To answer the question, no chance whatsoever. Events since the last election have been a revelation. Money controls the game in America. No serious restraints will be placed on Wallstreet. Insurance companies will determine the shape of any healthcare “reform”. The wealthy in this country are at this time, untouchable. We all just don’t realize it yet. I for one am finished with voting for the spoonfed candidates given to us by the two major parties. The well-to-do in this country only need to beware of “killing the golden goose”.

All of those organizations are equally guilty of leveraging debt all over the place and making quick profits from reselling virtual bundles in false markets only they have access to.

Only transparency, regulation and limits on indirection in leveraging, reselling and virtual market creation can save us from gambling traders gaming the system.

Unfortunately our government probably isn’t up to that task since the incentive and intelligence necessary for effective reform isn’t there. So sadly it will be up to our children to survive the next wave of financial disaster that comes about as we continue expanding on and codifying systems already so complex that no individual player can comprehend the aggregate global ramifications of their local actions.

It’s time to simplify, dumb-down and make transparent everything these companies do. It should be out in the open… no secret leveraging. No back room bundling! There needs to be one website where what these companies are doing, how they are vested, is public and out in the open. Their “competitive advantage” is meaningless if keeping it means they might bring down our whole economy with their money games.

Playing games with other people’s money should not be rewarded. It just adds a whole new level of complexity that capitalism doesn’t need. No real value is added. No physical product created. It’s like they are playing a private monopoly game, but with our real money!
Stop it. Thanks.

I hope these guests are up to asking the real serious questions on this issue. As Croy and Nandedesuka have already stated there are some real problems here.

I don’t think there will be any change, the game is fixed. Our political system is corrupt and it’s a disgrace.
Bush and then Obama just bailed out the wall street gamblers and the banks while the average working stiff got food stamps and free cheese.

I hope this show will show that, but I doubt it.

WBUR is deleting my postings again.

The postings were not offensive, on the topic of US is opposing to cap financial CEO Bonuses.

Shame on you WBUR.

Gretchen is awesome! can’t wait to listen!

I just found this article by Robert Kuttner, Co-Founder and Co-Editor of The American Prospect, which is just happens to be related to this subject. Would have been nice to have had him on this show.

http://www.huffingtonpost.com/robert-kuttner/listening-to-paul-volcker_b_301300.html

Part of Putney link that important as well and i hope is discussed

But when the White House endorsed the idea, the banking lobby went berserk. It targeted members of the Financial Services Committee, offering campaign contributions to friendly legislators and threatening to support the opponents of pro-consumer members. On September 22, Chairman Barney Frank sent his colleagues a letter declaring that he would oppose any “plain vanilla” language, adding that in his draft of the bill: “Financial institutions will not be required to offer plain vanilla products and services and CFPA will not have the authority to approve or change business plans.”

Testifying the next day, Treasury Secretary Timothy Geithner, never an enthusiast of the proposed consumer agency, said Frank’s changes were fine with him. But of course, the whole point of consumer regulation is to require banks to “change business plans” when those plans are built around insane products such as sub-prime loans or usurious credit cards. The bill is not even out of committee and the bankers’ lobby is having its way.

Frank also took out the consumers protections against car salesman, as well as retail.

Not sure if anyone else had the problem with car salesman and deceptive practices.

haha and we want to export this to other countries.

What Cory said.

Executive compensation is mostly window dressing and not real reform. Lehman Brothers compensation was tied to firm performance and their executive lost a fortune when the firm went under. What difference did it make?

What we need is real bank capitalization requirements and tough limits on leverage. And address “too big to fail.” That might help prevent the next crisis. Executive compensation is a comparatively small issue.

Does Gretchen see a difference between Bank of America and other banks? Did anyone notice the Bank of America TV advertisement last night, I think right before 60 Minutes? Wow, what a grand ad! I believe it sees itself as sort of everyman’s bank.

