Kneale: The Real Numbers on Wall Street Pay

President Obama says he's fed up with "obscene bonuses" on Wall Street. The Congress is in an uproar. And new numbers from the front page of The Wall Street Journal today are stoking this mob mentality to feverish proportions.

Yet the actual metrics in the Journal story raise a key question: What’s all the screaming about? Wall Street’s total compensation simply isn’t out of control. And the pay critics, in their pious, get-tough crackdown, are only ensuring a new round of outrage when some of these banks recover.

We discussed these numbers today on CNBC’s “Power Lunch,” and you can see it here.

So, if you earn $150,000 a year and that’s up less than 2 percent in two years, do you really think you’re getting paid “obscene” sums?

No — but President Obama does. The first battle cry in Washington was that pay caps and bonus restraints should apply only to the banks that got TARP bailout money. Since then the backlash has spread, insidiously and cynically, to cover ALL banks, all Wall Street firms.

How long before the compensation-cranks come after YOUR salary? And mine? Nobody wants to cut a pro quarterback’s pay when he throws a passel of interceptions. Congress didn’t demand steep pay cuts for workers at the automakers when they lost billions and got a government bailout;

In the meantime: Fanning Fannie worries - NYP, 2010 January 15, by Paul Tharp As the White House pushes its plan to yank billions in taxes from financial firms, two of the biggest and dysfunctional companies are getting a free pass.
Mortgage finance giants Fannie Mae and Freddie Mac are exempt from the proposed tax, despite having played central roles in the financial crisis.
One consultant to Wall Street banks said it was smart for the feds to not mention Freddie and Fannie because extra scrutiny would reveal just how weak they are.
The Treasury has spent $60 billion to bail out Fannie and $51 billion to rescue Freddie. And just before Christmas, the Treasury lifted the $200 billion aid cap for each company. The entities are supposed to help make sure financing is available for home loans by buying mortgages from lenders and bundling them into guaranteed securities.
Over the past several years, critics say, they encouraged the subprime mortgage market to explode, and suffered huge losses.
"The fact that they're exempt and tucked away shows just how important it is that they be broken up," the source said.
In recent years, the firms have been mired in scandals that exposed mismanagement, political favoritism and abuses of power. .....

No justice, no peace and no cred: Zero Street cred - NYP, 2010 January 15, by Mark DeCambre

President Obama's plan to defray the cost of the Troubled Asset Relief Program by taxing banks on their liabilities is likely to backfire, throwing an already-bruised economy into deeper turmoil and not severely dinging the firms widely seen as the greediest.
The president is proposing to tax the country's 50 largest financial institutions at a rate of 0.15 percent of what the administration is calling "covered liabilities," or assets minus things like common stock. It is expected to generate $117 billion over 12 years, and would go toward costs associated with the bailout of financial firms and car companies.
"We want our money back, and we're going to get it," Obama said.
But the firms with the closest ties to Main Street -- banks like Citigroup, JPMorgan Chase and Bank of America -- will bear the brunt of the tax hit, while Goldman Sachs, arguably last year's poster child for Wall Street avarice, will pay less.
According to an analysis by FBR Capital Markets, Citi would be on the hook for a $1.5 billion tax, while JPMorgan's hit would be $1.38 billion and BofA's would be $1.25 billion. Goldman, meanwhile, would face a tax of $767 million and Morgan Stanley's would be $644 million. A Morgan Stanley analysis estimated the tax, proposed to go into effect June 30, could reduce banks' bottom line by 5 percent this year.
Several Wall Street bankers referred to the fee proposal as "unfair" and openly doubted that it would pass through the Senate. "This is all a political attack on Wall Street bankers who have already paid back TARP and don't owe anyone anything else," said one bulge-bracket banker.
Added another Wall Street insider: "Obama's tax scheme is simply a disingenuous move to gain public favor on the back of an industry that helped him take office."
And the repercussions of Obama's Wall Street tax may affect more than banks' bottom lines.
For starters, critics say the tax will discourage banks from doing the very thing the administration has been strong-arming them to do: lend. That's because the more a bank lends, the higher the assets subject to the tax.
The tax could also keep banks from merging, particularly during another financial crisis like this past one, during which JPMorgan acquired Bear Stearns and Washington Mutual and Wells Fargo bought Wachovia. It could also threaten US banks' ability to compete with overseas rivals.
"This plan is ultimately going to cause the industry to contract and force banks to shrink," said Richard Bove, an analyst at Rochdale Securities. .....

From the article: President Obama says he’s fed up with “obscene bonuses” on Wall Street.

So? The process of compensation in private enterprise is a subject between the employee and the management. Bonuses at the executive level are routinely designed, approved and implemented via the auspices of the Board’s Compensation Committee. The government has no business in the boardroom. The general public has no voice, APART FROM THE EXPENDITURE OF PUBLIC FUNDS (anti-Constitutionally) to support these businesses.

The argument that these bonuses are ‘obscene’ or out of place or extraordinary is simply fallacious.

GET OVER IT! IT’S NONE OF YOUR BUSINESS! Your argument is with the libtard gasbags who co-opted the Constitution and extended public funds to the private enterprises that should, rightly, been allowed to sink or swim, ON THEIR OWN.

Meet New Populism, same as Old Populism

Excerpts from your link - WSJ, by Peter Wallsten :

Democrats' last-minute scramble to salvage the special U.S. Senate election in Massachusetts is offering the first test of a populist pitch that party strategists hope to take to other campaigns this year. Central to the strategy is the new White House plan to tax big banks as punishment for their role in the financial crisis .....
... events Friday in Massachusetts showed how the White House and top Democrats aim to use the bank tax as a political weapon.
The shift suggests Democrats view Mr. Obama's health-care overhaul, his top domestic priority and a leading issue in the contest, as a less effective political topic, and possibly even a disadvantage. Polls show declining voter enthusiasm for Mr. Obama's health-care plan.
With the bank tax, "we can take populism back to our side," a Democratic Party strategist said. .....

Sadly, I am afraid, they might have a lot of "populist" Republicans joining them. The fact that Democrats want to take populism "back" indicates that they think they were losing it to GOP, which would be kind of bizarre if we didn't see some examples of it with our own eyes.

Scott Brown doesn't think it's fair for us to get it back—when they're paying out billions in bonuses with our money."
"Our money"? Repaid back by most banks to Fed and Treasury with 5% interest and / or warrants? While truly pugnacious bailouts of automakers' unions and Fannie / Freddie / GMAC "loans" and more than a Trillion dollars of financial and regulatory "stimulus" are not considered "our money"?

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