This guest post is part of the Twentysomething series of guest posts that I run periodically.

Today’s guest post is an open letter to Obama from a twentysomething investment banker working in a London office of a US bank. The letter is in response to the salary caps Obama is putting on bankers who receive bailout money. The cap is $500,000.

I do not necessarily agree with the ideas in this letter, but I think this is an important workplace topic for debate.

Dear Mr. Obama,

First of all, I would like to say how relieved I am to have made it through your firewall despite writing from my workplace account. Secondly, I would like to congratulate you on your bold and assertive moves to nip that pernicious weed we call capitalism in the bud. It’s about time somone brought change to the outdated american dream.

I would like to humbly request however that you apply the principle of capped pay to other areas of my professional life. For instance, can we also cap hours worked?

I know what you’re thinking – sounds a little too French. But I think the great American people could learn from the French. After all, circa 250 years ago they were the world’s greatest superpower only to fall into precipitous decline at the hands of a fiscally irresponsible and greedy ruling class (seeing any parallels?). The people believed in change and made it happen (capping pay was a little too bourgeois for those times, so they resorted to capping heads, but all in all it is the same).

Now – 250 years later, France have rebuilt themselves into a fine socialist state, and while they are not quite a superpower, their president is regularly intimate with Carla Bruni – what more do you need?

I believe in france the rule is that 35 hours of work a week is plenty and any time beyond that is free time (“le freedom time”). That may be a bit too radical for Wall Street at first, but may I suggest we use the same yardstick you used to cap pay – benchmarking it to the President of the United States.

Recent press reports indicated you start work at 9am and are sometimes seen in your office as late as 10pm! It also mentioned that you have meetings on Saturdays (and wear slacks, which is a step in the right direction – I can’t wait to see what the press says when you unleash the true Hawaiian in you and show up in board shorts and flip-flops!). So I will go ahead and estimate your average weekly working hours at 62 hours (9am-10pm 2 days a week, 9am-7pm 3 days a week, plus a 6 hour day on Saturday – please let me know if these assumptions are way off). I bow to your superior judgement, but I would just like to open the debate on limiting our working hours to 62 weekly hours.

I admire you greatly, and if this were implemented I would be able to follow your example more closely. I could become a more dedicated family man. I could work out daily (cardio and weights). I could walk about topless for the paparazzi. All in all, a few years down the line I would look back at the positive change you have made in my life and feel a debt of gratitude. All I ask though is that you please consider this suggestion.

Sincerely,

Bill

103 replies
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  1. DT
    DT says:

    Penelope – why are you posting this? It reads like something from a high school newspaper. I’m sure the author thinks that he’s being “hip” and “snarky,” but it’s just annoying. And I’m saying that as a fellow twentysomething.

    I agree that this is an important topic, but please either do it some justice or don’t mention it at all. I’ve come to expect more from your website.

    And yes, Bill, it’s a good plan to call anyone who disagrees with you a socialist. Do you honestly think that Obama is anti-capitalism? If you believe that, you’re willfully ignoring a whole lot of evidence in front of you. And if you don’t believe that, then you’re just being provocative for no purpose.

    • Penelope Trunk
      Penelope Trunk says:

      Yeah, okay. Before this comment string gets out of hand, I’m going to jump in.

      It’s true that this isn’t the tone that I write in. But look, if you want to have the perspective of investment bankers, this is the tone you’re gonna get.

      Additionally, it is a real problem that investment bankers work totally insane hours, and generally give up their lives for their work, and it’s a hard job to do without infinite salary possibilities.

      I linked to a Wall Street Journal article that argues the same point. Here it is again:
      http://online.wsj.com/article/SB123396915233059229.html

      I think the ultimate discussion is: Should there be jobs that are so demanding on someone’s life? And, is there a salary that actually compensates them?

      Penelope

  2. Anna
    Anna says:

    This is so poorly written. Penelope, I’m disappointed in you for publishing something that isn’t nearly in the same league with what you normally write.
    Sure, employees should be properly compensated for their time, skill, and success. Employees should not be exuberantly compensated by the taxpayers for their failure. And I feel no sympathy for someone who knowing entered an extremely time-demanding career. Their salaries still sound like plenty of money to me.

  3. jrandom42
    jrandom42 says:

    Yeah, right. The President of the US averages only 62 hrs a week. With the stimulus moving through Congress, strategy planning for Iraq and Afghanistan, the rest of his cabinet to be confirmed, as well as a whole host of foriegn and domestic policies to be formulated, pushed, legislated, and implemented, do you really think he’s ONLY working 62 hrs/week? Grow up and get real!

    And let’s not talk about the 3 AM phone call that’s coming.

    Finally, how many enterprenuers do you know who are only working 62 hrs/week?

  4. Maren
    Maren says:

    I’m in medicine, and recently work hour restrictions were put in place for resident physicians (the training between medical school and being an independent physician). The cap is at 80 hours per week and 30 hour shifts, and many residents are complaining that it is too few hours to work. Just for some perspective… investment bankers are not alone in their crazy life-consuming work habits.

    • t
      t says:

      And, of course, this comes with a system where a complete monopoly on how residency positions are selected and salaries are set that keeps the yearly salary to 45-55k for most residents.

      Keep in mind that a resident has already completed 4 years of college and 4 years of medical school (often accruing hundreds of thousands of dollars of loans along the way) before beginning 3-9 years of residency.

      So, yeah – it’s hard to muster up much sympathy for someone being capped at 500k….

      (and I agree with the comments suggesting there’s no way Obama’s working 62h/wk, either!)

  5. Alex K
    Alex K says:

    While I don’t like the tone and the choice of the supporting arguments in this post, I do agree 100% with the underlying point: salary cap is a bad idea, it goes completely against the American dream, and it IS socialist.

