The media onslaught against Wall Street continued Oct. 27 in a NBC “Nightly News” segment slamming executive compensation and calling for more regulation of the financial sector.
CNBC correspondent David Faber explained why some Wall Street firms want to keep executive bonuses at current levels – which averaged between $110,000 and $210,000 per employee, according to the report – even when taking part in the $850 billion taxpayer bailout Congress passed in September.
“For those people who the banks feel are truly their most valuable employees, they are going to pay them as well as they ever have and they want to keep them that way, that is happy and well paid, to keep them from going to any other firm,” Faber explained.
But that logic didn’t cut it for the two other voices used in the segment. Nell Minow of The Corporate Library, labeled by NBC correspondent Tom Costello as an “executive compensation advocate” warned, “They’re going to have villagers with torches coming after them if they do not turn down these bonuses or find some way to defer them until the mess is cleaned up.”
However, Rep. Barney Frank, chairman of the House Financial Services committee told NBC the solution would come from the government. He said he would favor regulation similar to that dating back to President Franklin Roosevelt’s New Deal if Wall Street didn’t limit executive pay on its own.
“There’s nothing we can do to stop it immediately,” Frank said. “But we will be regulating next year in a way that hasn’t been seen, I think, since the New Deal. That is, we have seen such a lack of control.”
Costello’s report did mention that Goldman Sachs (NYSE: GS), Morgan Stanley (NYSE: MS) and Merrill Lynch (NYSE: MER) haven’t made a final decision on how they would handle executive compensation, despite the segment’s suggestion that there would be a government response if they made what some thought to be the incorrect one.
He also didn’t mention a 2004 report by economists at the University of California, Los Angeles (UCLA), which concluded