2. Increase the Fear Factor. If any financial institution fails or needs extraordinary help from the government, the government should be able to claw back five years' worth of stock grants, options profits, and cash salaries and bonuses in excess of $1 million a year. That would apply to the 10 top executives, current and former, with a five-year look-back period. It would also apply to board members, present and past. (People brought in by regulators for rescues that ultimately fail would be clawback-exempt.) Anyone subject to the clawback would be permanently barred from executive positions or board seats at any institution that has federal deposit insurance or SIPC protection for brokerage customers. This provision would give executives and directors a huge incentive to make sure institutions they supervise don't take on excessive risk.
You have got to be kidding me, right?
It also makes a lot of assumptions about the unanimity of corporate decision-making and systemic risk. Treating the guys behind the fall of Lehman the same as a random politically weak board member at East Pleasantville Educational Credit Union is dumb.
Why is the board member at EPECU raking down $1 million a year? Nobody said he was. While idiotic, the clawback is not the most idiotic part of that suggestion. And you want to go further. You, delmoi, suggest that someone who was the CTO of AIG for the year before September 11th should NEVER BE ALLOWED TO WORK IN FINANCE AGAIN. Needless to say, your idea is obviously dumb.
Why is the board member at EPECU raking down $1 million a year?
So, delmoi, if I work at AIG in 2002 and I see that there is criminal or extremely negligent/irresponsible behavior I should stay there and fight the battle to fix it so that in 2009 when everything goes to shit I don't get banned from the industry? Or would there be an exemption for quitting in protest and whistleblowing, would would essentially mean banning yourself from the industry for life?
Yes, there is. That's exactly my point. That's why a rule like that proposed in the OP and advocated by delmoi and defended by quakerjono -- that is to say, a rule that completely ignores the difference -- is a bad rule.
« Older "In order for somebody to understand something, be... | Last August (2009), the "ephem... Newer »
This thread has been archived and is closed to new comments
Buy a Shirt