    For everybody who says it’s not socialist, I’m sorry, but please shut up. You don’t know what socialism is. I was born in USSR, and I remember when my dad was getting 120 roubles a month, and that number was set from above – whether he performed well or not, it wasn’t going to change. And the guy in a cubicle next to him, no matter how stupid, was getting the same amount.

    While the step that our president is taking is not the same thing, it’s a step in the same direction – and not the first one, either. I believe the whole ‘redistribution of wealth’ comment was that.. Next came the stimulus.

    I believe most Americans got too used to living in a good thing (capitalism), which despite its faults, works better than any other system out there right now. Socialism, on the other hand, definitely does not work: it goes against the human nature, it completely kills progress, and it ends up being much, much less “fair” to have-nots than capitalism. But that is a separate post in itself.

    • CappedWorker
      CappedWorker says:

      I agree with a lot of what you say, but if these companies are going to accept public funds, then restrictions must be attached. They cannot have it both ways.

    • Lisa
      Lisa says:

      You gotta love someone who argues “to everybody who disagrees with me, please shut up.” Particularly someone who doesn’t think there’s any difference between communism and socialism.

    • Pat Rocchi
      Pat Rocchi says:

      Thank you, Alex K, for getting to the heart of the matter… These execs are not working in the free market. They stepped out of the free market when they decided to take OUR money. And we, their employers, want to cap their pay.

    • Person Person
      Person Person says:

      “I was born in USSR, and I remember when my dad was getting 120 roubles a month, and that number was set from above – whether he performed well or not, it wasn’t going to change. And the guy in a cubicle next to him, no matter how stupid, was getting the same amount.”
      Well, not really. I was not only born, I worked in USSR, and, with the same starting salary a year later I was making much more than a stupid guy at the next table (there were no cubicles then).
      So – socialism has nothing to do with this.

  6. Erik
    Erik says:

    This is a great point, and even though Penelope didn’t write it with her usual style, instead she’s brought in someone directly impacted to make the point – i think we should be congratulating her for that rather than criticizing Bill’s writing style. How capping an industry’s pay is anything but socialist is beyond me – if the market will bear a higher pay rate, the person deserves it…that’s just how capitalism works. It goes to show how propping up the banks was just step 1 in a slippery slope if we’re not careful.

    • KateNonymous
      KateNonymous says:

      “if the market will bear a higher pay rate, the person deserves it – that’s just how capitalism works. ”

      Possibly there’s an “and” missing here, but it looks like there’s a correlation between what the market will bear and what the person deserves, and there just isn’t. The two are unrelated.

  7. Mike
    Mike says:

    This is a really immature and whiny article. If you don’t like the hours in your job, then it’s time to find a new line of work. I highly doubt that any aspiring investment banker is sitting there in college thinking that they can work on Wall St, only work 40 hours a week, and still make a huge salary.

    As for complaining about the salary cap, I think it’s a good idea. If you want to accept money from someone, there’s always conditions. You can take it or leave it. If I don’t want to pay interest, I won’t take out a loan. If I don’t want my CEO to have to suffer through only earning $500,000, then I won’t go running to the government when my CEO runs the company into the ground for short-term profits.

  8. Randy
    Randy says:

    What continually amazes me is the sweeping entitlement mentality of my fellow US citizens. The government, the universe, or your employers do not owe us anything beyond fair compensation for work performed. If I want more, I have to do more. There’s an old Sicilian proverb that says something like, “Don’t ask for what you can’t take.” Sums it up nicely I think.

    Personally, I am not willing to sacrifice my home and personal life. Nor do I have the stomach for massive risk-taking like trading or investment banking. So my reward, financially-speaking, is not as high as others. And I am totally okay with that. My choice.

    For those who are willing to trade, that’s their choice. I say go for it. But capping is completely counter-productive and counter-intuitive. Incentives (not always cash) have always promoted ingenuity and progress. The market will bear what the market will bear, and we should allow it.

    • Jess
      Jess says:

      Absolutely. These kids make a choice to sacrifice their life for the chance to become Gordon Gekko.. Don’t think for a minute that they are not entirely aware of what they are signing up for.

  9. Jeff
    Jeff says:

    Bill,

    Oh gag…
    France repealed the 35-hour weekly cap thing over 6 months ago. See: http://www.newser.com/archive-business-news/1G1-179473351/sarkozy-in-retreat-on-35-hour-work-week.html

    If you don’t like how much you are working at your job.. change. It’s a job. Government _should_ step in and protect those who can’t protect themselves.. like minimum wage workers who get abused constantly into working hours they shouldn’t or can’t. But bankers? I’m sorry, but I can’t even begin to empathize. Your life is WAY too short to be working 62 hours a week, and as a banker you have the choice and education to not work that much. If quitting/changing your job because you are unhappy is too disruptive for you.. Well have fun with whatever it is you’re calling life.

    And to ask “Should there be jobs so demanding” is to completely forget that investment banking is not the hardest job in America. I could point the Armed forces card and say they have it worse, I could point to people who work two and three part time jobs… I can’t believe you actually think that investment banking is the most demanding job around, and that we should push for legislation so their lives are easier. It’s astoundingly ignorant.

  10. NYC Memories
    NYC Memories says:

    I often hear investment bankers argue that if they worked the same amount of crazy hours at McDonald’s, they would have gotten paid more than they do now…

    My question is then why don’t you go ahead and work at McDonald’s? Stop complaining, if the hours are really that bad and the money is not worth the hours, then people would’ve quit.

    Investment bankers work crazy hours but are compensated more than enough… NOBODY fresh out of college makes six-figure salaries (including bonus) for doing largely meaningless work, except for investment bankers. And the fact that they are sort of the ones screwing up this market makes me even less sympathetic.

    Obama gave top executives a salary cap because those guys do NOT work crazy hours but earn billions of dollars way over anyone’s reasonable comprehension.

