Here's a classic case of the left hand not knowing it has a right hand ....
Left Hand: According to Neil Barofsky, the head of the the federal government's program responsible for overseeing the $700 billion financial industry bailout, the Troubled Asset Relief Program (TARP) will “almost certainly” result in a loss to U.S. taxpayers. Why? Because the auto bailout, the steady string of failed banks, and our role in the management of failed firms will continue to lose money, and drain our national treasure.
Why is this important? Because ...
Right Hand: According to Bloomberg.com, the Obama administration’s special master for executive compensation, Kenneth Feinberg, said that he is “very concerned” that his pay cuts may drive talent away from companies bailed out by U.S. taxpayers. According to Feinberg he is walking a fine line to insure that executives (who, in my world, would be unemployed and/or in prison) are properly compensated for the bang up job they did last year.
Hey, I have an idea. Why doesn't Neil Barofsky call Kenneth Feinberg. He could tell him that he shouldn't allow anyone in the taxpayer rescued industry to make any real money until (1) the American taxpayer is paid back in full and (2) the trillion dollar guarantees created for the financial sector are removed.
If the executives don't like it they can always leave, and flood the market with all their talent. God knows that with all the insider trading still going on, there are plenty of options for the talented but morally bankrupt out there ...
- Mark
P.S.: I almost forgot. All those "smart" market players aren't really that smart. They're just greedy. Here's an excellent Bloomberg piece from Michael Lewis - of Liar's Poker fame - outlining how self-absorbed and clueless these "talented" people really are. It was written before the meltdown.
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