Banks have received far more than the government has invested from other investors. You can't just charge to the front of the line from a corporate governance perspective simply because taxpayers are upset. The risk here is that you force the government to nationalize any industry it bails out because normal investors and board members get crowded out of day-to-day business decisions.

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And then you appear on Gawker, miffed that your total annual comp is down 10%? From the record-breaking 2007?

Try being down 100% before you know everything.

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Don't worry, "one of us" becomes "one of them" in a single headline. It's only a matter of time.

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A family supported by one wage-earner is not rich on a $500k income. Only in New York.

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I never based my cost-of-living calculations in LA on the price of living in Beverly Hills. Broaden your statistical sample, New Yorkers.

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Sheesh.

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You aren't suggesting that people take the train, are you? Because honestly, the last thing I need are more uppity jerks on the PATH in the morning.

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Holy cow, I really didn't mean to defend these tools! My only point is that NYC is frickin expensive, so a salary cap that would be fine in the midwest doesn't work in certain cities like NY.

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As for the nanny, even if your salary barely covers the expense, people have them to get out of the house, have a career, and free up time to actually spend it with their friends and families.

And registered speaks the truth about public schools. We have about 2 or 3 good public schools for a city of millions and millions of people. If your kid doesn't do well on the entrance exams, private school or a move to the burbs are your only options.

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You know some teachers, right? Professors? Social workers?

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The fact that your annual net income could buy a vacation home in Alabama (let's say) doesn't change just because you live in New York. You still have that amount of purchasing power. The fact that you spend it in New York instead of Alabama is purely discretionary.

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Let me reiterate--I can't stand bankers!!! But what I don't want is the economic collapse of my fine city if their salaries were to dry up!

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if the bankers didn't want to work for the gov they shouldn't have taken the gov money

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They don't come close to owning enough preferred shares in most of the banks to be majority holders. That would be nationalization, which the government has carefully avoided. This rule is a classic case of attempting to have one's cake and eat it too; you can't run a company unless you own it.

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I believe a marginal tax rate of 50-60% on incomes over $1m is a good idea. What say you? You're the resident economist here. Do you think folks would quit their multi-million jobs in disgust? Would we miss them? To where would they move?

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Congress should pass a meaningless pay cap that has loopholes galore and get back to doing something useful.

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50-60% seems arbitrary. Why not make it 75%?

Taxes need to increase given the wanton spending of our Federal Government. Cashflows must rise to pay for the current profligacy as well as the fiscal irresponsiblity of administrations past. But what is the argument for exclusively punishing the rich in a time of economic weakness?

A lot of people say "they can afford it" without knowing what that means. Taxes are disproportionately paid for by our nation's elite - do they really need more political power? And what is the risk to consumer discretionary sectors, which employ an awful lot of Americans? What is the risk to taxpayer investment in banks, which rely on fee revenue from the assets of the wealthy?

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But what is the argument for exclusively punishing the rich in a time of economic weakness?

Are you arguing for punishing the poor as a solution? I don't need to tell you that wealth disparity is out of control in this country.

Right now, I would assess the risk to taxpayer banks which rely on fee revenue from the assets of the wealthy as close to zero. Where are they moving to?

If you took every CEO or non-CEO (some non-CEOs earn more) and really asked them about how low their pay could go, what you would get is a bunch of men arguing that their dicks must be bigger than the next guy's.

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Liquidate some assets? At what value? I could be wrong, but this feels more like a liquidity crisis than capital problem.

Re: nationalization- Maybe you can't run a company if you don't own it, however you can call a heck alot of the shots if you get paid first (see Chile circa the 80's). The govt can put any stipulation it wants on it's money.

Re: Taxpayer investment in banks: for almost all people it's insured by the government.

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I'm not suggesting we punish the poor. Taxes do, however, need to be fairly allocated across all classes of Americans. Reliance on the rich creates long-term issues with Democracy, placing our individual sovereignty at risk. It also creates economic risks which need to be fairly evaluated.

Agree on the wealth disparity - we're far and away one of the most top-heavy societies when it comes to income distribution. But do we tackle that be levying taxes on the rich or by providing opportunities for the poor? I think the equalizer needs to be in the opportunities provided in our schools, not in the penalties levied by our government. Align the incentives toward giving every American a fairer chance to succeed IF HE OR SHE HAS THE WHEREWITHAL.