    And the fact that this investment banker is actually trying to match his work/life balance to that of our President is just shameless, and ridiculous. Next time when you inspire someone like Obama did instead of sitting in your cubicle churning away people’s retirement fund, then you can talk about having a 62 hours week…

  11. Betsy
    Betsy says:

    I am surprised how many people are finding so much fault with this piece. It’s a perspective, one different from my own, and while I am sure that other ex-pat investment bankers would disagree with it, it still has value. The responses underscore my concern that we are becoming an impatient and intolerant people, discarding the values and opinions of those who disagree with us, yet call ourselves “liberal” and “open-minded.” Penelope, I respect and admire that you are willing to give space to ideas and values that you do not share. True change will never come without reasonable discussion among us.

    This post actually reminds me why I left teaching. I didn’t mind that the pay was low – I just minded that I could work 24/7 and it would never be enough. That’s exhausting.

  12. Angie
    Angie says:

    I’m not sure that people understand that this salary cap doesn’t apply across the board. It will only apply to certain high-level executives in firms that choose to accept federal funds. And, it’s quite possible that employees below those executives will continue to earn an amount above and beyond the cap. So, this really isn’t consistent with Alex’s example of the system in the USSR. However, neither is it consistent with a 100% free market economy. But there are plenty of Americans who do not feel that the market should be completely free; many believe that the government should institute some controls.

    I think it would have been a better idea to introduce legislation that required publicly-traded companies to allow shareholders to vote on the top executives’ salaries. And it seems like it would be consistent with previous court decisions stating that executives owe a duty to run a company for the benefit of the shareholders (i.e., to earn profits for them). So…the shareholders could decide whether they were okay with the executives taking half of the revenues before they saw their part of the profits (example from the article Penelope posted). And the execs could decide whether they were happy to work for the compensation approved by shareholders.

    • Deb
      Deb says:

      But Angie, while shareholder voting maybe a good idea, IMHO it circulates back to the origin of the whole thing. That the companies concerned decided on incentive-based pay, which incentivised the concerned executives to take more and more risks to maximise their incentives, which landed everyone in the current soup. So while co. shareholders can of course vote on the compensation of their executives, it has to do with the wider risk of the same companies having to access public funds later to prop themselves up. It’s not contained within the co. any more.

  13. tom
    tom says:

    Putting aside the absurdly bristling and arrogant tone of the message– and if the OP uses this tone I generally I find it amazing that anyone would ever listen to him, regardless of his pedigree– he is completely missing the point. The question at hand is not how high a salary should go, as he implies. The question is how high an owner should set its employee salaries. And, if financial institutions accept bailout funding, they just accepted a new boss.

    Hopefully the new boss will *not* be the same as the old boss.

  14. Brandon
    Brandon says:

    First – the letter posted could have been bette. As upset as “wall street” may be over this, frankly as a tax payer whose money is going to line the pockets of these folks, I really could care less. Here’s what Obama did:

    He set a $500,000 annual cap on executive pay for companies getting taxpayer funds.

    Notice the last half of that sentence. Don’t want the salary cap? Fine. Don’t steal tax payer money to fund million dollar office renovations, $400,00 retreats and multi-million dollar planes. If a company needs a bailout from the federal government, the people at the head of the company don’t deserve top level pay for substandard performance.

  15. malingerer
    malingerer says:

    Social capitalism..

    Value the efforts of the individual while taking care of society as a whole.. It’s where we need to go.. If anything, this last pure capitalist debacle has shown us the work of producing nothing tangible of any type or a true capital asset does nothing to drive the improvement of us, those around us or the planet as whole.

    The manipulation of financial instruments for a perceived gain in value, driven mainly by inflationary factors and misrepresentations, for the acquisition or conglomeration of wealth does nothing but bring us down.

    There is nothing wrong with money, it is the pursuit of it at all other costs, which causes our challenges.

    You think it will make you happy at the end of the day? It doesn’t, you’ll only want more, because you think, maybe, it will make you feel better. Been there, done that, it doesn’t..

    We have a chance to make the world a better place, out of this situation we’ve gotten ourselves into, I truly hope we all make the right decisions.

  16. Keith
    Keith says:

    This is not a new argument and one that came out the first day that caps were proposed. Now, here’s the problem. The bailout was socialist, pay caps are just fiscal responsibility. The minute the industry went to the government for money, capitalism went out the window.

    As an investor, I would never put no-strings-attached money in the hands of those who are obviously greedy failures. Had they been greedy successes then I would ask less in return. Of course, if they were successful they wouldn’t need my money.

    Our leaders have a fine line to walk when keeping the greedy failures in line and in business while avoiding the financial suffocation of over-regulation. I think it is past time to regulate a little on our unruly market.

  17. Pbing
    Pbing says:

    I can’t quite keep up with the pace of the commenting here, so I apologize if any of this is redundant, but:

    1. I do agree that this is poorly written. Stylistic choices of snark vs. non-snark aside, it’s just not completely coherent, as presented. That just does everyone a disservice, in my opinion.

    2. I’m not sure how deep we need to get into the political nitty-gritty of this issue, but surely there’s a difference between capping pay in a general situation, and capping pay in this particular situation. If an industry is being propped up by the government, it seems reasonable that the government demand some accountability. The only alternative to this “socialist” (and I would disagree with characterizing it as such) situation and the previous laissez-faire situation is that the financial industry has already demonstrated that they are incapable of self-regulation. That’s why we’re in this mess! You don’t really get to choose the color of the life preserver that you are thrown, IMO.

    3. To follow up on that point (and perhaps to bring this comment back more in line with the subject of this blog in general): I’m quite unfamiliar with the inner workings of the financial industry, but I found this article by Michael Lewis illuminating. If the financial industry in general was operating as carelessly as he seems to indicate, then this situation is not only a result of their recklessness, but their ignorance and failure to do their jobs properly. If they failed to understand the situation they themselves were at the helm of, as it was happening, how can they be trusted to be the ones to put anything back together?

