Where else could they go? – Epilogue

Posted by Marc Hodak on October 1, 2010 under Reporting on pay | Be the First to Comment

They could go to Citigroup, as UBS found out in losing its top energy investment banker.  The upper half of the article was all about the money, which is really the only reason for such an article being on the front page.  Does the average WSJ reader care at all about Citi’s internal staffing decisions?  Finally, as the article winds down the inverted pyramid, they mention that there was actually a talent auction of sorts:

After Citigroup made a play for Mr. Trauber, UBS tried to work on a compensation package for him, but the firm was unwilling to meet several of his other proposals, which included getting 150 hours of access to a private plane annually and that a separate bonus pool be allocated for his specialized team of bankers, the people said.

We kept hearing that ridiculous question “Where else could they go?” throughout 2008 and 2009 when Joe Public began learning how much more bankers made than he did.  The sense of the articles, and the way the readers invariably perceived such high pay, was that it was arbitrarily high, and that it could be restrained by government fiat–and should be.  The utter lack of thought about the consequences of such restraint is natural if one believes that the pay level was arbitrary to begin with.  “Where else could they go?”  To the highest bidder, folks, just everything else in the market.