My husband and I have been debating the source of the populist rage vis-a-vis Wall Street bonuses. Here are a few thoughts:
–It doesn’t seem fair. Wall Street lost unconscionable amounts of money while enriching itself. Very true. And the compensation system rewarded the likelihood that that would happen. The greater the risk, the greater the rewards. But compensation packages didn’t take into account the downside of that equation. Now two firms, Morgan Stanley and UBS are in fact implementing “clawback” provisions. Bonus recipients most put in performances that produce profits for several years running or risk losing bonuses assigned in earlier years. An interesting idea — but how does it work if a trader switches jobs midstream?
–Wall Street is out of touch with reality. So what’s new? A world in which seven-figure compensation packages are commonplace is, by definition, out of touch with reality. The executives work in a bubble and have very little perspective. Many of the blessed in the finance industry have never really struggled: They went to the best schools and got great jobs. That doesn’t mean they didn’t and haven’t worked hard. It’s just that they’ve been so much luckier. And that makes them different from you and me, as F. Scott Fitzgerald would say.
Those lords of finance can’t let go of their sense of entitlement. Hmmm. Now we are really onto something. Entitlement is a very unpleasant air. It really rubs the denizens on Capitol Hill the wrong way. But I think that’s because they themselves are doused in their own sense of entitlement. And unless you’re cruising on Air Force One, the entitlements just aren’t as rich as the ones on Wall Street. Senator Chris Dodd (D-Conn.) recently acknowledged that he received favors from disgraced lender Countrywide Mortgage. It was only a few thousands dollars saved in lending costs, and that’s the point. As former majority leader Tom Daschle whisked through the revolving door into private life, he failed to pay more than $128,000 in taxes. Senator Dodd’s thousands and Daschle’s six-figure perks — what are they to Wall Street’s millions? It’s not fair that the entitlements in New York are just so much bigger than the ones in D.C.