This is the second in a series of posts about the need for Americans to step up and be more responsible. We all knew this need was coming – it has been a theme running through many of my posts – but when President Obama called it out during his inaugural address, I decided to address it more directly. My first entry in this series was about NIMBY attitudes preventing environmental projects from moving forward. Today’s entry is about greed, particularly among corporate executives and Wall Street bankers.
When Obama said during his inauguration that “what is required of us now is a new era of responsibility — a recognition on the part of every American that we have duties to ourselves, our nation and the world,” my guess is that he meant businesspeople too. And yet just three days after the inauguration, the Wall Street Journal ran an article about companies using dicey calculations to boost the value of pension payments they are making to senior executives. I won’t get into the mathematical details, but the basic story is that instead of using IRS rates to discount the value of future pension payments, companies are using their own rates, to generate a higher payment.
For example, one of the executives profiled, John Hammergren of McKesson, is due to receive $84.6 million, rather than the $66.4 million he would be paid using the IRS rate. This man made $38 million in 2008, $25 million in 2007 and over $10 million per year for the last several years. And on top of all this money he gets paid, he is due a pension payment of $66 million. But that isn’t enough…he seems to need even more money, so he monkeys with the numbers to boost that pension by another $20 million.
Merrill Lynch is a steady source of greed. First you have John Thain (am I the only one who thinks he’s a dead ringer for Mitt Romney?)
spending $1 million to redecorate his office. His excuse: the redecoration was done during better times. Dude, if you’re spending $1 million of shareholder money on office decorations, you are being greedy, no matter how well your company is doing. Then there is Thomas Montag, who Thain recruited to Merrill from Goldman Sachs with a guaranteed pay package of $39 million for 2008. Mr. Montag’s debt unit lost $16 billion in Q4 of 2008. Because of those losses, taxpayers have had to invest over $20 billion in Bank of America to support its acquisition of Merrill, and agree to share losses on $118 billion in assets. But has Montag (who, let’s not forget, after 20 years at Goldman is already rich) offered to take less of his bonus? No way. Why? Because he is greedy.
Of course, the ultimate symbol of greed was the recent news that Wall Street bankers paid themselves $18 billion in bonuses while taxpayers bailed out all their companies. It was this act of greed that President Obama called “shameful.” And he was right. For bankers to insist on getting their multi-million dollar performance bonuses, when their companies clearly had not performed, and were taking taxpayer money to survive, is the apex of greed. Companies claimed that they had to pay bonuses to retain employees. Where were those employees going to go? Bear Stearns? Lehman? I don’t think so.
Look, I understand people wanting to make money. I understand the desire to be rich. But rich people grubbing for the last dollar…I have to ask: have you no sense of decency? Responsibility and duty – to the nation, to our neighbors – means sometimes leaving a little money on the table. If we are to “begin again the work of remaking America,” as President Obama encourages us to do, reducing greed is a good place to start. How can we expect to solve problems like Social Security, health care, or global warming if everyone is grabbing as much money as they can? Whether the sacrifice is flying commercial instead of private, or buying a 30″ flat screen instead of 50″, if we are going to build America back up we must all change our attitude from “I want it all now” to “I’d like most of it, but I’m willing to share.” Let’s show a little restraint and try to come together to solve some really difficult challenges.