They're All Madoffs

Shutterhand's comment about tasseled loafers on Raw Milk Prices, below, came to mind when I came across this gem in today's NY Times:

A provision buried deep inside the $787 billion economic stimulus bill would impose restrictions on executive bonuses at financial institutions that are much tougher than those proposed 10 days ago by the Treasury Department.

The provision, inserted by Senate Democrats over the objections of the Obama administration, is aimed at companies that have received financial bailout funds. It would prohibit cash bonuses and almost all other incentive compensation for the five most senior officers and the 20 highest-paid executives at large companies that receive money under the Treasury’s Troubled Asset Relief Program, or TARP.

[snip]

The restriction with the most bite would bar top executives from receiving bonuses exceeding one-third of their annual pay. Any bonus would have to be in the form of long-term incentives, like restricted stock, which could not be cashed out until the TARP money was repaid in full.

The provision, written by Senator Christopher J. Dodd, Democrat of Connecticut, highlighted the growing wrath among lawmakers and voters over the lavish compensation that top Wall Street firms and big banks awarded to senior executives at the same time that many of the companies, teetering on the brink of insolvency, received taxpayer-paid bailouts.

[snip]

Top economic advisers to President Obama adamantly opposed the pay restrictions, according to Congressional officials, warning lawmakers behind closed doors that they went too far and would cause a brain drain in the financial industry during an acute crisis. Another worry is the tougher restrictions may encourage executives to more quickly pay back the government’s investments since, in a compromise with the financial industry, banks no longer have to replace federal funds with private capital. That could remove an extra capital cushion, further reducing lending.

[snip]

But some experts on executive compensation warned that the restrictions could unleash unintended consequences, like encouraging banks to increase salaries to make up for diminished incentive pay. Even then, they warned, banks were likely to lose top talent.

“These rules will not work,” James F. Reda, an independent compensation consultant, said on Friday. “Any smart executive will (a) pay back TARP money ASAP or (b) get another job.”

Like Shutterhand, I'm furious. Heck, I've been furious since we started down Ronald Reagan's Road to Ruin in 1980! I'm trying hard not to get emotional about it, because I usually regret that, but Mr. Reda's comment just makes me want to puke. These guys are not worth those salaries and bonuses. They don't know what they're doing. They have loyalty to nothing but their own bank account, and they've been robbing their depositors for decades. Let them leave. Let them get other jobs. Good riddance.

Update: A prof from Harvard Business School had a good article about how executive compensation has changed since the 1980's here.