President Obama blasting bankers' bonuses

How could one disagree with the opinion expressed by President Obama regarding the bonuses some Wall Street bankers have decided to pay themselves? We’re really witnessing recklessness of untold and unprecedented proportions. Those bankers’ behaviro testifies to the fact that there is a complete disconnect between modern finance and the field reality of what we call the "real" economy. But of course when things are getting tough for their girlfriends, wives and mistresses who need to change lifestyle (see the DABA Girls blog to get a feel for the utter disconnect of this crowd from real life), these guys feel the pressure to do something, no? Sadly enough a limited number of people damage the reputation of an entire profession. Most of my contacts in the world of finance are just very fine persons, working hard and decently to fulfill their mission and serve real companies with real customers and real services and real employees and real profits and real problems. They’re part of economic life, whereas the people President Obama is targeting are causing economic death and loss of confidence. If we are serious about solving the current crisis, both they and the pervert system they’ve created must be taken out of the system.

Read on for an analysis take and a video embedded.

It’s quite clear that for this sort of things to be happening in broad daylight several conditions must be logically true:

1. 
   
   the checks and balances described in annual reports don’t check anything and don’t balance anything. There is simply no control regardless how numerous the members of compensation committees might be or how “foolproof” their procedures are considered by both internal and external auditors


2. 
   
   the individuals concerned (the beneficiaries of the bonuses) are completely out of touch with real life, living in the fantasy world of board rooms with their very special kind of fauna, i.e. professional executives and board directors who make up a closed group of individuals with virtually unlimited powers and supposedly enormous responsibility as directors. Theoretically US legislation is tough on the responsibility of directors, but that seems to be valid for everyone bar those companies that are either too big to fail or too big to be controlled and punised for any wrongdoings


3. 
   
   the set of people who hold positions as directors of major corporations, especially banks, is too small for complacency, carelessness and tacit conspiracy not to exist: those who play the role of oversight on one board are, in another company, under the oversight of the very people they control in the first one. How can we possibly think that there is no exchange of favors even if it’s just unconscious? Those who sit on all sorts of board and eventually cover for one another. Just take a look at the Board of Citicorp, Fortis or Goldman Sachs and check out how many people are actually execs or former execs of other companies able to exert influence in ways that may not necessarily be transparent or acceptable


4. 
   
   there’s an unacceptable degree of collusion between senior decision makers and board members of major corporations and people who are supposed to be running government by the people and for the people. Was Cheney ever in trouble for his ties to the oil industry and Halliburton? Did anyone react when Halliburton opened its second headquarters to the United Arab Emirates under the pretense of developing is business in the “Eastern hemisphere”, but in fact in order to avoid corporate income taxes in America? How many former Goldman Sachs senior execs ended up managing public money in the US, Henri Paulson being the least competent IMHO?


5. 
   
   corporate governance need to be fundamentally reviewed to become more inclusive of all categories of people who work for companies. It’s also absolutely essential to force a degree of transparency on the decisions being made, their implications and their rationale, using the information provided openly to key constituencies and communities within a company to allow the companies’ people (after all they all claim it’s their most precious asset) to express a view and provide feedback on what is being done. From that perspective the governance model of German companies is a good first step.