Being A Deserver Is A Lot Like Being A Decider

Believe it or not, there are people out there who are trying to explain why the guys at AIG (and Goldman Sachs and JP Morgan) deserve their bonuses/deferred compensation/ransom money for starting the financial wildfire that threatens to burn down the whole country.

Their numbers are few, but the rhetoric is strong, the tone is aggrieved, the righteousness is sanctimonious. "You people are dead wrong", they assert. "We're not going to take it any more."

I'll have to admit, I see why these people got to be executive vice presidents or so called economic whiz kids - it takes a well educated mind and a stupendous amount of motivation to concoct the elaborate straw man arguments these guys come up with. It is as if they are trying to maneuver us around the scene of the derivative wildfires that destroyed all the equity in our homes without letting us stare the charred remains of our own financial lives.

Being a deserver is a lot like being a decider - it's one of those things that can't be earned. You have to confer it on yourself.

This means if you are an auto industry chieftain who hasn't figured out how to convince the O-Team in D.C. that letting the domestic transportation industry die is a "systemic risk", they will give you your gold watch (and parachute) and tell you to clean out your desk.

I can see that President Obama is a dispassionate decision maker. He doesn’t seem to have any particular loyalty to a position, but to the logic behind "why this position is important." Which makes the disparity between the way his administration has treated Wall Street execs and the way they are treating the Big Three auto execs make even less and less sense.

Either Obama believes in the Deserver Doctrine - "I am the only one capable of deciding what is best for me and my company, despite all evidence to the contrary that may exist, and am not to ever be to judged, questioned, or doubted" - or there is something so bad in the banking system's books that bribing these guys to stay on and start more fires, the way they do in California to keep wildfires from spreading, is the only way to have a chance with this God awful mess.

You have to live in a bubble to feel the way the deservers on Wall Street do. I've dubbed them the "double bubbliers" (pronounced DOO - BLAY BUBE - LEE - AY - an extraordinary pronunciation for extraordinary people) because they live inside two bubbles. Not only has their lifestyle been unaffected - these people's outlook on their future is unaffected too, as though, despite all the financial carnage and the evaporation of value in the United States, they don't have to make any adjustments to their career paths, or their business plans, or their retirement plans.

The Double Bubbliers are not just symbols of a class divide between the haves and the have nots; they are a symbol of the way the nature of the relationship between the deservers and the deserve not's are finally being revealed in full detail. President Obama has to come up with a better reason than the ones he and his team have been giving us as to why he's standing with the deservers, because being on the wrong side of this is like wearing a capital "E" for elitist on your chest.

Fargo, North Dakota was nearly washed away by flooding last week. The Red River was the highest it had been in decades, and was threatening to set a new record when it crested on Saturday. The ENTIRE community - rich and poor, working and jobless, young and old, tired and tireder - filled sand bags, transported sand bags, and stacked sand bags against the river's onslaught. I don't have any visual evidence of this, but I'm sure an enterprising reporter looking for an angle could find a few bankers who put their boots on and stood next to their borrowers as the whole town toiled frantically day after day to hold back the rising waters.

The next time somebody starts shooting at our soldiers fulltime, we will wish we had GM and Chrysler and Ford - domestic automakers are the only place you can turn out mass produced tanks and light armored vehicles in a hurry. "Strategic strikes" haven’t won a war yet - bodies on the ground are the only way to bring major military conflicts to an end. I would hate to think we’d have to order our light armored transports from KIA, or beg Toyota to retool so they can build us some tanks.

We are throwing trillions out of the back door of the Fed - why is it so hard to send the 50 or 60 billion to Michigan? If their unemployment rate gets any higher it will be hard to get the state's economy back on track. If this industry disappears, or shrinks severely, it will be next to impossible. Can we as Americans in good conscience stand by and watch millions of our fellow Midwestern citizens get left out in the cold for being a part of the food chain of a failed industry while we hock everything we've got to keep the deservers living in high style, deservers who are also a part of the food chain of a failed industry?

Unless our deservers can get off of their high horses and out of their high rise mind sets, and figure out how to become preservers in a hurry, they may not get enough help from the rest of us when they need it the most to keep the whole financial system from going up in smoke.

Mr. President, that means you too.

Acknowledging the idea of the White House "bubble" is cute, but since you went to the trouble of keeping your precious Blackberry, why don't you use it. Call some people who don't sit at government desks all day so you can get some perspective on how bad all this looks to the deserve not's.

