At some point it had to happen. It was only a matter of time before Wall Street rebelled against Geithner, Obama, and their plan to rein in capitalism.
For months, Geithner and Obama have been trying to eliminate bonuses, otherwise known as financial incentives for good performance. They have even instituted a Pay Czar (whatever that is) to rein in on executive compensation.
Well, instead of compensating executives with things like bonuses, Wall Street has figured out a new way to get around Team Obama.
Obama and Geithner never said anything about raising salaries. So instead of having things like goals and metrics to determine compensation, banks are now turning to raising salaries to make sure that their top producers and executives get paid.
The New York Times is reporting that troubled bank Citigroup has raised salaries by as much as 50 percent to offset smaller bonuses. On top of that, Citigroup is awarding millions of new stock options to employees to retain top talent.
What do I have to say about it? Good for you, Citigroup.
We live in a capitalistic society where companies and individuals compete. Companies have to compete for top talent to put out the best product. Individuals have to compete with each other for the best jobs.
If someone is doing a bad job in their position, they get fired. If a company is failing, they go out of business. Plain and simple.
That’s where the government overstepped its boundaries. Instead of letting markets and competition figure its way out of the trouble that they were in, it stepped in and tried to take over the banks.
When that happened, some called it a bailout. Others called it socialism. But no matter how you shake it, getting government involved in any industry is never a good idea.
Obama wanted to rein in the culture of irresponsibility on Wall Street by imposing the culture of irresponsibility of Washington.
Not really a good trade.
So when Geithner and Team Obama tried to rein in Wall Street compensation, Wall Street used an old Washington trick, a loophole.
In the end the actual decision makers at the banks should face the music for their actions. Just because someone is a salesman, sits in a back office, or does some work for the company and gets a bonus, does not mean that they should be lumped in with the same folks who made some really poor decisions.
But the administration just doesn’t get that.
Geithner and the Obama administration wanted to fight non-C level employees of banks for about five- and six-figure bonuses when there are tens of billions of dollars unaccounted for in TARP funds.
If people do their jobs, they deserve to be paid. If those people perform better than expected, they deserve a bonus.
While I don’t necessarily support how some banks are being run and how they give out their bonuses, it should never be the government’s role to determine how much someone can make.
It’s simply un-American.
This is supposed to be the land of the American dream. This country is where any man or woman, regardless of their background, has the opportunity to compete in a free society and achieve a level of success that could only be achieved in America.
Let’s face facts. Did people get too greedy? Yes. Did that greed lead to bad decision-making? Yes.
But let’s not throw the baby out with the bathwater. Capitalism has done us right so far, and we should be so fast to abandon its principles of competition.
So when major banks such as Citigroup, Bank of America, JPMorgan Chase, and Wells Fargo decide that they need to compete for top talent, I say more power to them. Let all the banks compete and let the best banks win.
Capitalism at its very best.
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