В связи с новой охотой на ведьм... random thoughts
Да, CEO senior management многих банков и компаний фактически довели свои фирмы до банкротства. Но.
Реально виноваты советы директоров, конкретно compensation committees. It was their fiduciary duty, to establish proper incentive systems that would not reward excessive risk-taking. The CEOs acted simply as rational economic agents. They had no incentive to act otherwise. If I am compensated by taking excessive risks, than that's what I'm going to do! Last time I've checked, the compensation and incentive systems were set up to incentivize, hence it's not the CEOs, but the reckless, careless boards that have to formally carry the blame. However, the rage against the CEOs is also justified, since everyone knows that de facto most of the boards were under direct (CEO is the chairman as is the case with Morgan Stanley) or indirect control from the CEOs. The investors have also screwed up by not taking an active stance in corporate governance issues, considering them a "fad" not worth spending time on.
Now, the bonuses. True, giving huge bonuses to employees whose firms have been bailed out is inappropriate. Moderate bonuses are ok. Huge exit bonuses to CEOs are not ok. However, there is a big media ruckus re: inappropriate bonuses in previous years. Well, that's what it took to keep people! And this is not going to change. M&A bankers will continue to collect multi-million bonuses.
Senators, already on an established track, are now sharpening their knives against a puny $210 bonus pool of Freddie and Fannie. Well, who do you think is going to clean up all this mess, you??? I'm sure that F&F employees with the PIPP and TALF and all the other programs have tons of opportunities in front of them. If one day they all leave, who is going to work??
Yes, the system was corrupt and wrong and could be compared with an appartment full of bugs, but you don't go nuclear on everything just to get rid of bugs. Paulson screwed up big time when he did not bail out Lehman, perhaps letting emotions and "wrath of justice" get in the way.
The journalists quickly grasped that cracking down on anyone getting a bonus is a endless pit of gold and have started mining it ferociously. Не читайте в общем, советских газет по утрам =)
A bit convoluted, but I've been so frustrated with all the news lately, that had to put my thoughts on paper.
Peace :)
Реально виноваты советы директоров, конкретно compensation committees. It was their fiduciary duty, to establish proper incentive systems that would not reward excessive risk-taking. The CEOs acted simply as rational economic agents. They had no incentive to act otherwise. If I am compensated by taking excessive risks, than that's what I'm going to do! Last time I've checked, the compensation and incentive systems were set up to incentivize, hence it's not the CEOs, but the reckless, careless boards that have to formally carry the blame. However, the rage against the CEOs is also justified, since everyone knows that de facto most of the boards were under direct (CEO is the chairman as is the case with Morgan Stanley) or indirect control from the CEOs. The investors have also screwed up by not taking an active stance in corporate governance issues, considering them a "fad" not worth spending time on.
Now, the bonuses. True, giving huge bonuses to employees whose firms have been bailed out is inappropriate. Moderate bonuses are ok. Huge exit bonuses to CEOs are not ok. However, there is a big media ruckus re: inappropriate bonuses in previous years. Well, that's what it took to keep people! And this is not going to change. M&A bankers will continue to collect multi-million bonuses.
Senators, already on an established track, are now sharpening their knives against a puny $210 bonus pool of Freddie and Fannie. Well, who do you think is going to clean up all this mess, you??? I'm sure that F&F employees with the PIPP and TALF and all the other programs have tons of opportunities in front of them. If one day they all leave, who is going to work??
Yes, the system was corrupt and wrong and could be compared with an appartment full of bugs, but you don't go nuclear on everything just to get rid of bugs. Paulson screwed up big time when he did not bail out Lehman, perhaps letting emotions and "wrath of justice" get in the way.
The journalists quickly grasped that cracking down on anyone getting a bonus is a endless pit of gold and have started mining it ferociously. Не читайте в общем, советских газет по утрам =)
A bit convoluted, but I've been so frustrated with all the news lately, that had to put my thoughts on paper.
Peace :)