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OpEdNews Op Eds    H3'ed 2/6/09

Shameful? Yes. Surprising? No.

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Item: Soon after receiving $85 million from the TARP bailout fund, executives of an AIG subsidiary went on a week-long luxury retreat to St. Regis Resort.  Cost: $443,000. 

Item: Merrill Lynch CEO John Thain spent $1.2 million to renovate his office, even as his firm was being acquired by Bank of America and BOA received of some $408 billion in government equity purchases, asset guarantees, and cash infusions from the TARP bailout fund. 

Item: Citigroup planned to take delivery of a $50 million French-made Dassault Falcon 7X.  At the time, The bank was receiving some $381 billion (including asset guarantees) from the TARP fund.  

Item: Wall Street brokerages paid $18.4 billion in bonuses in 2008, even as their firms lost more than $35 billion; 2.1 million Americans lost their jobs; and the world economy lost more than $2.2 trillion last year.   

à  Polled last week, 46% of Wall Streeters said they believed they deserved larger bonuses. 

President Barack Obama was right when he said, referring to the bonus payments, “That is the height of irresponsibility.  It is shameful.” 

Shameful?  Yes.  Surprising?  Not in the least. 

Senator Claire McCaskill, on the Senate floor, observed, “We have a bunch of idiots on Wall Street, that are kicking sand in the face of the American taxpayer … they don’t get it … these people are idiots … what planet are these people on?  What could they be thinking about?  … I don’t think any of us thought these guys were this stupid.” 

Believe it, Senator.  “These guys” care about money and themselves, in either order.  That’s all.  And it’s not stupidity, it’s greed.  You didn’t think these guys were this greedy?  Think again. 

I spent 17 years in the financial services business and 16 more as a consultant to financial services firms.  During that time, I learned a few important lessons about “these guys” – Financial Animals, I call them – and the planet they are on.   Here are five of those lessons and how I learned them. 

Most Financial Animals are disconnected almost entirely from the reality in which the rest of us live. 

In 1990, I worked for the CEO of a major financial services company.  One Friday I had some documents for Mr. Wunderbar to sign; I left them with his assistant and said I would pick them up Monday.  “Oh no,” she replied, “He’s waiting for them now.  And the G-5 [Gulfstream V jet] is waiting for you.”  I called my wife and said, “I’m going to Bermuda but I’ll be home by suppertime.”  The documents (on which original signatures were required) were not needed until late the next week. 

The same company had a tough 1990 and we had to lay off 600 employees (the first tranche of what would become 13,000 layoffs by 1993).  As we walked to the TV studio to tape a video announcing the layoffs, Mr. Wunderbar told me what was really griping him: the elevator down to his indoor swimming pool at home was on the fritz; he had to use the stairs.   

That is disconnection from reality. 

Because they are so disconnected, most Financial Animals see no relationship – especially not a causative one – between their pay and their performance.  For that reason, they see any mandated cap on their compensation as an undeserved penalty. 

Financial Animals are keen on “pay for performance” for the rank-and-file.  But they are usually unwilling to apply the approach at higher levels.  Why not?  Because, in their view, so many factors beyond their control affect the organization’s performance that “pay for performance” just does not work for them.   

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Rick Wise is an industrial psychologist and retired management consultant. For 15 years, he was managing director of ValueNet International, Inc. Before starting ValueNet, Rick was director, corporate training and, later, director, corporate (more...)
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