Obama misses the target. Needs an eye-test?
‘Obama stands for ‘Change’, ‘Change we can believe in’ – these were some tall claims that were heard when Barack Obama took over as US President a year ago. Now the agenda of ‘Change’ itself seems to have changed.
What was once the big bad world of Wall Street as seen from Obama’s eyes when he ran for President, does not seem bad after all – the notorious business of hedge funds have clearly fallen in the blind spot. Obama is fighting to limit the salaries of CEO’s, and now takes the battle further by making noise about restricting Proprietary Trading. Point well taken that Obama is taking baby steps before he can take on the big bad boys of Wall Street. But why is Obama not training his gun at hedge funds straight away?
Hedge funds are (in)famous for being the vehicle for high-risk high-return seeking investors (read, movers and shakers of Wall Street). The government has poor visibility and lax controls into hedge funds including its investors, the traded securities, the frequency of trading, the risks taken, the market impact etc.,. In other words they are very poorly regulated, if at all. It is this veil of ‘Hedge funds’ which is giving raise to (or protecting) high-frequency trading which the SEC is now looking into; the world’s top financial companies having been embraced and already are making millions of dollars on their own money (Proprietary Trading) or through servicing their clients (mostly, Hedge funds).
Is Obama afraid of the political fall out when Hedge funds show gaping holes in their governance and that most of the clients are close to the Government or other prominent personalities, and pose a threat to his Presidency when exposed?
Is he afraid of unleashing a can of worms that might roil the markets once again?
Does Obama need to review the goals and achievements from last year and make sure the agenda of ‘Change’ is really still on?
Joke of the year- Paulson calls CEO pay excessive!
Henry Paulson told Warren Buffet in a TV interview [Videos – Part 1, Part 2, Part 3 ] that the current CEO payout is ‘out of whack’. When CEO pay is 400 times of an average employee’s salary, we completely agree with you. But wait a second. Is he the same gentleman who took home $18.7 Million cash (in six months of 2006), and stock and restricted shares worth more than $500 million when he moved on from Goldman Sachs? Bull’s eye!
Paulson doesn’t offer any reason for why he deserved what he got paid, but present day CEO’s shouldn’t be rewarded on the same scale. A purist would think that the rewards should be commensurate to the long term returns of a company and the quantum of risk and leverage using which those results were achieved. How will a CEO earning tens of millions of dollars ever share such a view?
When as a Wall Street veteran, Paulson miserably fails to make any intelligent reflection of the problem plaguing the system and to suggest any plausible course of action to get this ‘out of whack’ system back in working order, the problem itself is quite evident.
It is like the old saying “Do as I say. Don’t do as I do”.