From article by Robert Kuttner:

Paul Volcker explicitly challenged the very centerpiece of the administration’s proposed reform program, the idea of focusing on “systemically significant institutions,” which presumably would come in for additional supervision, but would be rescued if they got into trouble. Volcker said:

The approach proposed by the Treasury is to designate in advance financial institutions “whose size, leverage, and interconnection could pose a threat to financial stability if it failed.” Those institutions, bank or non-bank, connected to a commercial firm or not, would be subject to particularly strict and conservative prudential supervision and regulation. The Federal Reserve would be designated as consolidated supervisor. The precise criteria for designation as “systemically important” have not, so far as I know, been set out. However, the clear implication of such designation, whether officially acknowledged or not, will be that such institutions, in whole or in part, will be sheltered by access to a Federal safety net in time of crisis; they will be broadly understood to be “too big to fail.”

Think of the practical difficulties of such designation. Can we really anticipate which institutions will be systemically significant amid the uncertainties in future crises and the complex inter-relationships of markets? Was Long Term Capital Management, a hedge fund, systemically significant in 1998? Was Bear Stearns, but not Lehman? How about General Electric’s huge financial affiliate, or the large affiliates of other substantial commercial firms? What about foreign institutions operating in the United States?

And, without using the words, Volcker in effect called for a restoration of the core principles of the Glass-Steagall Act, separating commercial banking from investment banking and proprietary trading. He said:

As a general matter, I would exclude from commercial banking institutions, which are potential beneficiaries of official (i.e., taxpayer) financial support, certain risky activities entirely suitable for our capital markets. Ownership or sponsorship of hedge funds and private equity funds should be among those prohibited activities. So should in my view a heavy volume of proprietary trading with its inherent risks.

Ellen it’s advertising, which is all about selling fantasies. Look at Obama, we were sold on him and he’s not what the adds sold us by a long shot.

As a retired teacher, I now see what a sap I was. All I got were lousy hankies and apples! Why didn’t I see the light and demand bonuses from my wealthier parents? Who would have been hurt if I had erased a few wrong answers and inflated my kids’ test results? After all, what is more important than my bottom line?

Pay bonus caps will do no good. It’s a prospective remedy for a completed crime. The Wall Street geniuses who created this mess have already left the chicken coop. They don’t care about bonus caps. We need to go after the people who actually created the mess. Why can’t the US Attorney General figure out who the real culprits are and sue them to get the bonuses back?

Paul
Asheville, NC

Proposed regulation for executive compensation for all public companies.

All executive employment contracts must include the following provision:
In the event of a bankruptcy filing, or any exceptional borrowing of government funds, or investment by the government, all bonuses accrued for the prior 12 month period will be null and void. All salary paid going forward will be 50% of the base salary of the contract.

Putney, the ad was not presenting the everyman theme so much. That came from a PBS special about Bank of America’s CEO and his journey through the crisis, a special I saw months ago. The ad — I’ll have to watch it again. It takes a lot for me not to switch to music during an ad.
I do worry that as with Obama, Bank of America could be a bank that decides to avoid the moral pitfalls, and a costly ad presents a winning face, and then the original entity has morphed into something else.
We do hear that local banks are responsible.

Why not share the bonuses throughout the company? Give everybody a piece, all the way down to the lowest employee. The people at the top need to SHARE. And at a decent percentage,I would spend my money with any company that takes care of there own.

A CEO is the look out 5-10 years in the future and lead accordingly. Why not strecch pay out? 40% for the current year performace then pay 25,15,10,10% payments based on the next years performance.

There’s a wonderful comic on this topic from Ruben Bolling. Go to Salon.com, click on Entertainment/Comics/Tom the Dancing Bug. Sums up my frustration with the Obama administration’s approach to regulation.

“All executive employment contracts must include the following provision:
In the event of a bankruptcy filing, or any exceptional borrowing of government funds, or investment by the government, all bonuses accrued for the prior 12 month period will be null and void. All salary paid going forward will be 50% of the base salary of the contract.”

