Banks back in the market for new, expensive talent
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Kai Ryssdal: If everything works out right for him, Citigroup’s hotshot new investment banker stands to get $30 million over the next three years. That’s according to The Wall Street Journal. Stephen Traubner is Citigroup’s highest profile hire since the bank got out from under most of the government’s executive compensation restrictions. It’s a sign Citi is back in the market for high-priced talent. And that Wall Street salaries may be heading back to where they were not so long ago.
Marketplace’s Alisa Roth reports.
Alisa Roth: Citi isn’t confirming any details about its new hire, but it clearly marks a change for a bank that was badly weakened by the financial crisis.
J. Brown is a law professor at the University of Denver. He says the company’s making up for lost time.
J. Brown: You know, one of the things that you see with this new hiring is that Citigroup is shaking off the restrictions from the government and it’s becoming a more aggressive competitor in the marketplace.
The rules of the Troubled Asset Relief Program — a.k.a. TARP — gave the government a say in how much companies could pay their top executives.
Citigroup paid back a big chunk of its government loan last year, but the Treasury still owns around 17 percent of Citi’s shares. The government couldn’t weigh in on this hire, but it still oversees bonus payments to top Citi executives.
The government can only restrict pay at GM, Chrysler, AIG and Ally Financial. But these days it’s mostly out of the executive compensation game. That means there’s not much stopping banks from making big offers, just like they used to.
Steven Davidoff is a professor at the University of Connecticut’s law school. He says we’ll see more and more of it as the economy gets back to normal.
Steven Davidoff: There will be the same competition for talent and the same forces which drove up banker pay over the last 10 years will act to do so again.
Citigroup’s CEO has made this big offer to lure new talent. But for the last two years, he’s only taken an annual salary of $1.
In New York, I’m Alisa Roth for Marketplace.
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