Prediction: Bankers to become Republicans
September 18, 2009
Many of my friends in the Northeast are in the banking industry and they are almost all registered Democrats. When Obama ran for office he promised to raise taxes on those of us who earn more than $250,000 – which included 100% of my Northeastern friends. Despite this promise most of them suggested, “I can afford to pay a little more, because I make so much.” NONE of them counted on Obama’s latest move to limit their income. Not only will they pay more in taxes, soon more of them will be making less to boot. Ouch.
The Wall Street Journal reported on Obama’s plan to limit pay and compensation for more than 5,000 financial firms (100% of the ones my friends work for). Frankly, I was excited to see Obama make this move prior to the mid-term elections as well as prior to his second term. He is showing everyone his true colors. He wants to remake America – equality of outcome is his rallying cry. The more Americans who recognize this (sooner than later) the better off our country will be. America should be about equality of opportunity – that is a value worth fighting for.
The president’s plan would allow the Federal Reserve to reject any compensation policy that they feel encourages bank employees (including CEOs, traders to loan officers) to take too much risk. The Fed could amend any bank employee’s salary or bonus under the president’s plan. The largest banks (the top 25) would get the closest scrutiny – ‘injecting government regulators deep into compensation decisions’. The Journal, for the first time, revealed that the plan would, “likely push banks to use “clawbacks” — provisions to reclaim the pay of staffers who take risks that hurt their firms — in certain pay packages, among other tools, to punish employees for taking excessive risks with their firms’ money.”
If you though SOX was bad, you haven’t seen anything yet. What people earn is sacred to many. To allow the government, as a matter of course, to control that is an anathema. The plan would ONLY impact banks regulated by the Federal Reserve – Savings and Loans would not be impacted (I bet more and more of my friends start working for S&Ls).