You wish. In the event of a Chapter 11 bankruptcy a company goes through a reorganization process. During that time the company needs to operate and be managed. The old management is often retained and handsomely compensated on the rationale that it is in the best position to get the company through during difficult times. As a result, the equity gets wiped out, unsecured creditors get petty change, the labor takes a hit on salaries and benefits. The only groups who make out all right are usually secured creditors (not always) and management. That’s the system of incentives this free market system has. At the same time, conservatives keep harping about the lack of personal resposibility on the part of the little guy. Go figure.

We had a method of controlling high executive salaries. It was a 70 percent income tax rate. Also we limited the amount of executive compensation that was deductible on taxes.

The caller, Keith, obviously has NOT read the founders writing on what they called excessive wealth and pernicious gains.

Try reading Ben Franklin’s “A Critique of Excess Wealth” sometime. He states that excessive wealth belongs to the government that created the opportunity to make it.

what about the fact that congress cut SEC budgets when they leaned on wall street – now they are blaming the regulators

We had a method of controlling high executive salaries. It was a 70 percent income tax rate. Also we limited the amount of executive compensation that was deductible on taxes.

The caller, Keith, obviously has NOT read the founders writing on what they called excessive wealth and pernicious gains.

Try reading Ben Franklin’s “A Critique of Excess Wealth” sometime. He states that excessive wealth belongs to the government that created the opportunity to make it.

Couldn’t agree more. Even Hamilton would turn in his grave if he knew what has become of the system he created. To say nothing of Jefferson and his followers.

Sorry, forgot to put N.J.’s message in quotes.

“We had a method of controlling high executive salaries. It was a 70 percent income tax rate. Also we limited the amount of executive compensation that was deductible on taxes.
The caller, Keith, obviously has NOT read the founders writing on what they called excessive wealth and pernicious gains.
Try reading Ben Franklin’s “A Critique of Excess Wealth” sometime. He states that excessive wealth belongs to the government that created the opportunity to make it.”

Couldn’t agree more. Even Hamilton would turn in his grave if he knew what has become of the system he created. To say nothing of Jefferson and his followers.

Kevin says that there is no proven direct link between compensation and the economic meltdown. He blames it on among other things the social policies regarding housing. Is there a proven direct link between these policies and the economic meltdown (and does it show an effect of greater magnitude than compensation policies)?

It seems to me that the companies are not accountable for the role they claim they play in the economy. There is the moral hazard in socializing the downside and privatizing the upside. A company’s goal is to make a profit and an individual working within the company is incentivized to maximize their own profits. We simply need to set up regulations that require companies to be accountable to the systemic risk they pose. Let companies set policies for how to find, retain and compensate the individual workers. But for the companies, set policies for the outcomes we in society desire (e.g. not to take down the economic system) Eg. require companies to have a much higher level of cash behind their debt. Further the larger the market share the higher percentage of collateral/cash they need to hold. Then there is a protection for society and the companies can determine how to best run themselves.

Executive compensation should also be analyzed in the light of whether these compensation packages tend to make executives give less emphasis to the good of the company versus their own interests. Of course, this cannot be entirely separated from shareholders preference for short-term gains over long-term profitability. I am not an economist, but I tend to think we need revisions to the laws governing corporations which would take these issues into consideration.

Not a bad idea David. They are already paid way more than they need to live and after the 5th year, they will be back to the same salary they have now IF the company performed in the prior 5 years under their superb leadership.

I would like to see a ‘NO bonuses for ANYONE’ plan if the company posts a loss for the year. Even if that loss is related to ‘one time charges’. If you LOSE money you don’t HAVE money to pay bonuses!!!!! Oh, and the bonuses, as part of employee pay, are deducted from earnings as business expenses. Maybe there would be no loss, or it would be a smaller loss, if the company wasn’t paying bonuses with money they did NOT make.

