Talk Back

These are the personal views of Peter Morici, a professor at the University of Maryland’s Robert H. Smith School of Business and former chief economist at the U.S. International Trade Commission:

You have to admit President Barack Obama obfuscates embarrassing facts and pays off his supporters as well as any politician since Huey Long.

He slams health insurance companies, while endorsing heath-care reforms that would compel 30 million more Americans to buy their policies or face a poll tax.

Now he slams the bankers for paying themselves $140 billion in bonuses.

Continue reading…

By Neal Lipschutz
   A DOW JONES NEWSWIRES COLUMN

NEW YORK (Dow Jones)–Federal pay czar Kenneth Feinberg isn’t just halving the pay for 25 top earners at the seven fallen angels under his control. He’s apparently also forcing some changes in governance.

Feinberg, who technically is called the special master of compensation at the U.S. Treasury Department, delved into some of the issues that have been talked about for years in U.S. boardrooms and among activist investors.

He will insist on a split between chairman and chief executive jobs, a model already followed in other countries. Staggered board terms will be eliminated. And boards of directors will have to create risk committees. This according to reporting by Deborah Solomon of The Wall Street Journal. Continue reading…

By Neal Lipschutz
A DOW JONES NEWSWIRES COLUMN

The first paragraph of The Wall Street Journal article uses the verb “pushed” to describe the decision by outgoing Bank of America Corp. (BAC) Chief Executive Kenneth D. Lewis to go without compensation for 2009.

The pusher, of course, was Kenneth Feinberg, the so-called pay czar put in place by the Obama administration to oversee pay practices at the companies receiving major federal assistance.

Imagine for a moment that this is not about Ken Lewis (a Bank of America spokesman, it should be noted, told the Journal Lewis  voluntarily agreed to go without 2009 pay), but instead about a theoretical CEO at a theoretical company.

The company is performing badly. The shareholders over a sustained amount of time have taken a big hit on their investments. There is significant if not uniform disenchantment with the CEO’s performance based on a number of objective and even subjective variables. Continue reading…

By Neal Lipschutz
   A DOW JONES NEWSWIRES COLUMN

NEW YORK (Dow Jones)–The recommendations on U.S. executive pay from the Conference Board, a nonprofit business research group, could just as easily have been proposed by a government agency.

That shows we seem to know what needs to be done to put a lid on over-the-top compensation at publicly traded companies.

What we can’t agree on is who we want to enforce such principles. Do we want it to be a function of government, even in the sensitive and important banking industry? Or do we want to leave it to boards of directors and company shareholders?

Continue reading…

These are the personal views of Peter Morici, a professor at the University of Maryland’s Robert H. Smith School of Business and former chief economist at the U.S. International Trade Commission:

Wall Street greed and irresponsibility have nearly destroyed the U.S. economy. Big bonuses for bankers encourage reckless risk taking and were a principal cause of the credit crisis and Great Recession.

Pay must be regulated to avoid another calamity.

A generation ago, banks took deposits, made loans and collected payments. Bankers quickly felt the consequences of money lent to folks unlikely to repay.

Continue reading…

By Neal Lipschutz
   A DOW JONES NEWSWIRES COLUMN 

The fine imposed on Bank of America Corp. for allegedly misleading investors about big bonuses it agreed could be paid to Merrill Lynch & Co. executives just before the struggling Merrill was subsumed into BofA illustrates the Securities and Exchange Commission’s punishment conundrum.

There’s no doubt the BofA action, or lack of disclosure, is a serious matter. Yes, it was a frantic time in the annals of American capitalism. The system was rocked. Still, basic tenets of shareholder rights, such as disclosure of material information, must always be respected.

Imagine the position of a theoretical, long-time shareholder of Bank of America. He was an owner when the merger was coming together. He is  frustrated and angry by the SEC’s allegations against Bank of America.

Continue reading…