    Yours in typos,

  18. Danilo
    Danilo says:

    Secondly, I would like to congratulate you on your bold and assertive moves to nip that pernicious weed we call capitalism in the bud. It’s about time somone brought change to the outdated american dream.”

    Oh, this is crap. Last I checked, “capitalism” at no point involved queuing up and asking taxpayers to provide a bailout for a failed business enterprise. If anything, the death of capitalism can be laid at the feet of inept bankers and no one else. (As an aside, satire works better with correct spelling and capitalization, avoidance of cliche, as well as understanding that capitalism is well past the “bud” stage.)

    True capitalists make their own money and risk their own money. True capitalists wouldn’t be caught dead asking the state to subsidize their inept decision making. If the finance industry starts acting truly capitalist, I’ll be more enraged than anyone at the thought of outside interference in their internal compensation strategies. For the moment, though, the banks are acting like a distant cousin with a gambling problem. As long as my money, taken from me by the government by force, is being used to bail them out, damn right their pay should be limited.

    There’s nothing slimier than someone who claims to be a capitalist but who adopts socialist attitudes when it serves the interests of preserving their comforts and social standing.

    • Deb
      Deb says:

      The most apt comment till now, something I was on the verge of saying. Would the ‘wounded capitalist’ stand for his co. going into liquidation then, putting paid to all his 62-hour weeks?!

  19. Dale
    Dale says:

    I think the issue is more our culture and our refusal to take things into our own hands. How about figuring out a way to work smarter, instead of asking someone to do it for us?

    Dale

  20. malingerer
    malingerer says:

    maybe the author of this letter should read this site..
    http://baselinescenario.com/2009/02/08/baseline-scenario-2909/

    excellent comment near the end “During the boom years, large banks and their fellow travelers accumulated ever greater political power. This power is now being used to channel government subsidies into the now outmoded (and actually dangerous) financial structure, and in essence to prevent resources from moving out of finance into technology and manufacturing across the industrialized world.”

  21. Casey
    Casey says:

    The salary cap will only apply to companies receiving bailout funds from taxpayers. If an organization’s leadership mismanaged their business to the point of needing to request a financial bailout from the government, then they need to understand that some restrictions will apply. If this gentleman is not ok with those restrictions, then he is entitled to get a job with an organization that does not need a bailout. That’s the beauty of living in a capitalist country. Once the loans have been repaid, CEO’s can go back to their ridiculously high compensation packages. Hopefully they don’t do it at the expense of their company, or country, again. BTW, I am a Republican who understands that with freedom comes responsibility.

    • Mark
      Mark says:

      To Late. We’re already powerless.If you don’t think so. Please explain Barney Frank still being in office.

  22. Steve
    Steve says:

    How about capping the amount of money the lobbyists can donate to the Congressmen? How about capping the amount of money the government can loot from the taxpayers and spend on the pet projects of their buddies or the transfers of wealth? I appreciate the satire involved with some of the suggestions but I think we are past the stage of amusement and at the stage of nausea. I’m very concerned about the direction of the country toward socialism in masse and the debt the next 3 generations will inherit for our current spending spree. I think we all should be very worried the country will be broke and powerless in a few short years.

  23. Nisha
    Nisha says:

    If they want to be bailed out with taxpayer funds, it is completely reasonable for the government to cap salaries. There’s nothing socialist about that – if you want taxpayer money, deal with it.

  24. cd
    cd says:

    call it what you want…its bs. the issue is not (or at least it shouldnt be) political really its one of accountability and responsibility.

    its called pay for performance…commission…whatever have you. if you do a great job, you should be appropriately compensated. if you make billions of dollars for your company (and it’s shareholders) then perhaps millions of dollars is appropriate compensation. seriously. i dont agree with limits and i dont agree with the golden parachutes or the sweetheart severance or the benefit laden employment contracts.

    if you run the ship aground and suck badly, then you get nothing. nothing. massive reward carries with it some risk. if you f up you realize the risk, not the reward. its pretty simple. if you cant afford your lifestyle when you realize the risk, then u f’ed up again, deal with it. live within your means. plan for a rainy day.

    this s is getting old. own up. be responsible. they are lucky the shareholders arent capping their pay. it’d be 50k, not 500k.

  25. Voice in the Crowd
    Voice in the Crowd says:

    Folk,

    It should be mentioned that no one if forcing the executive wage cap on a company. However if they want the US Government to invest in their business, then the investor is attaching strings to the money, which is the wage cap. The companies seeking the money are perfectly free to go elsewhere, but if they so choose money coming from the US Government has a stipulation of capping the executive pay.

    As for the “if the market can bare it” comment, well obviously the market can’t. Sure the money is there, but the willingness of the people to allow it to be paid is not. As I said above all these companies can keep doing what they’re doing, but they risk the PR issues that come with it.

    If you want to get rid of the “socialism” of a wage cap, then Lets get rid of the socialism of the bail out all together. If the Company can’t stand on it’s own, let it burn. But I’ll warn you now, Economic and financial Darwinism doesn’t always end up with good results.

    And yes, Socialism and Communism are not the same. Most of Europe and Scandinavia are Socialist to some degree or another.

  26. Heather
    Heather says:

    I’m surprised at the knee-jerk hostility here. I would like to propose that the insane hours are actually part of what created this mess, as they lead to what I like to call “entitlement syndrome.”

    My brother-in-law is a junior trader with CitiGroup, and from what I can tell, this job entails sacrificing your entire 20s and 30s to the money gods. His goal is to amass a huge fortune by 55; as though retiring early in the lap of luxury will somehow compensate for his lost youth.

