The Pay-Limit Charade
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Feinberg's task was difficult, but he wielded more of a loofah than a whip. And the idea of the Fed Reserve Bank's stepping in to regulate compensation at banks is little more than fancied-up self-regulation by the banks. By its nature, the Fed is not much of a regulatory agency except in macroeconomic matters. Just look at the board of the New York Fed: It includes such "regulators" as JPMorgan Chase CEO Jamie Dimon, plus GE CEO Jeff Immelt and Pfizer CEO Jeff Kindler. They'll keep those Wall Street execs in check.
One of the smartest pieces on Feinberg's "crackdown" comes from the NYT's Joseph Nocera: "Pay Cuts, but Little Headway in What Matters Most."
Most of the press is treating this charade as radical change. Even the best paper, the WSJ, plays the news that way, before revealing on down in its main piece the devils in the details that make this a non-reform reform.
The WSJ's grossly overstated headline "Fed Hits Banks With Sweeping Pay Limits" introduces strong language about "a one-two punch at the pay culture of banks and Wall Street firms blamed for the financial crisis," "aggressively regulate compensation," "impose steep pay cuts," blah blah blah. The WSJ story calls this "unprecedented federal intervention in pay decisions traditionally left to boards and shareholders."
But though the WSJ's headline and lede grafs were shrill, the rest of the story is, as usual, solid and revealing. Some nuggets from lower in the story:
• "Some bankers and outside experts said Mr. Feinberg was overstating the extent of the cuts."
• [Feinberg's] rulings will be effective for just November and December ..."
• "Some critics said that Mr. Feinberg was too soft on the banks and that his main accomplishment -- forcing firms to use more stock and less cash when paying employees -- didn't go far enough to rein in compensation."
• "At Citigroup, some executives were relieved Mr. Feinberg's demands were not tougher."
