The Reasoned Review

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Heads I Win, Tails You Lose

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Bloomberg gets the scoop on how Obama’s flimsy “Bank Tax” will affect Goldman Sachs:

Jan. 25 (Bloomberg) — President Barack Obama’s call last week to curb bank risk-taking and crack down on “obscene” Wall Street bonuses may help boost those very payouts at Goldman Sachs Group Inc.

Goldman Sachs, like many banks, is awarding more of its bonuses in stock to tie them more closely to performance. The firm priced those shares at $154.12, the closing level on Jan. 22, a person familiar with the matter said, after a two-day, 8.1 percent slide prompted by Obama’s plan.


“The unintended consequences of some of this craziness coming out of Washington are breathtaking,” said Michael Holland, who oversees more than $4 billion as chairman of Holland & Co. in New York. “In the process of trying to score political points, they have taken the target, in this case the so-called fat-cat bankers, and provided them with a reward.”

I wonder if we’ll ever realize that you can’t punish people who make the rules. In this case, Goldman Sachs regularly gets their first choice appointed to the Treasury Secretaryship, and as Rep. Dick Durbin had the courage to remark, so far as Congress goes, the banks “frankly own the place” .

Under these circumstances, finding a way to curb executive compensation or even castigate the banks for getting us into this stupid crisis isn’t just difficult. It’s well-neigh impossible. It would be like getting Obama to reduce his executive powers, or trying to convince Stalin to step down nicely after two terms.


Written by pavanvan

January 26, 2010 at 10:22 am

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