Even if a company is a bail-out recipient, it still needs to retain talent and compete with other companies to hire the best workers. With onerous pay restrictions, no firm can be expected to hold its own with competition that is not functioning under the same conditions. Why would I want to work for 200k a year with Bank of America when I can get 400k with Goldman Sachs for the same job?
Fed and Treasury are coming around to this painful truth:
In recent weeks, officials from the New York Fed and the Treasury Department have urged Mr. Feinberg, to avoid making 2010 pay similarly restrictive for some top AIG executives and employees, according to people familiar with the discussions.
Fed and Treasury officials told Mr. Feinberg that tough restrictions could ultimately jeopardize the government’s ability to recoup its roughly $90 billion in loans because key employees would leave. Unlike other firms subject to Mr. Feinberg’s review, AIG isn’t expected to pay back the government’s investment for several years, making it subject to the pay czar’s rulings for the foreseeable future.
U.S. officials made a similar argument to Mr. Feinberg ahead of his 2009 decision, these people said.
But will Kenneth Feinberg and his White House overlords realize that socialism isn’t gonna help AIG and Bank of America return to profitability and independence?