    There are two ways this type of thinking leads to the crisis in which we find ourselves. First, only the most crazy, money-hungry types would even want a career in investment banking, because most of us are not willing to sacrifice our personal lives. Generally, these folks aren’t known for their stellar ethics or their tendencies to question shady practices, as long as they continue to get paid. So you’ve essentially created a professional monoculture of very selfish, unethical people.

    Secondly, these people feel that because they are sacrificing their youth, marriages, relationships with their children, etc., they are “entitled” to all the perks, bonuses and inflated salaries that have come to characterize this industry. Hence John Thain’s $1.2-million office renovation, which included an $87,000 area rug and an antique commode. The guy was probably thinking, “Hey, I spend more time here than at home, so I want to spruce the place up the way I like it. If the company expects me to put in crazy hours, they can pay to house me in the lap of luxury.” Then they’re on the slippery slope of justifying to themselves unethical and even illegal behaviour because “I work hard and I deserve this, and everyone else is doing it.”

    I’m not saying that restoring a little work-life balance to this industry will solve these problems, but I think it’s one mechanism for decreasing the sense of entitlement among this people, and recruiting a more diverse staff who may have other ethical perspectives besides “Me first.”

  27. Mark f..
    Mark f.. says:

    Salary caps work in a confined environment like the National Football League.It would be hard to mandate a cap when only some of the industry players are required (wall street and the banking community)…if we want a socialistic economy like France…then go for it, but I still believe in Democratic ideals and veto this concept…the fact that some of the Tarp money and executive behavior is innapropriate is less a free market issue and one of bad management and poor business ethics.
    If the gov’t wants to put some constraints on “lending” money that’s their right, and the companies can refuse the money too…
    I find it ironic that the gov’t legislators who are some of the most corrupt people on earth are calling the kettle black. Most senators and congressman/woman take lobbyist money, trips, and speaking engagements for 5-20 times their salary annually…and we have the biggest federal defecit in history…like they know how to handle money???

    • Mark W.
      Mark W. says:

      Exactly. Where were the government legislators and regulators before this train wreck occurred? The government lacks real credibility in my opinion as they’re doing all the finger pointing here and not accepting any responsibility for the mess we’re currently in. The government is part of the problem. So now they think they have the solution? Who is investigating the role (or maybe lack of action) of the government in this economic crisis? It will take some time to sort out this morass because it has taken some time to get us to this point.
      This salary cap issue during this economic crisis is merely a diversion and doesn’t do much more than divide us. Stimulate the economy – not the government sector. The government should be working to free up the credit markets and enable business to do business. Businesses compete against each other, take risks, and either reap rewards or not. Government just keeps getting bigger and answer to themselves. I’m not satisfied with the performance of government here just in case it’s not evident.

  28. Leanne
    Leanne says:

    Mr Twenty-something,

    Long work weeks is not something unique to the banking world. Try working in sports TV or advertising as I did in my 20’s. You know what the hours were long and the pay was not as good – but it was what I chose to do for a living. Capitalism means you have free will and free choice. If you don’t like the hours your working for the pay you’re receiving you should probably exercise some of the freedom you have and change course.

  29. IMK
    IMK says:

    OK, Alex, I was also born and brought up in the former USSR, but since when running to the government for money when you screw up and put your company in danger of collapse is called capitalism? Capitalism is when those companies who deserve to fail get to fail. So, if you accept government money, be prepared to get it with conditions. Don’t like it – you can give back the bailout money and stop whining.

  30. asdasdasd
    asdasdasd says:

    Sure, your CEO can have as big a salary as you want – 5 million, 50 million whatever. Just don’t expect the government to bail you out.

  31. sophie
    sophie says:

    First off, you can tell a numbers person wrote this article. Must have been the left brain working solely, because the writing is terrible. I had to reread several sentences multiple times just to figure out his meaning.

    Secondly, you can also tell he’s working in London. He’s acquiring that dry, satirical British humor and it’s quite evident here. Such humor always fuels debate amongst those who don’t appreciate it.

    Finally, no matter what Bill’s true intent is, anyone who needs to have a salary cap of $500,000 had better be working more than 80 hrs/wk. And they’d better do it without whining. And no, they’re not entitled to further compensation by any illegal, unethical or whatever means. They by no means are any more special than the rest of us.

  32. Moshe Zadka
    Moshe Zadka says:

    Dear Banker,

    If you want to get more, please free to do so without asking for hand-outs from the tax-payers. Also, if you work less than 62 hours a week, maybe you will get sleep — enough to make rational decisions. In fact, here’s a suggestion — feel free to quit if you want to reduce your work hour to 0 hours a week.

    Thanks,
    Moshe Zadka

    Dear Penelope,

    Next time, maybe we can have more rich people who lose the public’s money and then whine about not getting paid more than the president. Oooooh, and let’s have more French jokes. Those French — haha, they are so funny because they are foreign.

    Thanks,
    Moshe Zadka

  33. Jennifer
    Jennifer says:

    Life is about choices.

    If you take government bailout money, then there should be consequences for that (i.e. salary caps and regulations on how the money is spent).

    If you decide to make a lot of money as an investment banker, then you have chosen to accept the consequences that come along with that (i.e. long hours, time away from your “real life”, etc.).

    If you don’t like what you are doing, quit. If you don’t like accepting a salary cap, then go to a successful company that isn’t taking the bailout.

    But don’t give me this BS that investment bankers somehow got into their line of work because they want to make money, while the rest of us “working folk” whose jobs are being cut and companies are closing because of the whole financial meltdown were working there for altruistic reasons. We want to make money, too. And our salaries are being cut, too. So it’s hard for me to feel pity. I’d take your 80 hr weeks/$500,000 salary cap any day compared to my currently fruitless job search.

    The tunnel-visioned superiority astounds me.

