Exec Pay Cut: Loopholes Could Increase Compensation

Why is it that whenever they raise taxes they never seem to leave holes for the little guy to slip through; yet, when it comes to money and the deeper pocket guys, they always manage to find a way to take care of those potential big campaign contributors.

... the majority of Wall Street firms will still be able to pay people very well, in some cases more than before, said Eric Moskowitz, head of compensation consulting at New York-based Options Group, a global executive search firm focused in the financial industry.

Funny how it always works out that way. You'd almost think it wasn't a coincidence. 

The details of the Obama administration's efforts to curb excessive compensation on Wall Street emerged Thursday, with dual announcements from pay czar Kenneth Feinberg and the Federal Reserve Board. And while the potential loopholes do not appear large enough to drive the proverbial armored truck through, the securities industry is already set on finding ways to continue to pay traders and investment bankers exceptionally well, by any measure.

Kenneth Feinberg tells ABC's Betsy Stark his plans for cutting executive pay.Whether by deferring compensation over a couple of years, or paying more of it in the form of stock, the majority of Wall Street firms will still be able to pay people very well, in some cases more than before, said Eric Moskowitz, head of compensation consulting at New York-based Options Group, a global executive search firm focused in the financial industry.

Comments

[Diggs]

Well, he only has to outsmart those stupid enough to have voted for him the first time. How tough can that be?

[Percy Dovetonsils]

At a wedding last spring, I was talking to a programmer who worked for Goldman Sachs. His perspective? In sum, "Goldman has a lot of people smarter than I am (this guy was a Ph.D., BTW) who will work their way around any restrictions the government lays on them."

If it's a battle of wits between the government and Goldman (or JP Morgan Chase or Morgan Stanley), I'm betting the mortgage on the I-bankers.

[smitty]

Points to the need to take the 16th Amendment out behind the barn and give the ol' barn a new paint job therewith.
Complexity: only a friend to the jackasses writing the rules.

[JorgXMckie]

Percy is right. One of "Dave' Rules about Rules" is "Every Rule has at least one loophole. If you write a new Rule to close that loophole you also write a new loophole."

Godel's Incompleteness Theorem proves that you can't write a system of Rules that don't have any loopholes. "Dave's Rule on Loopholes" predicts that more Rules just means more loopholes.

Finally, my grandfather said, "It's impossible to make anything foolproof because not only did God make fools incredibly ingenious(to say nothing of his continual production of bigger and better fools), he also made them all but indefatigable. 'Fools' are a sort of genius, and the 'fools' in the money industry have very good reasons for finding the loopholes as quickly as possible. Given a few thousand of them and only a few (much less ingenious) regulators, it's obvious who will come out ahead.