Public Wants Wall Street To Bleed A Little More

President Obama will have his first test this week. He doesn't like the executive compensation restrictions inserted into the stimulus bill last week by the Democrat Chris Dodd and his cohorts in the Senate, but he's going to have to sign it anyway. I hope he doesn't waste any time this week barking into a microphone in the middle of a cornfield somewhere about why we need to be worried about paying Wall Street's foxes enough money to guard the public's hen house.

The American public - the same people who are tired of being laid off, the same people who are tired of shrunken retirement and investment accounts, the same people who are tired of rate increases on credit cards they pay on time from some of these very same banks when we have the lowest interest rate environment since 9/11 - this American public just does not want to hear it, especially not when it can still see the feathers falling from the jaws of these foxes.

The public wants a little blood. They want to see some sort of shared suffering. They really want to know - what is so god awful important about this particular fraternity of self-important white men that not one hair on the head of their financial chinny chin chins can possibly be exposed to harm? That their earning power cannot possibly be reduced by one dollar? That their personal lives cannot possibly be allowed to go into a tailspin, the way it has for millions of other Americans who were also employed by insolvent firms, but in other industries, industries that didn't get bailed out?

There is no crime in being wrong. Some of the greatest innovations in our history came from men who were wrong way more often than they were right. But there is a crime, in this case, a crime that seems to go against the very laws of nature itself, to be so hideously, horribly wrong and suffer no consequences that come even close to matching the proportion of the mistakes that were made.

This inequity is where President Obama needs to start learning how to put the "bully" in his "bully pulpit" and use it often for items that benefit the public at large. If the rest of us can suck it up and be good patriots, why can't the guys on Wall Street do the same? Are they only into being "Americans for America" when money is involved? Is their sense of honor and duty to preserving a marketplace that has made them rich based upon some sort of conditional quid pro quo, the way it was for the Benedict Arnolds of the world?

There is no moral high ground in this situation. We've all lived high on the credit hog as a nation for the last eighty years, so blaming where we are on any one president who served in the last thirty years is illogical. We believe in credit more than we believe in freedom. And for some of us, who have no other way to conceptualize life, credit is freedom - the freedom to enjoy what we want today.

The White House has been making overtures for days that these new executive restrictions have gone too far, and will create a "brain drain" on these firms just when they need these people the most, because they will leave for foreign banks and hedge funds.

Really?

I know somebody in the White House must subscribe to Forbes and Fortune. Our nation's leading business magazines don't print an issue these days that doesn't lament the loss of these exact same jobs. What I'd like to know, from those who do executive searches for financial services industries, is whether or not they are seeing any increased demand for candidates. Come to think of it, my old neighbor is a recruiter for financial services candidates with quantitative backgrounds - maybe I'll give her a call this afternoon.

There just aren't that many jobs out there in any sector. And all of these people that our bankers deem to be such key employees all came up the same way - up through the ranks. Which means there are second, third, and fourth in command employees in every trading department in the company who are thoroughly familiar with the proprietary trading strategies and positions their firms have, employees who are eager for a chance to prove themselves, even with the potential for drastically reduced bonuses, as the head of a major trading desk.

If President Obama is as good at reading the public's sentiment as his people says he is, and if he is as smart as his educational background and his meteoric political career suggest, he will understand instinctively why he needs to reverse his position on this issue. If he thought he got hit hard when the Daschle tax problem came to light, making any overtures to soften the language in this provision will make him wish Daschle was back in front of the cameras.

And if the latest internet scuttlebutt on the Bernie Madoff scandal - that Wall Street's execs knew what he was doing but kept their mouths shut - gathers any steam, they will wish no one knew what they looked like.

Our banks have no money left in them. So why should any representative of the people even waste any time considering paying a premium to retain "talent" to watch what are essentially empty savings deposit boxes?

It makes absolutely no sense to worry about the welfare of the fox when he is already inside the hen house, his belly full from the hens he has already eaten, his eyes glazed over as more hens are added to replace the ones he’s already gorged on.

These foxes will be just fine if they miss a few meals.

