Owning these CNBC hacks: it's not just for cable TV comedians anymore! Via the folks at TPM, here's video of CNBC's Mark Haines, who just cannot imagine a universe in which Wall Street Titans aren't fabulously well-compensated for their Great Works, discussing restrictions on corporate bonuses and salaries. Haines ain't having it! How will Wall Street retain the best and the brightest if they aren't given fat paychecks? This is the same argument I've heard my wife make, time and again. Except she's talking about schools! Anyway, Sherman is more than a little incredulous, given the actual policy being advanced by the White House.
HAINES: You and people who share your opinions seem to think, you know, let's hold salaries on Wall Street to $100,000. Do you have any idea what Wall Street would look like if you do that?
SHERMAN: Well, first of all, I wouldn't set the limit at $100,000.
HAINES: Well, whatever. $250[,000]. All the business would go -- all the business would go overseas, that's the bottom line.
SHERMAN: Obama's position is $500,000 plus unlimited restricted stock. That's where I'm at as well, although I was actually at a higher level before Obama's statement. But for you to assume that Wall Street is acting in the national interest flies in the face of recent reality.
Yeah, a half a million bucks is real skinflinty! How will capitalism survive? But let's rewind, and take a peek at a bit of the earlier exchange:
SHERMAN: We need receivership, and we need limits on salaries as well as bonuses.
HAINES: Well, receivership ... I think most people agree, that would have caused some systemic problems.
SHERMAN: Most people on Wall Street agree. But most people on Main Street do not.
HAINES: And what do the people on Main Street know about running a financial system?
SHERMAN: What do AIG executives know about running a financial system? [crosstalk] They only know how to destroy one.
That's a pretty good burn. My response to Haines, however, would be to buy that man a copy of the newspaper! Specifically, the newspaper that ran this article by Steven Pearlstein, that finds someone on Main Street who knows about how to run a financial system!
Pearlstein tells the story of Citizens South Bank of Charlotte, North Carolina and its CEO, Kim Price. Price and his bank avoided wading into the subprime market, and stayed profitable. But since they were eligible to receive Federal bailout money, they applied and won themselves a modest slice of the TARP, to the tune of $20.5 million. As Pearlstein relates, Price then found an excellent way to use that money:
...that got Price to thinking: What if Citizens were to use its federal bailout money to offer below-market mortgage rates with no closing costs to consumers who would buy a house, or a house lot, from builders and developers who had borrowed money from Citizens?
Price asked some of his loan officers to check with the builders and developers, who not surprisingly were excited enough about the project to be willing to chip in some money to help cover a portion of the forgone closing costs. So last week, Citizens launched its marketing campaign for the $20.5 million program, in collaboration with its builder-developer customers, offering 30-year loans with an initial teaser rate of 3.5 percent for the first two years, rising to a fixed 5.5 percent rate (the current market rate) for the balance of the loan.
"As we see it, it's a win-win-win situation all round," Price explained to me. The builders and developers win by having a tool to help move their unsold inventory. The consumer wins by getting a cut-rate loan. And Citizens wins because it lowers the risk that it will have to write off even more of its commercial loans while taking a modest step to help stimulate the local economy. And, of course, the public relations bump isn't bad either.
By the way, Price's "total pay package last year was $456,146." I guess you can get a lick of goddamn sense at wholesale prices if you just shop around!