Want Out? Too Bad
It appears that some at least one o f the companies that received TARP funds would rather get out from under the controversial government program that the Obama administration is now using to plainly interfere and disrupt the marketplace in favor of “the little guy” (which we’ll all be leveled out to soon enough). From CNN:
David Viniar, Goldman Sachs’ (GS, Fortune 500) chief financial officer, made headlines Wednesday when he voiced that very sentiment to attendees of a Credit Suisse conference, saying it would be easier for the company to run its business if it could pay back the $10 billion in capital it received from the government last fall.
And in a statement to CNNMoney.com Thursday, Bank of New York Mellon (BK, Fortune 500), which received $3 billion last year, said it was looking to redeem the government’s investment “as soon as is practical.”
…..
Earlier this week, President Obama struck back, announcing that the government would limit executive pay for any institution that accepts government financial aid in the future from programs such as the Troubled Asset Relief Program, or TARP.
Is executive pay often exorbitant? Yes, but as we’ve seen, many companies are paying the ultimate price for lavishing so much attention upon their executives. It’s the market, and its all intertwined. Executives who are clever are compensated very well; however, when they risk it all, they can very quickly find their fortunates and reputations ruined. When you limit what companies can compensate their employees at any level, you’re stifling innovation and competition and thus threatening the company’s bottom line. There isn’t just one simple part that can be fixed–when you mess with one part, you mess with it all, just like a game of Jenga.
I say bully for Goldman Sachs–they realize the perils of the market but would rather be free to fail that be confined by the Obama administration’s desire to say just who can and can’t be successful. However, it appears they won’t get the chance:
Ultimately Goldman and other banks simply don’t like being susceptible to the government’s bidding, according to one hedge fund manager, especially as the White House gears up to unveil its latest efforts to deal with the financial crisis on Monday.
“What it really comes down to is Goldman Sachs does not have control of its own destiny,” said James Ellman, head of San Francisco-based Seacliff Capital, a hedge fund specializing in financial services. “The President of the United States does and the President of the United States will tell us in 3 to 4 days what Goldman Sachs’ options are.”
