The mere fact that "special masters" are even labeled "Czars" by the administration should be warning enough. One might guess either that the leaders of the administration have a very poor grasp of the historical import and meaning of the term, or they have the unabashed arrogance to wield it notwithstanding its many negative and authoritarian connotations. Not that the Obama administration is alone in its use of the term, but it has now exceeded the high water mark for Czar populations set by the Bush Administration. That we now have one in the process of dictating executive pay, indeed any compensation structure at all, is deeply concerning. So when Obama administration’s "Special Master for Executive Compensation" out and dictates that his Papal Bull on pay cuts for executives of banks receiving government assistance should become the model for Wall Street and for the United States generally, well:
1. Despite the protestations nearly since January that no one in the Obama administration would be meddling with compensation in private enterprise, you should have seen this coming months ago.
2. We told you so.
We think it painfully congruent that Czar Nicholas Feinberg II comes hot off the throne of another Czarist dais to his present exultation. More appropriate still that he brings his experience from the 9/11 victims fund to his present post. "I am extremely sensitive to the public outrage," he quipped to Bloomberg. Excellent. We are most pleased, Your Imperial Majesty, that it is you, given your sensitivity, pulling the levers on the longer-term variables in this complex system.
The fact is, much as the public may yearn to cut bankers down to size, and much as getting at someone's cash is, after all, the most vicious and ghastly punishment there is in the United States, this will all end in tears. The proper way to have dealt with executive pay (which is a tiny fraction of corporate cost in any event) would have been to permit these institutions to fail. Period. You might notice that no one needs to modify Dick Fuld's pay today.
Citizens of the United States do not need a "special master" to deliver them a spanking for losing money. Nor do they need a handout from government coffers. It's time for enterprise in the United States to leave the nest and forgo both the extra bedroom that Mom will keep just like you left it "in case," and the time out room Dad will send you to if you blow it again. Punishing firms that accepted government funds, effectively under duress, and who have managed to actually pay those funds back (at a gain to the taxpayer, you might also notice) is a dangerous act. It is a clear sign that political whim and "sensitivity to public outrage" is driving economic policy. Again, this will all end in tears.