  34. Angela Cristina
    Angela Cristina says:

    I don’t believe in salary caps. I don’t believe in punishing people through the Robin Hood method: take from the rich and give to the poor. Many people are just bitter at this point and are blaming everyone but themselves for the mess they have put themselves in. Why cap the CEO from BofA’s pay (for example)just because the bank is hurting? I understand that yes, the banks are somewhat to blame for the bad mortgage loans (and a slew of many other loans), but is not the main responsibility with the loan applicant? How many people applied for loans using false information, false documentation, etc? Is that not also a felony? The banks, and their investors, were not the only ones greedy!! Was not the majority of people living beyond their means? Showing off to the Joneses? Trying to buy themselves some happiness?! The truth is that capping the high paid executives salaries will not “redistribute wealth” as the poor and middle class would hope, it will only stop them from whining…for a while. The middle class and poor talk about working hard for their money, but it’s not always about working hard…it’s more important to work smart…so if you are working 80 hours a week, then it’s probably because you have become a slave to money and have no escape. Only you choose to work those long hours for whatever pay you get. And you know what…the pay will never justify your efforts…

    Start working smart, and being happy with what you have (oh yeah…that would entail living within your means)!

  35. James
    James says:

    This is an important conversation to be having now, because once health care is nationalized then people in the health care industry will also be subject to government pay caps.

    I’d be interested to see how many people are telling the doctors of America to quit their jobs if they don’t like how much they’re being paid or how many hours they’re working.

    It’s a lot easier to hate an investment banker right now.

  36. Alex K
    Alex K says:

    Yes, it’s only for the companies that got government bailout. That bailout should’ve never happened, and the companies should’ve been allowed to fail. However:

    1) Just because the government “bailed them out”, does NOT mean the government gets a free pass to interfere and dictate how they should run their business. Does the government own those companies now? Maybe giving their CEO’s million dollar bonuses IS the best way to distribute the bailout money. Do you know for sure that it’s not? Bottom line, government should NEVER tell the companies how to run their business.

    2) If socialism would be introduced in its entirety in US right now, there would be public outcry, mass protests, and I think (I hope) it wouldn’t quite work. But – if it starts with baby steps like this one, then it will happen gradually, and nobody will really notice that one day we all live in socialism.

    I leave you with this quote from some guy named Nikita Khrushchev: “We can’t expect the American People to jump from Capitalism to Communism,
    but we can assist their elected leaders in giving them small doses of Socialism,
    until they awaken one day to find that they have Communism.”

  37. Andy
    Andy says:

    As *the* major shareholder in many of these bailed-out financial services firms, the US Federal Government certainly has every right to put whatever restrictions it wants on these firms, including compensation levels.

    Moreover, I find it extremely ironic and hypocritical that many of the execs of these firms, having failed miserably in the marketplace, are now crying with indignation “We are capitalists! Salary caps are socialism!”

    If they were true capitalists, they never would have accepted government bailout money in the first place. They would have taken their lumps like men and gone out of business like they deserved to, given the miserable failures they were in the marketplace.

  38. Andrea
    Andrea says:

    This letter is an interesting perspective, to be sure…it does make one consider the kind of repercussions on the wide-eyed hard working optimism that Penelope so celebrates in the current twentysomething generation. They (we?) are used to getting just rewards for just work done…for most of those i-bankers, that work will not radically change. There may even be more of it, more insane hours to go around as layoffs start. True, these i-bankers are *not* going to be the ones affected by the salary caps, except perhaps symbolically. This message of pay caps all too easily becomes a message of discouragement heretofore unseen by this generation. Most of them remember the 2000 dot-com bust as little more than headlers in Wired magazine.

    To say nothing of the recession itself! We shall see what the psychological repercussions are. But Penelope’s right to take note of this attitude, even if it falls far short of Mr. Swift.

    -Dree, employed, thankfully, in customer service.

  39. Mike
    Mike says:

    To me this “op-ed” is just an extension of the sensationalism and simplification of this issue. Enough has been said about it’s tone, so I won’t comment other than to say I’ve never met a twentysomething male that didn’t overcompensate his writing with heavy snark. Myself included. ;)

    As for the actual issue at hand however, I think it’s easy it is to demonize an entire industry marred with a history of opulence and a current mismanaged crisis. The truth is, as always, a bit more complicated.

    Canceling bonuses and capping salaries would be fair for those directly involved in the mismanagement and misrepresentation of financial assets; but that only accounts for 1%-2% of the employed personnel on Wall Street. The rest are as much a victim of this mess as the rest of us, perhaps more so thanks to the public lynch mob brewed up my the MSM. Great article on this here: http://www.slate.com/id/2210720/

    Now, what I’m going to say is probably isn’t popular, but it’s the truth. Great CEOs deserve their million dollar paychecks. Note that I didn’t say all CEOs, but great ones really earn it. A stellar CEO is an inspiring leader, a progressive thought leader and controls the sprawling bureaucracy with a iron-fisted management. They put in 70+ hour work weeks and bear a burden of responsibility from employees and stakeholders unlike anything most of us will ever experience. In the same vein as professional athletes, only a very small percentage of humanity is capable of doing this. Do you believe that the Boards of Directors of the Fortune 500 are paying their top executives because they’re nice guys? Nope, it’s because CEOs are like baseball cards – they get traded around a lot and the good ones are worth a lot of dough. These are exceptional human beings that have often achieved the highest levels of education, spent decades entrenched in one vertical and have worked harder than many of their peers. I think there is a hint of jealously when people complain about income disparity.

    On a personal note, most people do not live in NYC. I do. Read this great Times article about income disparity:

    http://www.nytimes.com/2009/02/08/fashion/08halfmill.html

    At the end of the day, it’s a cold hard truth that some people achieve greatness and afford themselves lavish lifestyles. Some people do not. It’s certainly unfair to let the impoverished suffer, but it’s equally unfair to punish the successful.

