Streams

Wall Street Blame Game

Tuesday, October 07, 2008

Joe Nocera, business columnist for the New York Times and author of the Executive Suite blog discusses the state of the stock market and the Capitol Hill testimony of Lehman CEO Richard Fuld. What do you think? What should Richard Fuld do with his $250 million dollars? Vent below!

Guests:

Joe Nocera

Comments [72]

Edwar d Hutter from Califon, NJ

I think executive pay should have a retro-active vesting aspect.

For instance, if a retired person gives money to their children and grand-children and then runs our of money and Medicare has to pay their nursing home bills, the government can retro-actively reclaim those gifts from the children to pay Medicare.

We should have the same thing for Mr. Fuld. Since his comany went broke, he should have to forfeit 80% of his salary and bonuses for 2007, 60% for 2006, 40% for 2005 and 20% for 2004. Put his salary and bonuses on a vesting plan like my 401k.

This should be a law and apply to more than just the CEO. All the officers should have this type of responsibility. This way if they leave the company the year before the implosion they are still held accountable!

Oct. 08 2008 04:17 PM
Kiki from NJ

What I have not heard from either candidate is how the recent changes (or lack thereof) in credit card laws and bankruptcy laws have fueled this crisis as it relates to the middle class.

Credit card companies have been allowed to charge usurious rates and squeeze people beyond realistic abilities. The same effect is seen with these ARMs and teaser rates which leave people with the God-awful choice of either paying the mortgage on a home which is worth less than they owe on it or feeding their kids and putting gas in the tank. These laws have to be addressed and corrected immediately.

Another change of law which I believe which help most Americans is to allow people to access the money in their 401Ks without penalties. I believe people would be better served by using these funds in paying bills (adding the money into the economy) than watching the value of the 401K sink like a rock.

Finally, the tax increase which Obama proposes should have an exception for small business owners. If a company has less than X employees, the proposed increase in taxes should not be applied to that business. That would satisfy most people who oppose Obama because of their fear that his tax proposal would put the small business owner out of commission.

Oct. 08 2008 10:47 AM
eva

Kim,
Sadly, that wouldn't help.
Unless, of course, as a deterrent, which, I guess, is the conservative argument for the death penalty. But last time I checked, it rarely applied to men in the higher income brackets. It's some, uh, legal clause I haven't figured out.

Oct. 07 2008 06:46 PM
kim from Woodstock, ny

I admit that I am getting HUGE pleasure to see these men humiliated in public, yet I also want more. I keeping thinking of the image of Oliver Cromwell's head spiked on the Tower of London.

Oct. 07 2008 05:29 PM
Connie Mack from NYC

eva,

yes. my needles are law and my yarn is justice. we seem to be out of both.

Oct. 07 2008 03:07 PM
eva

connie,
did you bring your knitting needles, like Madame Defarge? Or are you like the Mel Brooks "History of the World" version of Defarge, who is so bankrupted by the excesses of the rich that she not only can no longer afford the wool, but has sold the needles themselves?

Oct. 07 2008 02:51 PM
Connie Mack from NYC

The French got it right. Off with their heads. Not civil? Too barbaric? Were beyond that? Then lets just move on and in a few years we will go through this all over again.

Oct. 07 2008 02:41 PM
eva

another point Nocera made in his recent article was interesting about Glass-Steagal.
It was the banks who took advantage of the repeal of Glass Steagal who are doing fine (Citibank, B of A) and it's the ones who just stayed investment banks who went over.
Worth thinking about.

Oct. 07 2008 01:20 PM
hjs from 11211

eva
no
i just meant i've said that to friends

Oct. 07 2008 12:54 PM
eva

hjs,
I probably heard it from you!

Oct. 07 2008 12:51 PM
hjs from 11211

eve
OMG
i say that all the time!

Oct. 07 2008 12:44 PM
eva

hjs,
I hope you're wrong. But you know the old Chinese "proverb" dispensed to enemies? "May you live in interesting times." I guess we're going through that now.

Oct. 07 2008 12:34 PM
hjs from 11211

eva

well i hope you know how near the country is to becoming decivilized.
i see so much animal behavior. when there are no more countries to invade, its civil war for us, then welcome to the 3rd world.

Oct. 07 2008 12:09 PM
eva

#57,
too many people holding out for VP...
did you read the Washington Post today? They have coverage of a Palin rally, it's seriously creepy, with Palin supporters yelling "Kill him" in reference to Obama and "Sit down, boy" in reference to a black cameraman in the press box. There were young blond kids wearing Obama t-shirts with his face X'd out.