Shareholders actually have no say. Sure, we can vote our proxies but the people on the board decide who will be on the slate. Especially in the big companies, the boards are made up of executives of other companies (being brilliant leaders of course). AND, the BOARD members frequently get ridiculous ‘retirement’ pay if they serve for 5 years.

Ellen sorry your missing my point, All advertising is selling fantasies, they tell us things we want to hear.
That’s the point, to sell us products and in this point it’s Bank of America which has a lot to answer for in light of the financial crisis.

I found Kevin Murphy’s comments to be nothing more than spin. While the bonuses are not the entire issue it is part of how our financial institutions have become these monsters which control way to much of our economy.

Basically our economy now is service and financial based, we don’t make anything and we do not have a productive middle class, in short there is no model for growth here. Not for the majority of Americans.

Sue: “Is there a proven direct link between these policies and the economic meltdown (and does it show an effect of greater magnitude than compensation policies)?”

There was a good piece on NPR (yesterday or Saturday) talking about how the “Global Pool of Money” (the people with money to invest) went looking for something ‘profitable’ when Greenspan kept the interest rate at 1% meaning there wouldn’t be much money made on T-Bills. Where to invest? HOUSING! But, of course these people didn’t want to buy individual mortgages so some jackass came up with the “Mortgage Backed Security” – bundle a bunch of loans together, sell shares and the “Global Pool of Money” is fat and happy. Apparently there were 2 problems with this (other than the obvious “who cares if the loan I make goes bad, I don’t hold it anyway” attitude.
1) There was a lot more money to be invested than high quality loans to sell so the loan quality slid as greed came into play. They had a guy on who worked selling loans. He said it went
from: people having to put some money down AND prove what they could afford …
to: not even asking how much they make or what assets they hold, all it took to approve a loan was some accountant saying a generic person with ‘this’ kind of job COULD make ‘this’ much money. LOAN APPROVED!
2) The housing boom/bust. Buy and flip, make a big profit, buy 2 more and flip them, etc. Oops, implosion.

So, yes, there IS a proven link. The desire for these ‘bankers’ to make a cr@pload of money selling something, ANYTHING, to the “Global Pool of Money”. The more they sell, the bigger their commissions and bonuses. If there had been nowhere to sell “sliced and diced” mortgages, had the local bank (or even a BIG bank if the small bank sold it) had to HOLD the mortgage, those loans that were sub prime, no asset verification, no money down, interest only and whatever other financially stupid things they came up with would NEVER have been made.

All about greed, as usual. We all lose, even the local banks that NEVER made a bad loan. The only winners are the people who sold the MBSs and then only if they were smart enough to put their exorbitant salaries and bonuses in their mattresses.

Steve,

I think sharing may be “un-American”. I think we are supposed to “buck up”, pull ourselves up by our “bootstraps”, and earn our own bonuses (since execs and CEO’s have so obviously earned theirs!).

Most conservative references to the founders are better defined by what they leave out, rather than what they tell.

All of the founders had a deep distrust of entrenched and hereditary wealth.

When Madison opened the Constitutional Convention and was asked to describe the basis for his constitution the FIRST SENTENCE stated that its purpose was to prevent extremes of both wealth and poverty. In his paper “Equality” Madison makes this argument for ratifying the Constitution:

“In every political society, parties are unavoidable. A difference of interests, real or supposed, is the most natural and fruitful source of them. The great object should be to combat the evil: 1. By establishing a political equality among all. 2. By withholding unnecessary opportunities from a few, to increase the inequality of property, by an immoderate, and especially an unmerited, accumulation of riches. 3. By the silent operation of laws, which, without violating the rights of property, reduce extreme wealth towards a state of mediocrity, and raise extreme indigence towards a state of comfort. 4. By abstaining from measures which operate differently on different interests, and particularly such as favor one interest at the expence of another. 5. By making one party a check on the other, so far as the existence of parties cannot be prevented, nor their views accommodated. If this is not the language of reason, it is that of republicanism.”

