Like most people I am always shocked at the level of bonus payments and other compensation paid out by some Wall Street firms in a given year. It seems obscenely excessive.
Part of the reason for it—a big part—is the arcane complexity of the IRS Code and Byzantine tax regulations which encourage sleight of hand and short-term thinking in order to favor one special interest cause over another. Congress bears responsibility for this, but prefers to bash others rather than fix the problems encouraging risky behaviors.
Now in a one-two punch by politicians and bureaucrats both the pay czar and the Fed have imposed compensation caps or slashed the pay of key executives. But there has never been a law against making money by following the tax code, if you can do so.
And guess what, there still isn’t!
This is revenge politics—a kind of ‘let’s find someone to hang’ designed to distract us from the failure of Congress and the Administration to craft solutions to the financial, regulatory, entitlement and other economic issues that bedevil us. While that fear of revenge politics may discourage the TARP banks or GM or Chrysler execs from challenging these pay rules, there will be such a challenge in the courts. I predict these rules will be swept aside as unconstitutional over reaching.
The irony in this eagerness to punish the bankers is that imposing these new rules TODAY has the practical effect of driving out of these institutions the very people recently put in place to fix the mess left by their predecessors. Good luck with that!
Is it November 2010 yet?
Add this sorry story to a growing list of reasons people are realizing that this is not the ‘change we can believe in’ this is the change we fear. It is the change that bleeds us of our liberties, deprives us of our choices, imposes the fiat of czars to replace the rule of law, and undermines confidence in our future when we need it most.
This too shall pass.