Wednesday, April 02, 2008

C'mon, Really!?

With the US economy being what it is I cannot say that I am surprised by what is going on in the congress these days. Yesterday I heard a report that there is a bill going through that would cause the Fed to become a sort-of super-auditor. It would entrust them with the onus of making sure that companies who trade on the open market. They would look into things that smell fishy.

The pundits have complained about this being a bad idea for basically two reasons:

1) The Fed didn’t have the foresight to prevent the current mortgage melt-down…
2) The Fed auditors would not have the ability to understand the balance sheets that much higher paid CEOs have problems understanding themselves…

The mind boggles. As to the mortgage meltdown, the Fed didn't have the authority to do anything about it. Many people foresaw the impending problem and complained, but as it was not within their purview to do anything about it, they cannot be blamed for not having prevented the carnage caused by the collapse of that house-of-cards that was the mortgage industry for the past few years.

The second argument is just strange. What are they arguing? That the size of your paycheck is directly related to your ability to understand a topic? What a crock! Unless you personally work very closely with the CEO of your organization, or you have an extremely high-profile position, it is highly that the CEO of your organization knows more about what you do than you do… That's not the talent they (presumably) possess which justifies their salary. The mark of a good boss (and by extension, a good CEO), I feel, is the ability to employ people who are the best at what they have been hired to do. A good boss knows (and expects) that his employees are far better at doing their jobs than he (or she) would be.

Sunday, the pundits were discussing another bill that is moving through the system that would tie the promise of Fed bail-outs for companies to a requirement that their CEOs not earn more than a G15 salary grade salary. (That's about $150,000 US.) C'mon, really?

While I applaud the sentiment – don't pay obscene rewards to the person who drove the company to need a bail-out in the first place, why stop there? If you plan to stick your nose into the internal running of a company why stop at a pay cut? Why not make the CEOs of failed companies face the same tragic end that the employees of that company would have faced had they brought the company to the brink of disaster: Termination; A fall without a golden parachute!

I'll tell you why… because the CEO is an important person in the US Economy. Why? I'm not really sure why, but then, I probably just don't make enough money to understand it all.

Wherever you are today, I hope all your news is good!

Don Bergquist – April 02, 2008 – Lakewood, Colorado, USA

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