Money Talks (2)

The compensation discussion has not abated. Bonus season has basically come and gone, but the furor has not died down, and continues to be inflamed by our congressmen and women on Capitol Hill who want to make political points from the situation.

But I think, political points aside, the situation does reveal a few Naked Emperors. How is it that taxpayer funds that went to keep investment and money center banks from going under somehow ended up in the pockets of the banks' salesmen and traders? No doubt, this is a political situation, created by the government officials who created the funding that allowed the banks to remain standing in the latter half of 2008 and throughout much of 2009 with the liquidity provided by the American taxpayer. There is reason to ask for an accounting of those funds.

As I noted in my earlier post, there are some banks that get it. But as John Mack said the other day, most of them still don't: "'I still don't think the industry gets it.' Banks are reforming pay by focusing too much on structure - such as deferring bonuses to later - rather than the huge amounts being paid out, he said."

Barclays did exactly that - increased salaries and decreased bonuses - but still, enormous bonuses were paid out, much as those that were paid at Goldman Sachs and JPMorgan. But the CEOs are savvy politicians, and understood the optics, anyway. Blankfein of Goldman Sachs received a paltry bonus of $9Million; the CEO of Barclays Capital received nothing.

But the withheld bonuses are just optics. These guys (the CEOs) are not going to go hungry or go into debt because they didn't get a bonus this year, or even next year. (My cynical self said when I heard the news, well, the lawyers just went back to the employment contract and rewrote it to award the money later.) These guys have been minting millions for a long time in their chosen profession; they don't need the money. The company takes care of them 24 x 7 - they probably never have to fill a gas tank, buy lunch, or arrange for their own dry cleaning. To say nothing of scheduling their own travel or buying groceries, like the rest of us.

It's not about the money. It's about the power. That's the other Naked Emperor.