AIG Bonus Tax Vote--Fallout

I posted on the AIG Bonus issue previously ("AIG Bonus Tax Vote").

Since then, and not because of me, President Obama has done the right thing and said he would veto such a bill if it were to get past the US Senate. Did Representative Barney Frank really vote for this stinker?

Now we have the resignation EMail of Jake DeSantis, an executive vice president of the American International Group’s financial products unit (AIG FP). It was sent to Edward M. Liddy, the chief executive of AIG--the chap who testified before Congress the other day.

The day after Mr DeSantis' EMail appeared in the New York Times we had the Secretary of the Treasury saying that they want authority to regulate even more branches of the financial industry. Per the Washington Post we have this item:

In written testimony submitted today to the House Financial Services Committee, Geithner called for regulators to impose executive compensation standards on all financial firms. The guidelines would push firms to base pay on employees' long-term performance, curtailing big paydays for short-term victories.

As much as I would like to see executive compensation skewed in the direction of a focus on a firm's long-term performance, I worry about the Federal Government setting standards and limits directly. (If they incentivized Boards to do that, I think I might feel much better about it.) What I see is a long term trend where bright young men and women will not pursue jobs in the financial sector, but look elsewhere for the challenges and the compensation. While that might be good overall, it will mean that lucrative financial business might go to London or Paris or Zurich or Singapore.

The good news is that the DOW went up 175 today.

Regards  --  Cliff

PS: If you look at the written testimony from Secretary Geithner, you will notice that it appears to have 1.25 inch left and right margins, just like Microsoft Word has when it is first installed. I think that if the Obama Administration is really serious about "going green" they would encourage everyone to change those settings in M/S Word to 1 inch all around. On line it doesn't make any difference, but a lot of those people on Capitol Hill are old and probably have to hold the paper in their hands. The longer the document the more important it is to have good margins.