Archive for October, 2009

Bank Pay Cuts

When a company takes in major investors’ money, it usually comes with strings attached – a board seat, special control rights, and, often, a defined role on compensation committees.  This is especially true when the company has no better choices available than to take the money, along with the strings.

It is disingenuous for the Wall Street Journal to decry this when the investor happens to be the Treasury or the Fed.  Bloomberg got it right, quoting a Delaware investors’ lawyer, saying “…it was inevitable, and it was their own damn fault.”

This is not creeping socialism, but tough, hard, unforgiving capitalism coming back to bite its most aggressive proponents and successful beneficiaries.

Taxpayers to banks: If you wany my money to run your bank, you’ve got to agree to my conditions.  If you don’t like it, get your money elsewhere.  If you can’t find the money, and you’re insolvent, well, we’ve got the FDIC to take care of you.  Take your pick.


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