There is also a common mistake made by Americans living today that somehow the “right to property” is equivalent to the “right to wealth”. Letters between Jefferson and Adams repeatedly show the founders grappling with methods to limit wealth without effecting property rights.

The founders, as it is often cited, followed the social philosophies of the great John Locke, particularly his philosophy of property which was simply that property belongs to the person whose LABOR made made it. The idea of another person living on the labor of another was basically antithetical to the basic philosophy on which the founders based their new government.

They were also VERY aware of Adam Smith’s new ideas about free market capitalism. They were not much taken by it. The founders beleived that the only way the rise of a monied, aristocracy could be prevented from developing and replacing the landed aristocracy they just gave the boot to a method of limiting monied wealth through taxation had to be developed.

Tom Paine’s basically states that everyone was born with an equal right to an equal amount of property but it has been civilization which has created an imbalance and the job of a good government is to attempt to redress that imbalance.

Slavery was the elephant in the room, and Jefferson warned that it would create problems.

It is not by mistake that America’s first millionaire was Benjamin Franklin and that Franklin made his millions totally from the fruits of his own labors, without. He made his money on his writings mostly. Some on his inventions, like the bifocal. But with most of his inventions, he never bothered to patent them, largely because he felt it was immoral to make money off of anything that would really be of benefit to mankind as a whole. But off of the stove that bears his name, he made money,and from his newspaper publishing something at which he worked alongside with his apprentices.

And of course conservatives have the Boston Tea Party all wrong. It was not a protests against high taxes. It was a protest against a tax cut for a wealthy British corporation, the British East India Company. This tax cut gave the massive Wal Mart of its day an economic advantage over smaller American tea traders and sellers and tea shoppes that it sent the American colonial economy into a deep recession, and cause a huge amount of unemployment. Only the ships of the East India Company were targeted.

To go on, the British tax on a pound of British Tea was not all that high. A pound of British Tea was much less expensive than a pound of smuggled Dutch Tea from Indonesia. What the founders objected to was that a wealthy corporation was allowed to finance the political campaigns of representatives in the British Parliament, and then these elected representatives could vote to cut the taxes of that corporation while also voting to increase taxes in the colonies, and then send British Troops in to America to reinforce the collection of those taxes. One of the last living foot soldiers in the Revolution was interviewed fifty years after it was over and was asked why they rebelled and he simply said, we had always ruled ourselves in the colonies before the British sent troops in, and we always intended to rule ourselves. Not a mention of taxation.

And finally read the Declaration and the Constitution. The British levying of taxes is 17th on the Colonials list of grievances. Had taxation been uppermost on the minds of the founders, it most certainly would have had a higher place in their grievances.

Yes, Greed helped. But there are so many factors. One of the biggest factors is social engineering by the government in the form of telling banks to issue subprime loans to people who couldn’t possibly qualify for a loan.

And now the government is doing that again.

Now, US govt is giving out subprime loans
http://www.politicsandcurrentaffairs.co.uk/Forum/peak-oil-economics-environment/75642-now-us-govt-giving.html#post866996

We are heading I think for more woes in our economy. My plan, get out of debt and into things that are holders of wealth in the face of inflating prices.

Sue made a comment about the executive compensation that is on the money.

Before the 1980’s when Reagan lifted the tax deduction restrictions on executive compensation when the tax code was changed, no company could deduct MORE than 25 time the amount that the lowest paid person in the company was paid. This did not prohibit a company from giving more, it simply meant that if a company wanted to give an executive more, that executive would have had to perform well enough for the company to eat the tax deductibility of the amount in excess of that limit.

Barney Frank and Bernie Sanders have attempted to simply return to that tax deductibility limit, but their legislation has been repeatedly blocked by Republicans.

