Even Sarah Palin, my fellow Idahoan (she was born there), agrees that greed caused the financial crash. That’s the crash that has visited the despair of unemployment to some 13 million Americans, evicted millions in foreclosures, and a cast a gloom over the future of young Americans now exiting universities. “I think the corruption on Wall Street. That’s to blame. And that violation of the public trust. And that contract that should be inherent in corporations who are spending, investing other people’s money, the abuse of that is what has got to stop.”

Public Citizen hereby presents some startling figures on the object of that greed: “Hourly Rates: A Modest Essay about Extraordinary Paychecks.

For example, every fourteen minutes in 2009, hedge fund manager David Tepper made President Obama’s annual salary.  No matter how well compensated our Hollywood and sports stars are, the real money comes from the business of money. The AFL-CIO’s PayWatch noted that recently major bankers, apparently embarrassed by their dependence on record taxpayer subsidies, have tightened their belts. Thomas Montag, president of global banking at Bank of America, received only $29 million, or $14,500 an hour.  But the hedge funds have demonstrated no such restraint. The magazine Institutional Investor declared David Tepper the best paid hedge fund manager in 2009 at $4 billion. To put this in perspective, that is $2 million an hour. That is one million dollars every half hour. A Pittsburgh native, he donated $55 million to Carnegie Mellon University, which gratefully changed the name of a graduate program to the David Tepper School of Business. That was half a week’s paycheck.

None have pinned the crash on David Tepper. But the lure of such large paychecks led many to shed prudence for pecuniary pursuits.

Comments

  • K Makinney

    Mr. Tepper makes his money from a hedge fund that charges a 2% management fee and takes 20% of the profits his fund generates for his clients. They all choose to invest with Tepper, no one forces them and he would make little money were he not a popular manager…because he makes his clients money. This can not be said for any politician save the corrupt ones. To resent Teppers compensation is to fundamentally misunderstand how and why wealth is created. Tepper is generating wealth for others, and for that, anyone is generously compensated. This is in stark contrast to most others mentioned in your essay.

    • mick

      What do you suppose he pays in taxes?

    • K. Makinney,

      Wealth is created when labor is used to make something. What hedge fund managers and the financial sector do in general is shuffle money around. The person changing bed pans or digging ditches does harder work but their compensations are very different. Greed and Wealth have become the goal in the US instead of Earning a decent living.

    • Cary Kittner

      Mr. Tepper is not creating wealth for his clients, he is moving money from one place to another. Nothing of value is created, hence no real wealth is created. Just like war cannot create prosperity because it causes death and destruction, making money with money is a slight of hand that devalues everyone who actually creates goods or services that have value. Value and wealth must be tied together, not money and wealth. This is very important to understand. I do not begrudge people their money if they are adding something of value to the larger community, but this guy is not adding that much value, he is just taking advantage of things that are broken in our government right now.

    • L Bogan

      Wealth is not created by moving money around and gambling the system. Mr. Tepper does not create any value – he just plays/gambles the financial system to squeeze out the profits for his clients. Tepper is NOT creating value for our economy, he is just skimming the wealth off those who do, but are not valued or compensated according to their contribution. Unfortunately, that’s how this messed up society is set up. There is NOTHING that he does that is more valuable than what an elementary teacher does or anyone else for that matter.

    • K. Roberts

      It could be that Mr. Makinney is fundamentally, if not desperately, confused. Let’s replay his comments in a context that makes clear what’s wrong with his thinking:
      “Al Capone made his money from moonshining. His clients all chose to buy the moonshine from Capone, no one forced them, and he would have made little moonshine were he not a popular moonshiner . . . because he got his clients hammered. This cannot be said for any politician save the corrupt ones. To have resented Capone’s compensation would have been to fundamentally misunderstand how and why wealth is created. Capone generated boose for others, and for that, anyone is generously compensated.”

    • Tom Beaman

      K Makinney writes that “Tepper is generating wealth for others, and for that, anyone is generously compensated.” Thus I, as an economics teacher who has established the base on which over 1500 students have built their financial lives, will be generously compensated! WhooHoo! I’ll expect my check next week.

      Thanks for the great (and obviously correct!) news!

    • Marc

      reading “confessions of an economic hitman” by John Perkins, “The web of debt” by Ellen Brown, or “The Gods of Money” by Engdahl sure doesn’t make me go for your angelic justification of the plutocrats that destroy our world.

    • ricco

      Mr. Tepper also benefits from not having to pay regular income taxes like you and me. His earnings are subject to a 15% capital gains tax. So, he pays a lower tax rate than most working class americans.