  40. jrandom42
    jrandom42 says:

    Mike,
    Since when do successful CEOs go to the government to help save them after enduring massive losses? If the CEOs don’t like the compensation cap, they don’t have to take government bailout bucks. It’s that simple.

    • Mike
      Mike says:

      Oh totally agreed. I’m more arguing that this cap is a dog and pony pilot al theatre – to fix this we need real exeutives. Those people don’t work for $500k year.

      And kinda highjacking to bitch about NYC being insanely expensive !

  41. Jac
    Jac says:

    First, I admit that I didn’t read all 47 comments, just the first 10. I didn’t think the letter was poorly written. I thought it was meant to grab the attention of the office of the president and somehow it has succeeded in getting attention.

    I have long thought that some formula is needed to apply to salaries. I’m not sure it would be a specific cap. How about if the highest paid person can’t more than 700% the lowest paid person? What if that was then calculated on the amount the company spends on a person including benefits and training? When I worked at Schlumberger (boo!) they paid me $72k/year. They were quick to send out quarterly a notice of what it costs them to employ me with 401K, insurance, training, and potential mobility options (meaning I might be sent to France to work for a bit). That number came in at $160K. I considered this a gross mis-management of my funds. Regardless, would it be so unfair if the CEO could only then take 1.12 million dollars from Schlumberger (of course after they subtracted his 401, retirement, stock options, etc he may have to settle for $500K)? And if he would like to take home $1.5 million next year, I would happy to accept a 33% increase as well.

    As for hour caps, I’m all for it. I lived in France for 6 months. I was blown away to find out that everyone wasn’t working 80 hr/week in the world. I was only 21. I didn’t know much. Oh and the author of the letter failed to mention the standard 6 weeks of vacation a year. Sure some people worked more, but there was never a feeling in the office that you were a better worker cause you worked more. You had to be judged on performance cause time was a clean slate. The idea in America that some people collect overtime while another class of people don’t is bizarre. Should we both measure time and not measure time depending on to whom we are talking?

    As much as it may be socialist issue perhaps capping hours is also a health issue? Certainly you can get behind better health of the people, since they don’t have insurance anyway.

  42. 8020 Financial
    8020 Financial says:

    Employees of investment banks (and any other type of company) deserve big salaries when they generate massive profits for the companies they work for. Working long hours has nothing to do with it. Taxpayer supported investment banks are no longer profitable enterprises. Therefore the employees of such companies do NOT deserve big salaries.

    Bill – if you are willing to work long hours and money is your main motivation for doing so then I suggest you get out of banking, which is now essentially an part of the government bureaucracy, and find another industry. If you really believe in the free market, which seems to be the tone of your letter, then lose your sense of entitlement. Its disgraceful when so many people are suffering – really.

  43. Anthony
    Anthony says:

    To everyone decrying the salary caps on TARP fund receivers as a march to Socialism, please, stop engaging the slippery slope fallacies and pull your head out of your rear end. Instead of focusing on raw concepts that historically have never been truly implemented and never behaved as they were expected, let us engage in the truly revolutionary (at least in this day and age) act of analyzing the current the situation based on the facts on the ground. Please bare in mind as you read this that I was never a fan of the TARP program.

    First, let us remember what the purpose of the TARP was. The whole purpose of the TARP was to “unfreeze the credit markets.” It was supposed to buy “troubled” assets (the “A” in TARP) to help recapitalize these banks and to get them to loan money to allow the real economy to get funds to continue functioning. This bares some consideration. The purpose of the TARP was to save the real economy, not to save the banks. The banks were to be saved with the goal of helping the economy, not simply to make them profitable. It was supposed to make them loan money. Allowing them to survive was a necessary evil under this plan, not the primary goal. This alone nullifies any of the ridiculous arguments that the banks should be allowed to do what is in their best interest with TARP funds. TARP funds were allocated with the interest of the general economy in mind, not the best interest of the banks. Therefore, the banks had a duty to dispense with this money to follow the TARP’s goal, not to do with it whatever they wished.

    Of course, we know that the TARP was a massive failure, and possibly even a fraud. First, no assets were bought, and instead the government loaned tax payer (read “our”) money to these banks. Second, and more importantly, the banks did not extend credit as they were supposed to. Instead, they hoarded it, and blew some of our money on things like bonuses, jets, offices, and parties. Remember, this was money that was to be used to provide working capital to the rest of the economy, not to be used to save the banks themselves. In this regard, the banks violated the public trust, and now must have further controls placed on them if they are to continue to be the stewards of public funds meant to help us all.

    Now, if you would indulge me a bit further, I’d like to address the raw idea that these banks should have raw control if they receiving government funding. Let’s forget the original purpose of the TARP and assume that it was to save the banks for their own sake. Even in this case, the salary caps are warranted. The argument that the CEO’s should be allowed to “do what is best for the company” is laughable on its face. The reason the banks are on the government dole in the first place is because their leadership was incompetent, and hence undeserving of their salaries. More importantly, though, the government is the one making the loan, and as such the government has the right to stipulate the terms and conditions of the loan to make sure that it is repaid. Allowing CEO’s to shove more money into their pockets is not going to approach that goal, and it is ludicrous on its face to put forward such an argument.. Also, as others have stated, if the banks do not like the terms, they are free to not take the money.

    There is one other argument I would like to take on, and that is the argument that the average American has no right to be mad at the banks for what is going on. I will gladly agree with those who said that those who took out more loans than they could afford were irresponsible and have no one else to blame but themselves This in no way resolves the banks of their responsibility in this debacle. The banks are supposed to be the gatekeepers. They are supposed to have the training to evaluate risk when making loans, and it is their responsibility, both to their investors and to the economy at large, to properly evaluate the risk making those loans will pose. It was the banks ultimate responsibility to say no.