They knew it would be, but they were trying to make a point. For all of the conservative talk about valuing the American worker, the prevalent idea is that somehow the work of executives is more deserving of good remuneration and compensation than the work of the employees. The founders and Lincoln would have taken exception to that, and many things Lincoln said about capital would be railed against as “Socialist” by the current members of his own party. Lincoln simply said that labor was more important than capital and in fact it was labor that created capital and therefore deserved a greater share of benefit than capital did. The self made man in action there.

A small part of Lincoln’s quote is:

“Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration.” Lincoln’s First Annual Message to Congress, December 3, 1861.

“Yes, Greed helped. But there are so many factors. One of the biggest factors is social engineering by the government in the form of telling banks to issue subprime loans to people who couldn’t possibly qualify for a loan.”

I’d say it was the other way around. Governmental policies favoring subprime lending “helped.” But it was the Wall Street who really went at it. Not because the government told them to, but because the securitization of debt removed the risk of loss from their shoulders while giving a chance to make billions.

The hidden cost of high compensation on Wall Street is brain drain. For the best and brightest coming out of b-schools, hedge funds have been the most attractive place to start for the past 8-10 years. This has really negatively shaped our economy by robbing these talented individuals from working in technology, medicine, government, and other areas where their intelligence would have real, positive impact on our society. Executive pay policy for the financial sector really ought to take this incredibly high cost into account.

a good link to read if you wanna know more about what wall street did and how.

http://henryckliu.com/page140.html

maybe congress and the white house should be talking about restating the glass/S act.

In the days of our founding fathers, the wall street thieves of today would have been ridden out of town on a rail wearing tar and feathers long ago!

On the one hand, the issue of executive compensation is a bit of a red herring, as it only represents a fraction of the money pissed away by large lending institutions; on the other hand, some of that phenomenon gives incentives for lenders to play fast and loose with investments/engage in some pretty shaky business practices, and the salaries/bonuses, etc., haven’t seemed to be tied generally to performance. We could probably fix those problems by putting the tax rates where they were before 1980.

The Obama (and I voted for him!) administration has used a lot of tough talk that plays well for populist fodder (and seems more like stump speeches), but he and his administration haven’t implemented anything of value to prevent financial institutions from behaving any differently than they did when causing our economic meltdown. Congressional politicians also seem more interested in preserving their relationships with lobbyists (so they can get the large donations in re-election campaigns) than they do in implementing change.

Gretchen I thought gave a fairly accurate assessment as to some of the problems with our current financial situation. She used a phrase, that seemed to linger in my mind, about financial institutions in saying (I’m paraphrasing) they want privatization in good times and socialization in bad times.

My own experiences with purchasing real estate during the beginning of the instability in our economy–I bought a house in 2001 with a 30-year, fixed-rate mortgage (with a great interest rate) purchased at about $100,000 under what the bank was willing to lend me because I didn’t want to stress out my finances, then I sold it in 2004 at the height of the bubble–do not reflect what many people were doing with ARMS. A year or two later, many people purchased property that was either at the top of what they could afford or beyond, or they took out second mortgages on the estimated value of their property at the height of the bubble. Many also got really greedy and tried to flip their property purchases, which just exacerbated the problem. So, some responsibility can be assigned to consumers, sure, but much of it can be placed with lending institutions; there’s no doubt there was a lot of predatory lending going on.

In managing a stock portfolio, also, I’ve seen some financial advisors wanting to entice me to do business with them propose some pretty unsound practices. I would also be remiss if I didn’t mention the unsavory ways of many credit card companies that amount to little more than loan sharking.

When lending institutions began slicing and dicing loans, bundling them into different bits and reselling them to banks all over the world–not to mention companies like AIG who engaged in insuring their own loans (talk about a conflict of interest!)–then all the problems went into overdrive.

I am amazed at the ad campaigns that bombard us still from banks and other lenders. I hope few are being seduced by such advertising. Those ads also indicate that not much has changed.