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RE: liquidation, I was referring to the supposed travails of the wealthy and making a sarcastic comment that the response is to sell, further depressing asset prices. It was sort of an economist's joke about the expected impact of income caps.

I understand the government CAN put those stipulations on money - I'm not arguing against the power of the Federal Government. I'm arguing about whether or not that power is being properly applied. There are lots of other preferred shareholders of bank stocks - should the Federal Government's investment take precedence over the investments of others? If so, it has dire consequences for future intervention. You're creating a risk going forward that preferred shareholders will liquidate as soon as Uncle Sam gets involved.

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How about the rich pay more taxes. That would be good for the economy. They have more money than they can spend. I'd like to spend it on health care for everyone and good education for all.

The economy is not collapsing because Hermes bags are out of fashion. Do you by any chance belong to that website, the one about dating bankers?

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ONLY ONE PROBLEM. IT'S NOT YOUR GODDAMN MONEY AND YOU HAVE NO RIGHT TO TELL PEOPLE WHAT TO DO WITH THEIR CASH.

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Right. I really don't want this to become about taxation - it's really more about wealth and the government's role in determining how it should be allocated. While there are steps I believe we should take to empower workers to receive a larger share of compensation, this method is ridiculous, arbitrary, ineffective, and wholly designed for media consumption.

If this is Barack Obama's idea of fiscal policy - legislating via PR - we're one fucked nation.

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what i can say though, is that the tax hikes proposed during the 2008 campaign would mean that my husband and i will no longer be able to afford to pay our mortgage. by national standards we make a lot of money, but in ny, we cant afford to raise children.

when we heard about the proposed tax hikes, the first thing we did was stop eating out, stop shopping... etc. we pretty much stopped discretionary spending so that we can save some of our income before the govt takes what they think is "fair". i know plenty of other people in our shoes.

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Look, that's a histrionic pile of garbage. Go get an argument. "I know finance people and they're not smart!" is not a valid basis to attack the points raised in this comment thread about shareholder rights and government intervention. You can't just be MAD OMG BANKERS SUCK!!! and expect people to take you seriously. The fact that Barack Obama does is damning.

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Say it all you want sister. My compensation is totally unjustified because some prick I've never met bought a bunch of debt-backed assets 3 years ago. Off with my head!

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As far as whether or not salary caps should be in place, I simply remind folks- if I go ask the government for any kind of support, whether it be a student loan, food stamps, medicare- what have you- I have to prove my income requires government support.

This issue is different, in that it is a matter of individual v. corp., but salaries are an integral expense of these companies that are asking for support. If these people lost their job because there was no government bail out- they would not be eligible for any government aid programs (usually) because their income and assets far exceeded the cap.

Something to think about...

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"Many of the luxury industries the "rich" solely support are expendable, whereas the industries that low-income to middle class support are an intrinsic part of our economy."

The very minute taxpayers decide which industries matter is the beginning of the end. Economic nationalism, protectionism, and central planning have failed the world economy too many times. There is too much evidence that this sort of thought is deadly for it to be tolerated.

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I don't think Obama wanted to take that stance but he has b/c the people want him to. let us not forget, he IS a politician after all!

I agree that there is a massive issue surrounding wealth distribution. My problem with the distribution as it now stands is that the "wealthy" are paying financiers WAY too much and are getting screwed over. The fee and bonus structure hurt the wealthy by rewarding people who are for the most part extremely replaceable. Charge your fees, that is fine but when it isn't your money you don't get a cut just for making investments.

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you can also compare the money somewhat to the pay for a pro-athlete. being a pro-athlete is a very high risk career... an injury can kill your career instantly, without warning. this is similar to the layoff risk that bankers bear. but at the same time, the compensation matches the risk, and so you never really hear bankers complaining loudly about layoffs.

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i also forgot to mention, that charitable donations will also disappear. i donate a sizable portion of my salary each year (to help the poor), which will i will stop doing if taxes go up.

man, registered - you really got me going. i think i had only commented on gawker about 5 times in the last four years before today :)

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If you are new to a division or company and take a job where that division or company is doing poorly why would you expect good compensation? some prick bought bad assets and now you have to deal with it? tough luck buddy! it might not be your fault but you are the one that has chosen to deal with it.

