{"id":1174,"date":"2009-04-28T22:02:36","date_gmt":"2009-04-29T06:02:36","guid":{"rendered":"http:\/\/hodakvalue.com\/blog\/?p=1174"},"modified":"2009-05-05T11:02:23","modified_gmt":"2009-05-05T19:02:23","slug":"do-you-pay-or-do-they-go","status":"publish","type":"post","link":"http:\/\/hodakvalue.com\/blog\/do-you-pay-or-do-they-go\/","title":{"rendered":"Do you pay or do they go?"},"content":{"rendered":"

\"\"<\/p>\n

It had to come to this.\u00a0 After months of bonus baiting<\/a>, with everyone asking “where else could they go?<\/a>”\u00a0 After Andrew Cuomo invited every banker unfortunate enough to find himself in the Journal or Times<\/a> into his office to ask why they made so much money.\u00a0 After the press smacked Geithner around like a pinata.\u00a0 We’re finally at the moment when it all comes down to taking responsibility for a choice<\/a>:<\/p>\n

Citigroup<\/span> Inc.<\/a>, soon to be one-third owned by the U.S. government, is asking the Treasury for permission to pay special bonuses to many key employees, according to people familiar with the matter.<\/p><\/blockquote>\n

We’re talking tens of millions for certain people.\u00a0 Choose your outraged retort:<\/p>\n

How can anyone be worth that much?\u00a0 Surely they don’t need the money.<\/em><\/a><\/p>\n

How can they be so greedy?\u00a0 This is just extortion!<\/a>
\n<\/em><\/p>\n

Why should taxpayers be paying bonuses for failure?<\/em><\/a><\/p>\n

Why should people need incentives to do their job?<\/a>
\n<\/em><\/p><\/blockquote>\n

Now that you’ve gotten it out of your system, put yourself in Geithner’s shoes.\u00a0 Phibro generates a huge amount of profit for the Citibank.\u00a0 It’s not the machines.\u00a0 It’s not the building or furnishings.\u00a0 It’s not the computers.\u00a0 It’s the people.\u00a0 The people create the profit.\u00a0 As with anything else, it’s most likely that 20% of the people create 80% of the profit.\u00a0 If you don’t pay the key 20%, they walk.\u00a0 You lose 80% of the profit.\u00a0 So, we can enjoy our two minute hate, the clever rants <\/em>about evil bankers, and emotional complaints about how bankers are no more special than the “working man.”\u00a0 Then someone has to decide what to do about bonuses.<\/p>\n

I think the right answer may be to spin off the unit; Citibank is unwieldy and inherently unprofitable.\u00a0 They need to get leaner.\u00a0 They need to undo the failed “financial supermarket” strategy that got them here if there is any chance of creating a profitable remnant.\u00a0 That, or pay enough to keep the best.<\/p>\n

But that’s the economic decision.\u00a0 That’s what a conscientious board mindful of their fiduciary responsibilities would likely decide.\u00a0 Congress is a different kind of board.\u00a0 What would you do?<\/p>\n","protected":false},"excerpt":{"rendered":"

It had to come to this.\u00a0 After months of bonus baiting, with everyone asking “where else could they go?”\u00a0 After Andrew Cuomo invited every banker unfortunate enough to find himself in the Journal or Times into his office to ask why they made so much money.\u00a0 After the press smacked Geithner around like a pinata.\u00a0 […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5,10],"tags":[],"class_list":["post-1174","post","type-post","status-publish","format-standard","hentry","category-executive-compensation","category-invisible-trade-offs"],"_links":{"self":[{"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/posts\/1174","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/comments?post=1174"}],"version-history":[{"count":9,"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/posts\/1174\/revisions"}],"predecessor-version":[{"id":1215,"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/posts\/1174\/revisions\/1215"}],"wp:attachment":[{"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/media?parent=1174"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/categories?post=1174"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/tags?post=1174"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}