I think we are coming at this from the wrong tack. Part of the problem as I see it is the vast disparity between the top and the bottom of the corporate pay scale. I think we should have a general guideline that the top of the scale should be no more than say, 15 times the bottom of the scale. If an executive then receives a bonus that increases his pay above this level all pay levels throughout the organization would have to be increased in proportion. In this way a time of prosperity would benefit all, and a time of cutback will pinch everyone. If the board of XYZ Corporation fixes the available funds for compensation at 1 billion, it should be equitably distributed to the benefit of all. This gives everyone a stake in the success of the company.

Mr. Murphy does not get it!

He acts as though the “bankers” who failed their fiduciary duties to depositors, shareholders, etc. were not paid like waiters. They were not getting below minimum wage. During their work marathons they had perks of transportation, food, etc. on their shareholders’ dime.

The past 30 years has seen corporate criteria decay to the point that they don’t offer their quarterly reports without interim “advice” to institutional & large individual shareholders.

And for the past 30+ years, we have destroyed our good jobs by exporting everything but the consuming.

We’re big enough to manufacture for ourselves & reap the economic & tax benefits of circulating through our domestic economies before being sent out of the country.

We need a real Industrial Policy. Other countries, like Korea recognize what type of infrastructure is needed to maintain a competitive economy.

Example: Broadband speed data from speednet.net today.

Download speeds: #1 – Korea – 21.51 MB/sec, #6 Sweden – 13.20 MB/sec, #28 -USA -6.90 MB/sec

Upload speeds: #1 LIthuania – 8.92 MB/sec,#4 -Latvia – 5.25 MB/sec, #30 – USA -1.55 MB/sec.

28th & 30th – since in 2000 WHO rated our medicare care as #37 in the world, we appear to be stuck in the ’80s as far as economic competition tools.

The only “engineering” that we’ve had is financial engineering from the NYC co-op condo goldrush to the S&L crisis which was built on the same actions as our most recent housing bubble. Packaging mortgages & selling them upstream.

We must have both civil & criminal accountability from Corporate & Government America. From Phil Gramm’s exemption of energy futures from regulation by anybody to the past 8 years of despotic GOP rule, we must have full investigation, evaluation and, where necessary, prosecution so that we know what really happened & not what’s been “reported” as our 4th Estate has become the Entertainment Estate.

Correction: the broadband data came from speedtest.net not URL noted above.

Tomorrow the debate on the public option, here a link to call your senator, congressman, to like them know you want the public option.

just click on the link and find there number

http://www.visi.com/juan/congress/

The accountability issue here is a symptom of a larger societal problem in the business world.

We see the same situation in the corporate world, where CEOs and top executives make huge salaries without accountability:
* when they make good decisions (those that make profit), they’re rewarded with big bonuses.
* when they make bad decisions, several thousand of us at the bottom are laid off.

The average people in this country are in this ever-present situation where no matter how hard we work and how many good decisions we make, we may be punished at any moment, while those who did the bad deeds and who have no need for more money are rewarded with more money and more power.

Thanks for the link, Michael

Tarred and feathered. Hear hear.

Hello,

I’m sorry for the wrong email and pseudonym in this post, but I just wanted to keep my privacy as I’m sure my friends at Goldman would not like what I’m about to write.

You see, I retired from Goldman about 18 months ago, I was a highly paid executive and made ~$10M before I left. As such, I’m comfortable financially enough that I can say, without much worry, the truth as I see it.

The truth is that whatever Washington will do about executive pay at banks will, in the end, not make a difference. We bankers are a smart set of people and we will always figure out a way to get paid. Period.

How do I know this you may ask, well since I worked in this industry I can tell you a few things that many are not looking at with regards to executive pay and whatever silly regulations passed by congress.

First, many banks went public years ago, including Goldman, changing from a partnership structure. So what you may ask, isn’t this to unlock shareholder potential, et al? No, that is foolish, the real reason is that now partners don’t need to worry about putting up their own capital, that is risk their own capital. It is much easier to raise money and do things when you are a public company, including subsidizing losses through shareholders.