My poor country...

Oct. 07 2008 11:58 AM
Simon

@Betsy - There are similarities, though I don't see a direct relationship. Women, virginity and sex have been and still are seen as a commodity.

Oct. 07 2008 11:52 AM
hjs from 11211

eva
i'm holding out for VP, at least.
but really i'm more of the pulling the strings behind the scenes kind of guy.

Oct. 07 2008 11:18 AM
Betsy from Greenwich Village

An aside for Simon, #52: here's more material for your "money is trust" proposal -- consider how often the language surrounding bad credit and defaulted mortgages resembles that used in traditional discussions of female virtue/virginity. Yes, this sounds like a silly lark, but indulge me: in either case, there is little one can do once one has a "reputation", and there are some built-in inequalities in the workings of this system of honor, and a desperate anxiety and overreaction on the side of the "creditor" regarding what can and cannot be known..... Sheesh, sorry. Time for coffee.

Oct. 07 2008 11:13 AM
eva

i'm voting the simon-karen ticket, with hjs as comptroller

they're the only ones who make sense of this mess

Oct. 07 2008 11:02 AM
MMN from Midtown Manhattan

Repent for your sins Richard Fuld!

Yom Kippur is Thursday, a little old fashioned self flagellation may be a good thing for you even if you aren't Jewish.

Then donate all but 30k to the community. Your wife needs get a job! You need to donate all your art work to a deserving museum. You need to live and struggle and love like the rest of us common folk.

You must return to your human self.

Oct. 07 2008 11:01 AM
Simon

Betsy #51 - You are completely right. However, many red blooded Americans who take pride in their pseudo-individualism will fight to the death before that happens. Don't expect to see micro-economies in the US without a massive loss of life.

Oct. 07 2008 10:59 AM
Simon

What is money?

Money is essentially a more liquid substitute for trust in a modern society.

The everyman might better understand the answers to the question, "what is this financial mess about?" if they rephrased it to, "why doesn't anyone trust each other?

We have a system where whistleblowers go punished, blacklisted and the CEO to created the car that explodes on impact makes millions. This is the system millions of Americans are fine with when things are ok. This shows us the true character of our friends, families and neighbors.

Oct. 07 2008 10:54 AM
Betsy from Greenwich Village

Vengeance fantasies aside, I am heartened by the notion that this crisis might be used to focus us into inventing locally interdependent, informal economies. (If only we had a wee bit of seed capital....) Think of the lending circles that allow Asian immigrants to finance the purchase of bodegas. I would be interested to hear what the Nobel Prize winner of a few years back (M. Younes?) who worked on the development of microlending in the "third world" might suggest about concrete strategies to help ourselves and our neighbors despite the failings of multinational banks and hedge funds. For example, perhaps small local lending pools could help shore up real-estate sales/values?

Oct. 07 2008 10:53 AM
hjs from 11211

[44] Georgia

one empty house on your block lowers everyones property value.

Oct. 07 2008 10:52 AM
Jan from Manhattan

As an attorney, I'm afraid to inform you that Fuld (unless and until proved otherwise), has not done anything (i) in violation of the approval of his board of directors, which had to have approved his compensation, (ii) that salaries of directors and officers of publicly held companies are usually publicly listed with a company's SEC filings and there for all to see, (iii) that Lehman's shareholders have a say in this matter and there were fewer complaints when money was being made for them and Lehman's clients hand-over-fist, and, perhaps most importantly iv) his compensation is NOT out of line with similarly situated high level CEOs. We need an overall restructuring -- what some would call a redistribution of wealth -- so that no one makes that kind of money when at the same time people across the world are dying daily of hunger. But to scapegoat one person -- unless he is proved to have done something illegal, in which case they should take away ALL his money and homes and art and throw him in jail -- simply detracts us from the much greater problem -- he is but one of many, and the system clearly needs major overhaul. All that said, I, a pacifist, send a shout-out to the person in the gym who socked him in the face.

Oct. 07 2008 10:50 AM
ericf

IMHO, one small but significant aspect of all that we've been seeing recently may be the collision of the concepts of "the economic man" and "corporate person-hood".

that is, have markets been working in unexpected ways because individual decision makers have not been facing the prospect of personally suffering the consequences of their decisions if those decisions are bad?

is there a similar phenomenon in government?

how influential are the temptations to let consequences be born by abstract institutions or to let chickens come home to roost on the next guy's watch?

