Bankers Get Rewarded (Again)

Some of our good friends, such as Dean and B-Daddy, have been blogging about the limits being considered for compensation to bankers, such as the $500K salary cap. They needn't have worried. There's no real cap at all. Jim Jubak has the details.

By the time I'd finished (reading it), the plan was insulting, a paper cut delivered when Madame Defarge is demanding the guillotine. Here's why:

The cap won't apply retroactively. If your bank has already received its $45 billion in taxpayer money, there's no cap on pay.

The cap won't even apply to all banks that take taxpayer money in the future. A bank that takes billions in "normal" bailout money from TARP II could get around the cap by disclosing pay and by holding a nonbinding shareholder vote on the pay. (It's nonbinding, so why wouldn't a company that wanted to pay more hold the vote? Because they'd be too embarrassed to pay the higher salary if they lost the vote? These companies, embarrassed? Remember the Citigroup (C, news, msgs) $50 million jet?) Only if your bank took "exceptional" assistance from taxpayers in the future would the cap be mandatory. It's not clear how the proposal would separate "normal" from "exceptional" bailout billions, but however the term is defined, the cap clearly affects fewer companies than it seems.

The cap doesn't apply to all compensation -- just to salaries. Banks could still give CEOs huge bonuses, but the bonuses would have to be in the form of restricted stock that couldn't be sold until after the company had repaid taxpayers.

And finally, and this is perhaps the most troubling, the cap, if finally triggered, would apply only to the top 25 or so executives at any bank. In other words, some Wall Street rocket scientist in charge of slicing and dicing subprime mortgages could make $5 million as long as he or she was far enough down the corporate ladder. Makes a lot of sense, right?

The only people being punished are the US taxpayers as we fall deeper and deeper into debt to pay off the bad loans made by these idiots. Meanwhile, the politicians grow fat and prosperous taking payoffs and kickbacks from everyone slorping down money from the government.

It all sounds eerily reminiscent of the end of Atlas Shrugged.