In particular, Feinberg’s plan to limit cash compensation and require most bonuses to be paid in stocks is a good way to turn bankers’ focus to long-term gains. The plan is certainly not a silver bullet, but I think he’s done a great job working out a plan to eliminate the worst excesses of Wall Street firms, while still understanding that he needs to allow for competitive pay and incentives for success.
Listen to the Feinberg interview below, or click here for the story at NPR:
Nobody was forced to. Some decided that they needed to in order to make their customers feel secure, so they were between a rock and a hard place.
But if you've got government money, you've got government money. By the way, TARP came in $135 billion under budget. Instead of simply saying there is $135 billion we don't need to borrow and putting the program to bed, Obama wants to spend it elsewhere.
For the sake of a complete equation, we should also include any accrued retirement earnings.
A private sector guy may have a spectucular year one year and make a million dollars. That million dollars is partially for current consumption, but largely for funding a retirement. He probably doesn't have a pension waiting. And in my private sector experience, that million could turn into zero next year if performance isn't sustained.
The government guy may make $150K, but he will likely make at least $250K for as long as he shows up to work with a warm body. I'm familiar with a couple government agencies, and performance-related dismissals are nearly unheard of unless it is an egregious case. Plus, he will probably make at least $100K yearly in retirement from the pension we pay him, which, if he lives for 30 years beyond retirement, has a cash value of at least $3 million.
With that said, we shouldn't feel for the guy making a million or the guy making $250K to be sure. But just wanted to point out that anytime you do a salary comparison, you should also count entitled retirement benefits.