Oct. 07 2008 10:48 AM
Mark from Brooklyn

Castrating CEOs won't change the fundamental financial illiteracy of this country. People were told they could afford million dollar mortgages, and took that bait because that's the American dream. Letting homeowners hang is a build-more-prisons approach. What's needed is better education -- financial and otherwise.

Oct. 07 2008 10:48 AM
harshad from new york

Very cute, Brian Lehrer. Is this the best discussion you can have? Do want to talk about accountability and consequences? Why not talk about how futile and lame these public shaming displays are and then move on to a real discussion.

Heard of Joseph Stiglitz? why not bring him on?, he's based in New York? Ralph Nader? - wait, he's been blacked out by the bosses.

shouldn't we be talking about how to bring back regulation into the markets?

Oct. 07 2008 10:47 AM
Waheed Shams from Jamaica, NY

For $300,000,000 you can buy 50,000 'anti-social elements' in third world countries their new homes AND utilities AND years worth of food.

Oct. 07 2008 10:47 AM
Georgia from New York

I live in an apartment. I was offered an Interest only loan on a house I KNEW I COULDNT AFFORD, and I said No.

Why should we make it possible for people who bought houses they couldnt afford to stay in them.

They should lose them, and go back to renting, like ALOT of us who didnt try to cheat the system do.

Oct. 07 2008 10:46 AM
eva

Simon, #18 is right.
This is, in the end, our own fault, because we didn't hold these people accountable.
We were too busy watching American Idol or whatever.

Oct. 07 2008 10:46 AM
Richard Williams from Larchmont, NY

He should give it to every person who faces foreclosure.

Oct. 07 2008 10:46 AM
JR from NJ from NJ

I am thinking that the Wall Street Crisis is going to unleash a large population of poor, angry trophy brides out there. They will need a $250m Bailout, to fund sagging botox, personal trainers and $900 high heel shoes.
We must help heal those who are pouting.

Oct. 07 2008 10:46 AM
William

This should be a wake up call to the middle and lower class.

When times were good, they allowed you to forget what you knew all along - you're the low man on the totem pole. When things are tough, a CEO is going to walk away with 500 million and you're going to help finance more of that.

Maybe you shoulda written to your congressman. Maybe you shouldn't have put up with crappy politicians and a system that gives us a moron like Sarah Palin as one of our main Vice Presidential candidates.

But instead, like most people on this earth, instead of planning, instead of guiding your life on principle, you can only respond to immediate problems the way that bacteria only respond to what is exactly in front of them at the moment.

Oct. 07 2008 10:46 AM
Owen from Rochester

Speaking of insanely wealthy, unethical corporate profiteers, where's Robert Rubin these days? Has the Obama campaign got him in a secure undisclosed location? I'm voting for Obama, but it's depressing that there might be some Fuld-like characters lining up to fill his cabinet.

Oct. 07 2008 10:46 AM
Leo Queens from Queens

TO HJS:

What is the difference between the Contras and Al Queda and the Weather Underground and the Salvadorian Death Squads?

Answer: Some are accepted violent/terrorist groups and others are not. Depends on what our government and the 'Media Ilite" (Thanks Palin) choose to define as terrorists.

Oct. 07 2008 10:46 AM
sue from Bronxville

He should redeem himself by donating (or returning) most of the money somewhere helpful. Admitting any negligence would not be necessary. Unfortunately, many people like him (and I live in a town full of them), somehow can rationalize that they actually deserve the excessive income because of their intellectual brilliance and innate superiority. Then they can bask in the glow of the good charitable deeds they perform between golf games and vacations, while paying for rehab for themselves and their offspring, who spend their time off doing good deeds in sunny, exotic locations.

Oct. 07 2008 10:45 AM
Mark Lazar from New Jersey

If it was up to me, he wouldn't have money to buy his kids shoes.

Oct. 07 2008 10:45 AM
Barry from Elmira, NY

He should be forced to use it to buy some of the bad paper.

Oct. 07 2008 10:45 AM
karen from Hartsdale

"The love of money is the root of all evil."
Fuld's wealth as described by Brian, is in itself obscene. If he'd been a king of a feudal state it would not have been obscene. In a democratic republic, it is. Does believing that make me a communist? A socialist? UnAmerican? I thought I was quoting the Bible. The only difference between a totalitarian state and the totalitarian nature of unregulated capitalism is that our government must abide by constitutional law. The spirit of the laws as they were written no longer rules. The love of money and the struggle for power to maintain a status quo - that rules. If the spirit of constitutional law rules, justice would be done with his obscene earnings.

