Monday, September 29, 2008

 

Salary Curbs in Paulson Plan Need to be Spelled Out

The hours spent hammering out agreement between Paulson and Congress(see picture) have produced a deal. Its wider ramifications I would leave to the economists to discuss but the, for me, key political aspect is left opaque. The reason why Paulson misjudged the angry political reaction to his $700bn baleout plan might just be connected with the fact that, as a very fat cat himself, he is part of the problem: the net worth of this former Goldman Sachs CEO has been calculated at $700mn.

The sheer unfairness of the deal is missed by people as rich as this. When millions were made unemployed in the US as jobs fled overseas, there was no talk of a massive multi billion baleout for them; it was only when their own were affected that Hank and co. got their arses moving to producxe a rescue plan. American people, like British people, have been infuriated by the obscene salaries handed out to these so -called 'Masters of the Universe' and, after all, it is pursuit of individual wealth through bonuses which has been the potent cause of this crisis in the first place.

We learn that financial salaries are to be curbed:

In a major concession, the bill will set limits on salary packages for Wall Street executives whose companies benefit from the bill. "The party is over. The era of golden parachutes for high-flying Wall Street operators is over," Pelosi told a press conference.

Well, as a cynical observer of this kind of thing for most of my life, I wonder just how this is to be done? Current reports give no detail but I was not reassured to find that the British device of giving shareholders the ability to question executive salaries, was rejected. People clever enough to devise the fiendishly complicated financial products which lie at the heart of the banking crisis, are not going to be outwitted by mere statements of intent.

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