The Other End of Wall Street

At first blush it may seem a bit un-American but the news that the Obama Administration will cap the salary of top executives at any firm receiving Federal bailout money at $500,000 was met with applause on both sides of the aisle on Capitol Hill (a rare feat of late).

Obama said the measure was aimed at curbing excess. “We don’t begrudge anybody for achieving success. And we believe that success should be rewarded. But what gets people upset — and rightfully so — are executives being rewarded for failure. Especially when those rewards are subsidized by U.S. taxpayers.”

The Republican House leader John Boehner concurred. “If anyone is looking for the taxpayer to help bail their company out these types of executive pay caps are appropriate.”

But surprise surprise, some on Wall Street think this idea will create a big problem. The NY Times quoted Alan Johnson who runs his own Wall Street pay consulting firm (companies need to pay someone to tell them how much to pay someone? I want that job!).

The Times writes Johnson “said the new restrictions could make it harder for the government to resuscitate ailing firms by making it harder for them to retain and recruit talented executives.”

Then there’s this unnamed wise guy from a “boutique investment firm” as quoted in the Washington Post: “I understand why the government is doing this; I think a lot of people are outraged on Main Street, but “we don’t want to be a penny-wise and a pound foolish. We need to attract smart people. My fear is that we may not attract the necessary talent we need to see us through this type of crisis. $500,000 might be too low of an incentive to sign on.”

Really? Did you really say that Mr. Boutique Banker? Let me help you guys with a little math. New York State Comptroller Tom DiNapoli estimated in November that New York would lose 55,000 financial services jobs by the end of 2009. A source in the office says that number is now believed to be substantially too low.

So with 55,000 well-trained financial services workers out of work and no jobs to be found, Wall Streeters believe capping executive pay at a measly half million will leave these huge companies starved for qualified applicants? And what makes someone qualified, having destroyed a trillion dollars in wealth? That is, after all, what the incredibly well-compensated executives who ran our economy off the rails did.

So I propose a little test. Post the top 5 jobs at Citibank or BofA on Monster.com and see how many qualified applicants you can get for $500,000 a piece. I volunteer to be the first to send in my resume. My qualifications? I can balance my checkbook and I haven’t run a bank into the ground.