Oct. 07 2008 10:45 AM
hjs from 11211

punch every voter in the face on election day

Oct. 07 2008 10:44 AM
ben from brooklyn

The problem is people like Joe Nocera. You asked what should done about Lehman bro. and he responded that it is not just lehaman bro. they business men, like nocera, are in there own world where keep in up with their piers assets becomes a game. Put fuld in jail and make him live with people other than his friends and lackies.

Oct. 07 2008 10:43 AM
Dylan from Astoria

I agree Joe Nocera that the hearings are a red herring and a distraction.
Congress should be paying attention to Henry Paulson and overseeing the bailout and looking to use Freddie and Fannie to renegotiate mortgages for average citizens.
Thanks for 'grilling' CEO's, but stop here and actually look to focus on solutions to the current crisis and avoiding further crisis.

Oct. 07 2008 10:43 AM
Robert from New York

People who bought houses they couldnt afford should not be ENABLED to keep them.

That is enabling MASSIVE CHEATING!

If people bought a house they cant pay for they should LOSE IT!. They should take the loss.

NO ONE HELD A GUN TO THEIR HEAD and MADE THEM BUY A HOUSE THEY COULDNT AFFORD

They were GREEDY! Now they should face justice.

Oct. 07 2008 10:42 AM
Darren

If commerce stops, it's our own fault.

We learned that this paper market is necessary for commerce and it's the only solution.

What happened to trust.

When a company wants a few million dollars to build a new building or upgrade their equipment, maybe the lender should say to themselves, "hey, is this a good idea?" If the answer is no, what are you complaining about?

Oct. 07 2008 10:42 AM
Dan Treglia from Staten Island, NY

A real-life rendition of Trading Places. Deprive Richard Fuld of his money, family, homes, and comfort, and turn his homes into timeshares for Lehman's lowest-paid former employees.

Oct. 07 2008 10:42 AM
jkl from manhattan

Congress loves to talk about high CEO pay because that is all they can understand and it is easier for everyone else than trying to figure out exactly what happened to Lehman. I agree with your guest that the conversation is pointless unless there is some other person. Investment bankers and hedge fund managers have and will make a lot of money. Get over it.

Oct. 07 2008 10:41 AM
Gordon King from Verona, NJ


The government should nationalize the $350 million for the treasury and Fuld should go to
prison - charged with endangering the public
welfare. If it's not a law, it should be.

Oct. 07 2008 10:41 AM
David Fuentes from brooklyn

He should be forced to give up most of his money and properties to invest it in the public who actually gave him all that, time for him and all of them to pay up they greed and we paid for that so he should be forced to pay back

Oct. 07 2008 10:40 AM
ericka hamburg from staten island

fuld's money should be applied to halt the slaughter of primates; he personally should be sent to the DRC; given an outfit, a rifle, and maybe some mosquito repellent and a map; let him do something constructive for a change.

Oct. 07 2008 10:40 AM
eva

Karen,
vis-a-vis GWTW, maybe Fuld knows what Rhett Butler did:
"With enough courage, you can do without a reputation."

Oct. 07 2008 10:40 AM
hjs from 11211

you all turned a blind eye to the obvious.
those advocating violence; what's the difference between u and Al Qaeda?

Oct. 07 2008 10:39 AM
C from mid town

I'm with Karen, except I think he should pay mortgages and tuitions of middle class citizens.

Oct. 07 2008 10:39 AM
Lorenzo from NY/NJ

What you saw in the house was bad theatre..these C.E.Os should be prosecuted if they broke the law. Scolding them while on live tv is a cheap catharsis and ultimately will change nothing.
It's all in the rules ( also know as "The Law").. they need to change if we want to effectively trace responsibility.

Oct. 07 2008 10:39 AM
Matthew Gregory from NYC

Regardless of the health of a company, this kind of excessive executive compensation is indicative of a deep inequity in our society, which allows wheelers and dealers to amass immense wealth at the detriment of the country at large. No one needs this kind of income. It is grossly immoral, and I am happy to see that one good thing may come out of the current fiscal crisis; a re-examination of unjust compensation scales in the U.S. today.

Oct. 07 2008 10:39 AM
Simon from NYC

How much should he have made? He should make as much as he can get away with.

The time to have done something about this was years ago.

Millions of people invest in companies every year, not caring one bit what those companies do. No one complains when their stocks go up.

The overwhelming majority of stockholders do not care one bit if the companies they invest in lead to loss of life through negligence or criminal.