Obama Ends Bailout Bonus Bonanza

I was climbing down from the attic, dirty air filter in hand, dreading the trek all the way down to the basement to complete the other half of this task, when a grade school level metaphor hit me - the new $500,000 cap on senior executives whose firms receive government financial rescue money put in place today by President Obama was a lot like changing the air filters in our home air-conditioning system.

Changing your air filters regularly does more to improve the operation of your air conditioning system than it does to affect the air quality in your house, the same way capping excessive executive compensation will do more to improve the operation of the banking system than it will do to affect the economic recovery. Because if you don’t clean out the ducts through which the air passes, all you’re really doing when you change your air filter is keep whatever has accumulated in there from tearing up your blower motor.

I don't have to tell you what kind of filth has accumulated in our financial industry.

I took a look at the dirty filters before I threw them away to see if there was anything more in them than a uniform layer of fine grey dust that signaled all was well with the system. I would imagine that President Obama’s people did the same thing, reviewing the often arcane methodologies used to justify executive bonuses amid huge corporate losses to see what ill effects they might have added to the bottom lines of their companies.

If the current crop of wonder boys decide to desert their posts for greener pastures, there are plenty of up and coming banking executives who would fight for an opportunity to make a name for themselves in a time of crisis. These are the kind of people who won't blink at the pay caps today, knowing that a successful tenure when all the chips are down will bring plenty of visibility, and plenty of big paydays, down the road.

Need I spell out that well trained and qualified minority executives usually thrive in situations like this - giving twice as much effort for half as much pay?

Years ago, working part time on the weekends with my uncle, who was in the heating and air business, I got to see first hand what happens when you don’t regularly change your air filters. Old, stiff filters layered with dust, dog hairs, and pollen an inch thick would literally choke the life out of a furnace by overloading the blower motor.

If the customer was lucky, we could sometimes get their system going again by simply cleaning out the furnace, tweaking the blower motor, and taping up the gaps in their ducts.

I imagine we are all keeping our fingers crossed right now, hoping, as our new president begins to find his way amid the wreckage of our economy, that he can implement more changes like the one he has put in place today to improve the financial health of our nation's banks, the same way new air filters and aluminum tape can often get a balky furnace restarted.

Obama Says Big Three Exec Pay "Out Of Line"

When executives in any industry start leaping tall buildings in a single bound, then I'll be the first to back their Superman sized pay packages. Everyone of these guys claims he is indispensable, until the next guy shows up, who proceeds to trumpet the same thing.

Instead of worrying so much about "legacy costs", we need to think a lot harder about whether or not we can afford to pay sums so exorbitant they border on the obscene for "legacy mindsets".

Barack Obama and I seem to see eye to eye on this.



There are quotes on this floating around the internet, but I don't think these tidbits adequately reflect the tone of the conversation. I've taken the time to transcribe a part of the interview Obama had with Tom Brokaw on NBC's Meet The Press so you can see for yourself, unfiltered, exactly how your next president thinks:

[The following is from the video above beginning at the 5:03 mark]

Tom Brokaw: But under that organization, or any organization that you settle on, should the current management get to stay in their jobs?

Barack Obama: Here's where I'll, I'll say, that it may not be the same for all the companies. But what I think we need to put an end to is the "head in the sand" approach to the auto industry that has been prevalent for decades now.

I think, in fairness, you have seen some progress made incrementally in many of these companies. They have been building better cars now than they were 10 or 15 or 20 years ago. They are making some investments in the kind of green technologies and the new batteries that will allow us to create plug-in hybrids.

What we haven't seen is a sense of urgency and the willingness to make tough decisions, and what we still see are executive compensation packages for the auto industry that are out of line compared to their competitors, their Japanese competitors who are doing a lot better.

Now, its not unique to the auto industry. We've seen that across the board. Certainly we saw it on Wall Street.

And part of what I'm hoping to introduce, as the next president, is a new ethic of responsibility, where we say, that if you're laying off workers, the least you could do when you're making 25 million dollars a year is give up some of your compensation and some of your bonuses. Figure out ways in which workers maybe have to take a haircut but they can still keep their jobs, they can still keep their healthcare, they can still stay in their homes.

That kind of notion of shared benefits and burdens is something that I think has been lost for too long and is something I'd like to see restored.

The thing I like best about this outsider president-elect, who has had to put the blinders on in order to look past the distractions of life and get where he is today, is his lack of allegiance to political dogma and his utter and complete conviction to preserving the dignity and humanity of his citizens.