Insults Aren’t Policy

I’m a political consultant. So I understand the utility of over-the-top populist rhetoric, even when it’s kind of silly. But Claire McCaskill isn’t a candidate in a campaign. She’s a Senator amid a crisis. Her demand that employees at any bank that receives TARP funds receive no more than the President’s $400,000 yearly salary is ludicrous. Yes, it’ll play well to the millions struggling to put food on the table for far less than 400 large. But in the real world of commercial and investment banks, it’s a joke. The day that Citi tries to pay its top traders and bankers (the best of whom currently earn more than 400,000 a month), less than their competitors is the day Citi might as well turn its lights off. Citi’s non-TARP-recipient competitors, including foreign owned banks, would instantly swoop in to snatch its pick of Citi’s talent and that would be essentially the end of Citi’s ability to compete in the global marketplace.

In Major League Baseball, the highest-spending teams are forced to pay a luxury tax to the lower-payroll teams, which is theoretically supposed to fund the salaries of the latter’s players. Imagine a scenario in which teams receiving those monies were forbidden from paying their players more than $400,000 while the Yankees and Cubs remained free to pay whatever they liked. Does anyone think the best players would volunteer to remain Brewers and Pirates out of loyalty or good manners?

However much one might resent the paychecks of Wall Street jerkoffs – and I spent 10-plus years as a financial journalist, clenching my fist every time some kid younger and dumber than me outearned me by 10 times – the fact is that these banks pay what they do not because they want to. They pay it because they have to. Just like your job pays you exactly what it must to get you out of bed in the morning and come to work where you work rather than somewhere else that also desires your services.