    Of course, the banks did not say no. Instead, they went a veritable lending orgy, extending credit to anyone and everyone whether or not they could ever hope to repay. If only the banks’ complicity had ended here, though, the damage may have been contained. The banks not only issued bad loans, but then they sold them to the investors with a AAA rating attached. They told investors that these were safe investments. This allowed the banks to unload much of this paper onto unsuspecting investors. This not only allowed them to make more loans further blowing up the bubble, but it spread the damage well past the housing sector. This was fraud.

    These people should be in jail, not getting bailouts. We have every reason to be angry, even those who over extended themselves. This is the reason why our retirement accounts have lost 40% of their value. This is why we are losing our jobs. This is why we are facing another depression. It was fraud, and whether or not you over extended yourself, you have every right to be mad. There is no excuse for this behavior, so stop making them.

    • tom
      tom says:

      This is a great post, Anthony.

      Frankly, Penelope, I think your site would be better served by using Anthony’s post to replace the diatrabe which spawned it.

  44. Rich Procter
    Rich Procter says:

    May I comment that many folks are missing the point? Including Bill?

    As a horrified taxpayer, I guess its up to me to let Bill know that “capitalism” is a swell system designed to reward people who make money and provide value, and punish people who lose money and destroy value.

    What I see is the Very Serious Financial Experts who have lost TRILLIONS of dollars and almost destroyed the American economy asking for (and getting) more money. This is like the coach of the Detroit “Zip N’ 16” Lions asking for a new 7 year, 52 million dollar contract because to do otherwise shake people’s confidence in the team.

    The question isn’t about money or hours. The question is, “Why are the incompetent thieves and pirates who destroyed the system still on my teevee asking for money, instead of cleaning toilets in a Laughlin, Nevada casino?”

  45. Gene
    Gene says:

    Hello Penelope,

    This entry made me smile. It’s refreshing to consider other points of view that aren’t presented with the same level of venom normally associated with cyber critiques. Based on a scan of prior responses, is it lost on other readers? Have we lost our collective sense of humor?

    The reference to the French Revolution is thought provoking. Rather than storming the Bastille, can you imagine Americans storming the boardrooms of financial institutions?

    Yes, things are bad, very bad. And yes, responsibility and accountability need to be reintroduced into the fabric of U.S. business and government. So, let’s do it. But let’s not lose our sense of humor. We need now more than ever.

    • Diogo Slov
      Diogo Slov says:

      Gene, take a look at Rich above. It’s a lot funnier to picture an exec cleaning a toilet than to picture someone actually complaining about a $500k salary.

      What are these people doing now? Stressing out that they can’t afford a private jet? Having to sell the Porsche and buy an Audi instead? Trading vacation in Japan for China because of cheaper exchange rate? Give me $500k and I will make a living for the rest of my life.

      Execs are free to leave their jobs if they are so annoyed, disgusted or offended. No person is forcing anyone to take ‘low’ salaries and work that many hours: they should golf 35 hours a week instead.

      Cheers, D.

  46. Eric
    Eric says:

    Hello,

    Well, as a french man, I guess I can say one thing or two about the 35h/week cap.

    It is one of the hugest mistake France done. It’s a socialist idea, when the country was ruled by something that we call “coabitation”. Per example, when you have a Liberal President and a Socialist Prime Minister. That suck a lot. When 35h has been aplied in french, the prime minister was socialist, not the president. Socialists had the crazy idea that if people work less hours per week then that will free a lot for work for unemployed people.

    Few years after that (right now) we all see that was a huge mistake and we actually trying to remove this mascarade. Our actual president proposed to keep the 35h/week cap of the MINIMUM and not a maximum which can be a good beggining.

    35h/week sucks a lot because an employee who want to earn more money and make more hours per week usually cannot. Because added working hours are to expensive and few company can/want afford it.

    If you have some questions on the french system, I can help you out.

    Eric.

  47. Frank
    Frank says:

    Penelope,
    I’m sorry, but it’s true. When you have a guest writer, you want to bring in someone who writes BETTER than you.

    As for the issue of salary cap, yes there should be because it’s my damned money paying these guys, not the shareholders any longer. If you want to borrow money from my $42K gross pay and my government, you play by new rules. My money is to keep the banks afloat, not to cushion a bank exec’s butt. Will the good talent run away because they can’t make megabucks anymore? Come on. Just where are they going to run? To a big bank that isn’t receiving federal dollars? How many are there? There is a glut of well qualified bank execs who’d love to have a job making $500K a year.

    Should there be a cap on hours? In theory, there is, the 40 hour work week for non-exempt workers, and I think that’s as good as we’re going to get. I still take home office work and teach part time and grade papers off the clock and and that pisses me off, but there probably isn’t any good way to fix that. We’re not socialist, after all, despite what our ex-Soviet friend thinks.

  48. Mariella
    Mariella says:

    This is very interesting.
    I might have a different perspective from you guys because I am from Belgium, and I am supposed to work 38 hours a week. I say supposed because I am in middle management and encouraged to do a bit more “when needed” (for no extra-money of course).
    I see it this way: my life outside of work is important. I do need my job and the pay that goes with it to support my activities outside of work (which includes living somewhere and buying food, but also shoes and makeup or spending holidays in Italy). But still my personnal life is more important to me.
    So as long as I can hold a work/life balance that matches my best interest it’s OK. 45 hours, I can do. 60 hours, I cannot do, because I am going to do nothing else but work and sleep and I’d hate that.
    If I am asked to do it for a while, I might agree, if I get some compensation (like more money of extra vacation days) to rebalance the whole thing (I’ll be able to have more fun later thanks to the compensation).
    If something work ask me to do brings imbalance, then I say no.

    So indeed, if you limit the compensations someone can get from working hard long hours, you might want to think of limiting the effort that can be asked from them as well. You know, just to maintain some balance.

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