Banking Executives vs Football Players

“Why is it we’re going to cap executive compensation for Wall Street bankers but not Silicon Valley entrepreneurs and NFL football players?”

On September 14, President Obama posed the question as he addressed Wall Street from Federal Hall on the anniversary of the collapse of Lehman Brothers. Obama also stated that "we will not go back to the days of reckless behavior and unchecked excess at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses." He continued, “And, of course, to embrace serious financial reform, not fight it."

The President had already set up a game plan months before. I should note that, although he wisely commented about excessive executive compensation during his campaign, Obama’s messages were all about “regulation”.

With little fanfare, Kenneth Feinberg, appointed by the Treasury Department in June and dubbed “pay czar” with the official title of Special Master, the same post he was given to distribute aid to victims after 9/11, has remained a behind-the-scenes administrator, which indicates he’s little more than an Obama implant to promote oversight of financial institutions by means of some regulatory scheme rather than by putting ceilings on executive compensation.

On September 25, Feinberg stated that, when he releases a report next month on the executive compensations of bail-out companies, “ We don’t want specific names next to dollars.” And that, "Avoiding excessive risk means different things to different people in different situations." The wording indicates a degree of coaching from Treasury Secreaty Timothy Geithner who, in turn, may have been teleprompted by Team Obama.

Unlike German Chancellor Angela Merkel and French President Nicolas Sarkoz, both of whom prefer strict governance over banking bonuses, The Administration seems to be treading lightly toward a resolution with Wall Street egos and their troves of lobbyists to relegate satisfactory action to Congress.

Obama’s apparent disdain of Simi Valley entrepreneurs who provide innovation and evolutionary advancements in e-commerce technologies is misplaced as displayed by the Forbes list of the top 10 CEOs and their levels of compensation.

Although Oracle CEO Lawrence Ellison tops the list in compensation ($556M), petroleum CEOs of Occidental ($222M), Hess ($154M), Ultra Petroleum ($116M), and EOG Resources ($90M) round up the top remaining five companies that handsomely reward their CEOs with fortunes. Of course, the President dare not rile the money-mongering emissaries of greenhouse gases.

Nor should Obama attempt to tackle the salaries of football players.

In 2008, Ben Roethlisberger of the NFL Pittsburgh Steelers made $27M. Of other sports figures, Kevin Garnett of the NBA Boston Celtics was paid $27M; Alex Rodriguez of the MLB New York Yankees received $33M; in the NHL Dany Heatley of the Ottawa Senators earned $10M. Not too shabby by any measure of success.

Which takes me back to the interests of Wall Street. When the dot-com bubble burst at the turn of the century, an estimated $7-trillion were lost to investors, primarily in tech stocks. When Wall Street got burned, it was quick to regain its fortunes in the housing market.

In 2005, Yale economist Robert Shiller said, “Once stocks fell, real estate became the primary outlet for the speculative frenzy that the stock market had unleashed. Where else could plungers apply their newly acquired trading talents? The materialistic display of the big house also has become a salve to bruised egos of disappointed stock investors.”

Over these past two years, it’s estimated that U.S. households have lost $7-trillion in home equity, $2-trillion in retirement funds, and $8-trillion in the stock market. But to this day Wall Street shows no shame.

Lawrence White, a professor at New York University's Stern School of Business, said Wall Street believes its pay is justified and that, “The big Wall Street view is 'Hey, we work hard, we achieve a lot, and we deserve what we get paid.” Recent articles and Op-Ed columns in The New York Times shows that many Lehman Brothers ex-employees are remorseful of only one thing: the loss of the jobs that had brought them such riches they may never see again.

According to Challenger, Gray & Christmas, an outplacement company, only slightly more than 300,000 jobs were lost in the finance industry since the beginning of 2008, as compared to all the other 7.4M jobs lost since the beginning of the recession.

It should be no surprise that, according to an Ipsos Public Affairs survey conducted September 11-14 of 1,000 adults, 60% of Americans are angry about excessive compensation to investment executives.

President Obama should leave Simi Valley alone, let sports fans judge the worth of football players and address the concerns that Americans have about the fortunes that Wall Street executives have reaped at the expense of present day and future taxpayers.