21st-Century Banking, III: All we need is can-do-type execs interested in doing a seriousjob for a serious paycheck -- yup, that's all!

Jack Donaghy (Alec Baldwin) in church? Jack commemorates the Martyrdom of St. Valentine with the lovely Elisa (Salma Hayek) -- before she insists he take confession.

JACK DONAGHY [in the confessional booth, to the young PRIEST]: I have faith, in things I can see, and buy, and deregulate. Capitalism is my religion. Now you want to have an intellectual argument? Okay, but I should warn you, I went to Princeton.

PRIEST: I went to Harvard Divinity School.

JACK [chuckling]: You Crimson guys never miss a chance, do you? You want a confession? Let's get this done, so I can go eat. [PRIEST looks on in bewilderment bordering on panic.] I am divorced. I take the Lord's name in vain often, and with great relish. I hit my mother with a car -- possibly by accident.
[Time gap.]
JACK: I almost let him choke to death right there on the football field. [PRIEST is shocked.] I looked the other way when my wig-based parent company turned a bunch of children orange. I once claimed "I am God" -- during a deposition.
[Time gap.]
JACK: And I may have sodomized our former vice president while under the influence of some weapons-grade narcotics. Ahhh! It feels good to say that out loud. Actually, that one was weighing on me.

PRIEST: Wow! I, uh . . . I don't know what to say.

JACK: I don't want you to say anything. I already made that clear.

PRIEST: Then what brought you here tonight?

JACK: What brought me here? What brings anyone anywhere? Why do men build bridges? Why are there jets? I was trying to have sex tonight. Have you ever made love to a woman, father?

PRIEST [desperate]: Come on, man!

JACK: Imagine cradling your face into the curve of a velvety-soft neck, your hands cupping the warm heft of the greatest pair of --

PRIEST [bolting from the confessional]: I need backup! Harvard did not prepare me for this!

-- from Thursday's episode of 30 Rock

"Hope for the best! Expect the worst!
The rich are blessed. The poor are cursed."

-- from Mel Brooks's The Twelve Chairs

by Ken

We come finally, in our little series on Modern Banking, to the issue of executive compensation, which obviously applies to the whole economy and not just the banking segment.

Yesterday, in addition to seeing (in the "Power of Populism" segment from Rachel Maddow's Wednesday show) fake contrition exuded by the eight megabank CEOs hauled before the House Financial Services Committee on Wednesday, we were introduced (courtesy of Washington Post business columnist Steven Pearlstein's Wednesday column) to a local North Carolina bank CEO, Kim Price of Citizens South, who was smart enough to keep his institution mostly out of the subprime-mortgage craziness, and devised a plan for using federal bailout money to actually promote lending -- all of this for a pay package, all told, under a half-mil.

We noted the inclusion in the conference version of the economic stimulus package passed by both houses of Congress of Sen. Chris Dodd's amendment seeking to impose some enforceable limits on the payment of bonuses to top-ranking execs of banks accepting federal bailout money.
Naturally, today most of the discussion focuses not on whether this is a good idea, or really doable, but how those execs will get around it. (Deck on the story in today's Washington Post: "More Rigorous Limits Trigger Concerns Over What Banks Might Do To Be Free of Them.")

And if you didn't watch the Maddow show clip, I encourage you to do so now. I just looked at again, the whole thing, and was not only caught up in Rachel's sharp and impassioned commentary on the upswell of populist sentiment around the country ("little people" all over are tired of being shafted while fat cats line their silk pockets), but impressed once again by the degree of nuance she's able to introduce to the discussion, including wondering whether the course we're on is going to get us toward the goal. (Answer: She doesn't know.)

Of course the argument from the business community regarding executive compensation is that they have to offer these preposterous compensation packages to secure the services of the best executive talent, and then to hold onto their prize catches. (And of course, when the geniuses are finally sent packing, they're sent wafting gently to earth in the comfort of the golden parachutes the companies were forced to give them.)

As should be clear by now, this is bullshit. Those people weren't creating anything, least of all wealth; all they made was deals, scams, cons. They aren't "executive talent"; they're a breed of parasitic, egomaniacal, sociopathic thieves. As many commentators, we have been inflicted, over the last couple of decades, with the Cult of the CEO, these make-believe geniuses who have gotten away with something more or less equivalent to murder over that time. Of course CEOs who serve their companies well should be well compensated, but these levels of compensation are orders of magnitude in excess of reasonable compensation, even for good performance, which, incredibly, was increasingly not demanded or apparently even expected of them. We all know the horror stories.

