TEXT OF INTERVIEW
Bill Radke: The very day after the Treasury Secretary announced his plan
for a bank rescue and got scalded for it in the stock markets, bank executives have to troupe up to Capitol Hill this morning and defend their part in the financial fallout. Executives of eight banks that participated in the government bailout last fall will tell the House Financial Services Committee what they’ve done with the money, and why they’re not lending more.
Senate Banking Committee member Richard Shelby says the bankers will get a well-deserved grilling:
Richard Shelby: I don’t think they’ll show any remorse, but they should, because a lot of the people dealing in the financial centers of New York, they caused most of the problem, and now they want to benefit from it. We’ve got to watch the taxpayers’ money here.
One thing House members are sure to complain about is the generous bonuses that bank employees have been getting even as their companies lose billions. Some bank executives have countered that they have to compensate their key people richly, or risk losing them.
But is big money really all that motivates employees? We asked some working people in Los Angeles what inspires them to do a great job.
Nelly Velasco: It’s my passion for arts and beauty.
Ernest Curtis: I want to be the best, best shoe-shine man there is.
Dakota Bertrand: And if you care for your customers, then you want to do the best you can for them, to.
That was hair stylist Nelly Velasco, shoe shiner Ernest Curtis and barista Dakota Bertrand.
Los Angeles Times columnist Davis Lazarus, we turn to you. Welcome.
David Lazarus: Thank you.
Radke: So David, we have bank executives saying we need to pay millions and millions of dollars. We’ve got those working people we just met saying, no — I do a good job just because I love it. Who’s telling the truth?
Lazarus: Well it’s a little of both, obviously. And clearly, when you ask working Americans, all right, well would you like a higher salary? Would you like a bonus? Nobody says no to that. What it really comes down to is a question of motivation. And my impression is, is that ordinary working stiffs seem to say, I’m gonna do my job. Yes, of course I want to be paid well for it, but I take pride in what I’m doing. Whereas you look at the Wall Street culture, and it’s not the fault of the workers themselves, but the idea there seems to be that no good effort should go unrewarded — and it should go rewarded as lavishly as possible.
Radke: So how do we get to this point that bank executives are saying the love isn’t enough, we need a lot more than a half million dollars?
Lazarus: Well, if we go back about 20 years or so, you get in the mid-80’s a point where there was so much outrage about CEO pay that efforts were finally made to crack down on it. And so tax penalties were imposed on golden parachutes that went way over the top. How did companies respond? They paid the taxes for their CEOS, thus allowing them to keep doing the big, fat packages. Then in the early 90’s, yet another attempt was made to give transparency by making companies disclose all of the extent of the CEO pay and all the perks. What happened after that? Other CEOs saw how much their rivals made and said, “I want that, too.” And then shortly thereafter, there was yet another attempt to bring these things down by saying that any CEO pay over a million dollars would not be tax deductible unless it was performance-based. So what do companies do? They bring out a little something called the stock option.
Radke: Do you suspect that if bank executives saw their pay shrink, they would do it for the love anyway?
Lazarus: Not at all! Ha! But I do think you would get, first of all a cultural shift, and then I think you would get an attraction of a different style of worker to these jobs. Right now, a certain personality type is going to pursue this. And I don’t want to say it’s all the Gordon Gekkos of the world, but they are going to go this way. If Wall Street was able to say look, here’s the salary up front, and bonuses are going to be much more contingent on doing the work as opposed to something that you can expect to get time after time, you’re gonna get people who come in and do the work in and of itself.
Radke: LA Times business columnist David Lazarus. Thanks a lot.
Lazarus: Thanks for having me.
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