The Compensation Czar Cometh
Earlier this week, the Obama administration appointed Kenneth R. Feinberg to the exulted new position of 'Compensation Czar' (Feinberg had previously been mentioned as a candidate for a "car czar" position). Feinberg, whose expertise lies primarily in alternative dispute resolution and mediation, appears to be a good fit for such a controversial position. During the aftermath of the September 11th attacks on the World Trade Center, Feinberg was tapped by the Bush administration to determine adequate compensation for the families of the deceased. Given the difficult nature of that task, and how Feinberg weathered the controversy, he seems to be just as qualified as any other man or woman for this job. But what exactly is his job going to be?
Feinber's job as compensation czar (Doesn't anyone remember that the last czar of Russia, Nicholas II, was killed by the Bolsheviks? Isn't that a good enough reason to stop using this title? No? Okay then.) will be to oversee the compensation given to top executives at institutions that have been beneficiaries of the government's recent bailouts. That the Obama administration would create such a position is no surprise considering the public outrage over the news of some top executives getting bonuses after receiving government aid.
While I may personally agree that this position makes sense, I wonder how effective Feinberg will be, and what help he will have in determining compensation levels. Remember, we're dealing with 175 executives whose companies received billions of dollars. These executives are still powerful men, and the culture that allowed those excessive bonuses seems entrenched in the American spirit. How long will it be before these companies are out from under the federal government's thumb? How long before these top CEO's return to the same risky practices that got them there in the first place?
Creating this new position for Feinberg seems to be equivalent to putting a band-aid on gaping wound. In my mind, the larger problem is the fact that these kind of bonuses are possible at all, not that these execs are using taxpayer money to give themselves huge bonuses. Although, let's admit it, that's definitely a good reason to be livid. But if we were to actually hold these CEO's accountable then we may have to take a big step and start holding our politicians accountable as well. I'm not sure we're ready for that quite yet.
