, without at least a minimal amount of governmental control and social regulation, it is chaos which is ushered in, and not the “Earthly Paradise” – into Reagan’s “Government is not just a part of the problem, it IS the problem.”
“I see,” said a very practical Jewish friend of mine in New York (presently the Chair of Litigation at the first-level and very “white-shoe” firm of Milbank, Tweed, Hadley & McCloy, primary counsel to David Rockefeller and what is now the J. P. Morgan Chase Bank), “in other words, if everyone acts like a pig, we’ll have a society fit for angels.”
[Pause, and lighting of cigarette. “Click” of lighter.]
“Sure.”
Let’s all watch the show, with grim recognition.
Best,
J.H.
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