Second, let’s face it Wall Street pay has more to do with Rent than profits. I’m talking about economic rent, where, in effect, large investment banks, especially Goldman, can extract a larger profit mainly because of control of the industry. This is one of the great reasons why a career on wall street, well at least with a big bank, offers the chance to make large sums of money. Just think of it, where else could a new graduate from a top school with a liberal arts degree make >$100K or a new MBA make >$400K? Honestly, I know these people as I’m one of them, and honestly I can say that many of these graduates, if they were not on wall street, they would be a Enterprise rent a car in the “management training” program. I just love it!

Finally, this last crisis will give many of my friends the chance to make even more money. How? Well, investment banks now have access to the Fed discount window. This is great as now we can borrow large sums of money directly from the government, at really low interest.

I’m thinking that maybe in a year or two I might get back on board. I’m starting to see opportunities in securitization of insurance products.

Here’s a thumbnail of what it takes, in my view, for a society to be prosperous:

1) An inventive / innovative class; people have to want to invent things and processes;

2) Cross-culturalization, where multiple inventors get together and compare their inventions, and newer \ better inventions are created;

3) Seaports or trade route intersections;

4) Business flowing from invention / innovation;

5) Decent Jobs flowing from business, so people can take care of their families with pride;

6) A reasonably decent life flowing from more people having jobs; and

7) Education encouraging the repeat of the process

Either some force in society sets this in motion, governs the process, and maintains it, or it does not. If you leave it to chance, you might be on top for a while but you will be on top indefinitely. But that is a cost of freedom, when you do not direct people what to do with their lives.

My suspicion is that China will be the next world power because they tell more people what to do, and they are more controlling. More free? Of course not. But more planning, organization, consistency, and coordination take place under their model. We in the U.S. use the “herding cats” model, and there are benefits and costs associated with it.

We’ve needed more inventors for years, and few in our country have paid attention to that issue. If you had enough inventors and inventions in the pipeline over the years leading to continued prosperity, very few would be complaining about compensation.

NJ has certainly made edifying comments as to our history. Thanks.
“Steve Smith” may not have read that section. Bankers will always be able to “take care of themselves” because they “mind” the money, and just as judges have to be paid well enough to be above corruption (one hopes), the same for bankers. If they’re playing the system for their own gain, we have to get out of the system. Perhaps the “civil rights movement” someone alluded to, a sort of boycott of banks, or moratorium on loans and investments, would be a widespread run on the banks. A retreat of capital to our mattresses.
Oh, where are our innovative political activists? Iranians with their Twittering and deceptive moves are putting us to shame.
As to American invention and innovation, consider the cost of American higher education, which must maintain the illusion that they are the only route to whatever it is. The result is if you are in an institution that is looking for ideas, they really want ideas from people with exactly the proper educational path and level. Ideas from outside are kind of a threat; all the contracts that apply to employees don’t apply to outsiders; the company could be sued. First you have to join this association, go to this program for certification, attend this or that national or international conference. And then you find the idea you’ve struggled so long to develop and carried so far would be shaking some supportive columns that everybody depends on for a living. (I am thinking of Samson, the blind man in the Old Testament, who shook the columns of maybe Jericho till they fell… forgive me for being imprecise.)
Perhaps it has always been thus. I cite Bill Gates and Windows. He quits Harvard, camps amidst his electronics, wrestles with IBM, shakes up everything.

It really sounds like what’s needed is a “Food and Drug Administration” for Wall Street. Before a drug gets to market, it gets a stamp of approval from the FDA. Why can’t we do the same with financial instruments and packages? Perhaps the SEC could be the clearing house where newly devised lending practices and determine whether or not those will harm the consumer. I know a Consumer Protection Agency has been discussed, but it seems like innovation needs to be tempered with caution — if a lending practice has the potential to cause great harm to the economy and the taxpayer, it could be banned and regulated.

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