And then you people act surprised that the people who run this company are even less caring and more motivated by profit than you?

Oct. 07 2008 10:38 AM
Susan

Not just Fuld--all of those who walked with millions after destroying their companies and the economy (Hank Greenberg and Stanley O'Neal come to mind for a start). Claw back all the golden parachutes and throw the bastards in prison.

Oct. 07 2008 10:37 AM
Leo Farley from Manhattan

I think he should have to do community service 250 hours at least one hour for each million he took out of the company. I also think he should serve thanksgiving dinner to all the newly un-employed workers at his company.

Oct. 07 2008 10:37 AM
Dorky from queens

The CEO of these mortgage companies should have all there bonuses taken from them to help pay off the 'bailout'. People need to be held accountable! We need to get back to a culture of accountability in Wall Street and Washington.!

Oct. 07 2008 10:37 AM
Peter Hogness from Brooklyn

You say "this is fantasy"-- but why? Bad public policy allowed Fuld and others to make hundreds of millions (and gain nice ocean-front homes) by taking bad risks with other people's money.
Good public policy can take back those hundreds of millions and spend them on affordable housing, health care for all, rebuilding our collapsing roads and bridges, and more.
The Republicans will call this "socialism." I call it common sense.

Oct. 07 2008 10:37 AM
BORED

Where are the mass suicides by the political class. Japanese politicans would have killed themselves. Our politicans have meetings where they act like they were not partying with this guy last year.

Oct. 07 2008 10:37 AM
Pete from Middleton, NJ

Fuld should be required to make severance payments to hourly employees who lost their jobs and retirees like my mother who lost a huge chunk of her monthly income.

Oct. 07 2008 10:37 AM
Owen from Rochester

I'll be generous and let Fuld keep $30,000 or so--the man's gotta eat. As for the rest, how about fixing up a few hundred schools in poor neighborhoods.

And hey, as long as this is a fantasy: maybe he can fund a Harlem-style Children's Zone here in Rochester. I would personally take one punch to the nose meant for Fuld if he would agree to this donation. Whaddya say, Fuld?

Oct. 07 2008 10:36 AM
Chuck from Brooklyn

He should be hung by the neck on Wall Street until dead.

Oct. 07 2008 10:36 AM
eva

didn't joe nocera call yesterday's testimony "political theater"?
Having said that, I am not sure that executive compensation is entirely irrelevant. It's not the cause, but it's a symptom of what's wrong.

Oct. 07 2008 10:35 AM
Marco from Manhattan

America has always been a get-rich-quick kind of place. Whether it's overpaid baseball players or hedge fund operators....the mentality is still the same. Let Lehman's creditors go after Mr. Fuld.

Oct. 07 2008 10:35 AM
Hugh Sansom from Crown Heights

Fuld, Paulson and others should surrender 80 to 90 percent of their assets to fund the "bailout".

Top marginal tax rates 50 years ago were around 90 percent anyway.

Fact: The top 15 wealthiest Americans have combined wealth equaling more than $350 billion -- half the bailout.

Oct. 07 2008 10:35 AM
Felipe from Brooklyn

Send him to the gallows!!

Oct. 07 2008 10:35 AM
hjs from 11211

jeff
the feds have no interest in that

Oct. 07 2008 10:35 AM
BORED

WHY DOES THE POLITICAL CLASS GET TO BE OUTRAGED!!!!! Where are the resignations by the political class. Why didn't G W Bush resign. Why didn't Harry Waxman resign. Why don't they get punched in the face.

Oct. 07 2008 10:34 AM
Karen from Manhattan

He should pay off the mortgages and children's college tuitions of the Lehmann support staff workers who got fired last week.

Oct. 07 2008 10:34 AM
Karen from Manhattan

Melanie to Scarlett after Scarlett shoots the Yankee robber/rapist:

"Scarlett! You've shot him! I'm glad you've shot him."

Oct. 07 2008 10:33 AM
Jeff Putterman from Queens

The fed should hire a smart forensic accountant to show exactly when the Board of Directors, and executives of Lehman, like Fuld, should have know it was headed towards bankruptcy.

Any funds, or stock sales, those executives took after that is illegal. It is called fraudulent conveyance, and they should have to give that money back to the legitimate creditors.

Oct. 07 2008 10:32 AM

Leave a Comment

Email addresses are required but never displayed.

Get the WNYC Morning Brief in your inbox.
We'll send you our top 5 stories every day, plus breaking news and weather.