And the price for the aggrandizement of these diseased egos has been systematic exploitation of and outright theft from the working stiffs who made those companies function. At a tenth what these leeches are being paid, they would be grotesquely overcompensated, at the expense of both their workers and the economy. Henry Ford may have been a bigot and a son of a bitch, but he understood that his workers were also his customers, and that giving them their fair share of his profits not only increased those profits but primed the economy. These parasites, who seem unable to see anything beyond their insane greed, don't understand that by bleeding every dollar they can out of the economy, they have gradually left themselves no one to do business with.

That is, if they had any business to do.

Even dull-witted prosecutors should be able to find enough criminal activity to secure these goons several lifetimes' worth of incarceration. Their companies should be scouring their contracts to prove malfeasance sufficient to justify the return of every dollar they extorted, with contributions from the people inside the companies who abetted the fleecing.

Or, perhaps more subtly and more appropriately, their compensation might be recalculated to minimum wage for a 35-hour work week for the term of their employment. And yes, I mean a strictly limited 35 hours, notwithstanding that these people were so dedicated that they worked, oh, 500-hour weeks.

Unfortunately, I have to make do without a quote I would have like to introduce from a New Yorker "Notes and Comment" piece by E. B. White, I guess from the early '50s. Somehow my cheesy old Perennial paperback edition of The Second Tree From the Corner (and also One Man's Meat) has mysteriously gone AWOL. I'm not pointing any fingers, just suggesting that anyone who knows anything about the vanished paperbacks would do well to spill his/her guts now rather than later. (Okay, so I've been watching too much Law and Order.)

The piece was an account of what I recall was a New York City-wide bomb-alert drill, in which, eerily, the entire city came to a standstill. I recall the report of a visitor unaware of the proceedings happening onto a no-longer-bustling city street and commenting, "What's this, something new?" And I remember in particular White's report of calculations of economic loss from that "lost" hour.

In The New Yorker's own offices, the business people were lamenting that by bad luck they had the company's lawyers present (and presumably billing). And they had a dollar figure to put on that loss.

But that calculation of loss, White suggested, depended on the quality of the advice the lawyers were giving. If by chance it was poor advice, he pointed out, then missing out on an hour's worth of it actually put the magazine ahead.

What ever happened to American ingenuity and the real American spirit of "can do"? Have the ambition, will, and knowhow to build companies that contribute real value to their customers, their workers, and the country as a whole been bred out of us?

I don't think so. I think we've just succumbed to misguided business goals, bad values, and really atrocious leadership models. I don't know how we turn that around, but I do know that there's a difference between the way Kim Price conceives of his job as a bank CEO and the way the megabank CEOs seem to. We need to learn how to value the one and kick the others' sorry asses out the door.

And somehow we need to figure out how to do the same thing with companies that become proverbially "too big to fail." I know this is appallingly naive of me, but it has to be possible. Let American ingenuity plug the gap with companies that actually do the job that the behemoths have failed at.

I mentioned yesterday the great innovation my friend Terry encountered at her bank, J. P. Morgan Chase, where customers are apparently now officially called guests. Guests. I would love to know how much the person who came up with that genius idea is paid.

I don't know what it's like in your town, but here in New York City, over the last decade or two the number of storefront banks has exploded. For a time there it seemed as if every property that became available was being swooped up by one of those banks.

It mystified a lot of us, who remembered the immediately preceding fetish among the banking elite, which was to segregate customers (not yet guests, of course) by economic status, the way casino operators pamper their high rollers, which in the extreme included trying to deny insufficiently important customrs access to tellers. Now, apparently, those banks couldn't open new locations fast enough.

But was there really any business justification for any of this? No bank offered to show me their books, but I had to figure their overhead was soaring. True, at the same time, the people inside all those banks were devising ever more ingenious ways to provide fewer services and to charge fees for what services remained. Was that really good business? For some of us there's some small ironic pleasure in the banks' discoveries that a lot of their high rollers were either dupes or crooks.

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