Bankers' whining about pay hits a nerve

John W. Schoen Senior producer • Profile • E-mail

Not many stories this year have touched a nerve with readers as much as executive compensation.

To many, it seems perfectly reasonable that companies which were bailed out with billions in taxpayers' money should pay their top executives by the government's rules.

The handful of generously compensated men who run these broken enterprises seem to feel differently.

Take, for example, the guy now in charge of AIG, the insurance behemoth clinging to life thanks to a $90 billion taxpayer-funded bailout.

It seems that AIG's CEO Robert Benmosche has told colleagues he’s fed up with the government’s moves to limit pay packages for top executives at his firm.

This at a time when Goldman Sachs reportedly is ready to divvy up $23 billion in bonuses and amid word that Bank of America CEO Ken Lewis abruptly resigned because he just couldn't take having Uncle Sam as a boss after $25 billion in taxpayer funds kept his bank afloat.

The leaders of these giant corporate welfare recipients have been arguing that they need to pay managers of government-owned banks and other bailout beneficiaries extremely well to compete for their talents in the cutthroat global financial services industry. If they don’t attract such talent, this argument goes, taxpayers will lose their investment.

The guys have a point — up to a point. It’s not uncommon for top money managers — people who make a living by taking a big pile of money from over here, slicing off a little piece for themselves, and then moving it over there — to make 10 times Mr. Benmosche’s $10.5 million annual pay package — which includes $3 million in cash. Even after the worst financial downturn since the Great Depression, there are enough of these folks to fill several large country clubs.

But taxpayers have provided the big pile of money being shuffled around, so readers seem to think it is reasonable to apply a different set of rules.

Why should America worry about losing so-called top (bank) execs when they are the ones whose greed ruined the country in the first place? Until all loans are repaid to the taxpayers and jobs are added these crooks should get nothing. 
— Bill K, address withheld

Relying on an all-volunteer army of bank managers to clean up the mess Wall Street made probably won’t get the job done.

But the argument that we need to continue to overpay the overseers of what are, essentially, government-owned banks falls apart on several levels.

First is the assumption that talented bankers only come with gigantic price tags. It turns out there are thousands of banks — including pretty much any bank still standing that didn’t get bailed out — that are being run by reasonably competent people who don't make enough in one year to buy a Major League Baseball team. If you’re managing a bank that's survived the crisis this far, you must be doing something right.

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