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Should Wall Street Apologize?
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Is It Enough To Hear Wall Street CEOs Say "I'm Sorry"?
Is Steven Pearlstein Right?
By JAMES F. HENRY
Bull Moose Magazine Publisher
Washington Post Business Columnist Steven Pearlstein wrote in his column on Wednesday, 24 September 2008 that Wall Street owes the American public an apology for the sins of their past. At the same time, Pearlstein rejects popularly held ideas that CEOs should have their salaries capped at $400,000 (the salary the President of the United States receives) and at the notion that severance language in their contracts should be removed, in exchange for a piece of the $700 billion the administration has proposed the American Public shell out to bail out Wall Street. So the question that must be asked is, would it be enough to hear a Wall Street CEO to say, "I'm sorry"?
I'm a father, and am pretty good at motivating my children to do things they don't want to do. One of the motivational techniques I (and doubtless most parents) use is to give the child two equally unattractive options and let them choose which they want to do. So here's my thought. If the CEO of Fannie Mae Herbert M. Allison, Jr. wants to keep severance language in his contract, he should be given a choice. We could ask him to run up and down Wall Street naked, screaming like a mad man, with cameras rolling for the 6 o'clock news. If he doesn't want to do that, then he gets an annual salary of $400,000 with no severance.
Now, I should let you know that Mr. Allison did not create the problems at Fannie Mae that led to his status as CEO. In fact, he was hired to replace Daniel Mudd, after the Federal Government took control of Fannie May a couple weeks back. So maybe it should be Mr. Mudd streaking down Wall Street.
As an aside, I was intrigued to read that Mr. Allison has ties to Sen. John McCain, having served as McCain's treasurer for his 2000 presidential bid. Interesting.
Back to the original question, is Steven Pearlstein right? Myself, I just don't think it would be enough to hear those Wall Street tycoons say they are sorry, because I wouldn't believe it for one second, any more than I do when I order my nine year old son to apologize to my five year old daughter for any number of offenses he has committed against her. Yes, there is the punitive factor of having to admit guilt, but do I think it would change anything if I heard Michael Sullivan, former CEO of AIG, say, "I'm sorry," while his successor holds out his hands asking for the coveted bailout bucks?
I don't think Pearlstein's suggestion goes far enough. I want a punishment for these yahoos that is so severe that we can be certain that they will learn from the error of their ways and never make these mistakes again.
I want to hear Richard Syron, the recently departed CEO of Freddie Mac, to go before Congress and say, "We would love to have tons and tons of Government oversight of all our business practices," in exchange for the $14.1 million severance package he received when he departed a couple weeks back.
Then and only then will I feel secure that the ungodly amount of money George Bush believes Wall Street needs to right the ship will be secure.