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No easy answers to those questions. There's no consensus - even among economists - as to how to best structure the money system. My feeling is that nationalization misaligns incentives in a more risky way that privatization does. We're seeing the downside risks to taxpayers of huge bonuses and aggressive risk-taking in the private sector now. The downside risks of nationalization seem more dire, in that it tends to stagnate industries due to a lack of reward or connect business strategy to fickle taxpayer sentiment.

Either way, it's alchemy. And even drinking the wrong potion can sometimes cure you - FDR's a good example of that, in my eyes.

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$500,000 is more than enough compensation for that risk.

Even if you worked 100 hours a week for all 52 weeks, $500,000 comes to just under $100/hour. if you can't live on $100/hr, you have problems.

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if the people in charge are making money for all, super; we'll all be better off

if the people in charge are just shovelling money into their own craws and starving the rest of us, well, that's what starts revolutions

are these people really worth this money? or would it have been more of a stimulus to have paid the workers more and the iic a few hundred million less?

[money.cnn.com]

In 2004, the ratio of average CEO pay to the average pay of a production (i.e., non-management) worker was 431-to-1, up from 301-to-1 in 2003, according to "Executive Excess," an annual report released Tuesday by the liberal research groups United for a Fair Economy and the Institute for Policy Studies.

That's not the highest ever. In 2001, the ratio of CEO-to-worker pay hit a peak of 525-to-1.

Still, it's quite a leap year over year, and it ranks on the high end historically. In 1990, for instance, CEOs made about 107 times more than the average worker, while in 1982, the average CEO made only 42 times more.

The cumulative pay of the top 10 highest paid CEOs in the past 15 years totaled $11.7 billion.

And though the specific individuals in each of those annual top 10 lists changed year to year, many bosses did pretty well throughout the entire period. Citigroup's Sandy Weill, for example, has made $1.1 billion since 1990.

[articles.moneycentral.msn.com]

[www.epi.org]

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in your second point, you have actually uncovered the problem with the salary cap. it isnt really about whether or not you can live on $100 an hour. the issue is, why would anyone work 100 hours a week for 52 weeks for ONLY $100 an hour? that is where the brain drain comes in. bankers are there for the money, and that is all. the salary has to justify the time spent on the job and when it doesn't, they leave. the most talented will not stick around for that pay.

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Wrong on your first point. The outflows of mortage personnel and debt-backed asset personnel are remarkable. Almost every CEO on Wall Street was fired over that! Don't you recall Chuck Prince, Jimmy Cayne, Stan O'Neal, etc.?

Let me give you an example of how insane all of this is. I have no input on or accountability for the CDO/CDS debacle, neither do my superiors or their superiors, and my portion of the business is cash-flow positive. We're profitable, even in this nightmare of a goddamn market. Yet I ate a 10% YOY compensation decrease despite top-percentile performance reviews. Banks are so big, and yet right now the government is incentivizing consolidation, risk pooling, and collective responsibility because it's politically expedient and less expensive to taxpayers. Fuck that! Bite the bullet, put the bad bank on the Federal balance sheet and let guys like me who can actually make money move on.

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also, it's not like the rich ceos are keeping all their money in a safe behind some painting in their office. it goes back into the economy in the form of consumption, savings (which provides capital to banks so that they can loan money to normal people for mortgages, cars, small businesses, etc.), or it is invested which provides capital for business growth (unless they are stupid and hand it over to someone like madoff).

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Where will the pissed-off bankers go in this market? I can introduce you to a lot of my friends who would happily work for ONLY $100/hr. They'd be happy as hell if the hours were longer.

I've been on both sides. I'm a former maid and a former i-banker. Being an i-banker was way better.

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The stimulus plan? We're not talking about that. Or at least we weren't - the conversation centered around the 500K pay limit and what that means for society, future bailouts, etc. I was using my personal compensation as an example of how bank consolidation encouraged by the TARP legislation creates unmanageably massive entities that don't reward success properly.

As for the stimulus plan, I'm fine with it by and large excepting the unrelated wish-list items that Pelosi is attempting to tack onto a bill with broader political support. A more focused discussion of that took place a few days ago. My ideal bailout is centered on tax cuts and contains plans to repay it with revenues.

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Pretty hard, because there isn't a single affected banker stupid enough to talk to the media right now.

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