    • Antony Dodds

      What is starkly missing from your comment is how there is ongoing criminal corruption on Wall Street and that the totality of the financial crisis sit firmly on the banks and financial indusrty. The money the make for some is mostly collected from the hard work and labor of millions who suffered from this crisis, so in a sense, they make trillions of money by transferring it from the needy to the affluent in a rigged system that rewards greed and not labor- the fruits of all wealth.

    • Paul S

      He made money for his clients by wrecking the global economy, and destroying fhe lives of productive people, not because he’s smarter, or more creative- but rather because he is essentially evil, and enabled by laws and models that encourage this theft.

    • Michael Ripple

      Mr. Tepper may have made a great deal of money for his clients. And he may have generated wealth – for them. The Wall Street I know cost me a great deal of money and cost many others their jobs, their houses, their retirement funds and more. Mr. Tepper and his clients can likely afford to eat thousands of times per day. Many of the people thrown under the bus by the risk takers of Wall Street struggle to eat three times per day. I need protection from these people. They will do it again if given the opportunity. Free markets are great. But we need government to protect us from market excesses.

    • K Makinney, you are the one who misunderstands economics. People like Tepper don’t “create” or “generate” any wealth. They just skim off the wealth that working people and nature create. His clients voluntarily pay him, because they are wealth skimmers too. This is the wealth which, if more fairly distributed, could easily keep our economy and services going.

    • Rich

      M. McKinney,
      True Mr. Tepper is generating wealth for others, like hede fund managers. he money they make is taken out of the main stream and invested where the highest return is to be secured, eg. emerging markets like China, India and Brazil, taken more money from Americans and giving to our competitors, creating jobs that compete directly with Americans. Very unpatrotic, and counter-productive the welfare of America.

      As Thomas Jefferson said in 1814, “Merchants have no country.”

    • Carroll W. McInroe

      You are a good writer, obviously an intelligent person – which makes your position all the more heinous – you know better, yet carry water for billionaires. You know very well these guys are not worth their hundreds of millions in salaries and bonuses. Their behavior goes beyond questionable, it is criminal, and quislings like you know it.
      Plus, none of these rich guys have ever served a day in the nation’s military; my guess you haven’t either. You rich kids want everything while paying nothing to your country – no taxes, no military service – nothing. Except all the luxury your excessive fortunes will buy.
      American men and women everywhere are struggling to survive, millions unemployed, millions more working 2 jobs at minimum wage, just to eat.
      You sir, and your ilk, are amoral, self-aggrandizing humans, without a social conscience. Your selfishness almost destroyed capitalism & America in 2008, and damned if you aren’t determined to do it again.

    • smileatfear

      Mr. Tepper does not “generate wealth.” Mr. Tepper adds no value to the economy. Mr. Tepper plays the same game with money that street thieves do with their shell games. He manipulates money by removing it from one pocket and putting it into another (mostly his own.) At least politicians build roads, bridges, schools, fire stations, airports, parks, etc., etc. with the money. That is called generating wealth.

    • Diane

      Bernie Madoff made money for others, and look where that got them.

    • According to the first comment, “generating wealth” = wealthy elites betting on numbers going up or down in a rigged system…making nothing physical you can see like a car (manufacturing). That’s exactly the problem: that IS what “generating wealth” has become.

    • Richard Patten

      Tepper is said to create wealth. Actually, that wealth is taken from others–others who depend on that wealth to fund retirement or invest in value-added production–which will return revenue that supports the U.S. national economy in
      much greater proportion than Tepper who pays taxes on that easy money income at the capital gain rate of only 15% (despite that income not being at-risk investment) rather than the income rate of 35%. Not only that: the national economy suffers in many, ignored, ways from such concentration of economic resources in the hands of few. Take, for example, social security, which takes FICA from only the first $170k of an individual’s earnings. Many fewer of the dollars taken by Tepper contribute to Soc. Sec. the would be the case if those dollars were in the hands of individuals earning $170K or less.

    • Jack

      Is McKinney a pseudonym for Tepper?

      Perhaps America can require DNA tests for everyone who makes more than $1/4 million per year. The test would have a look at their APRV1a gene (controls benevolence, among other things), which if short, is an indicator of a lack of care for others. This may be the way to get psychopaths out of the ruling class, including the sicko Tepper and his cousin Kadaffi. Guys like Tepper now OWN governments at all levels in Amerika, folks! How much longer before we become a third-or-fourth world nation? ACT NOW!

    • Robert B

      See the documentary “Inside Job” (2010) Then tell me these parasites deserve this kind of obscene pay.

    • Bob G

      That makes a lot of sense and because I have no funds to invest I might tend to be bitter. Ignorance of the situation definitely causes one to be jealous and communicate this jealousy as malice. However our politicians truly work to see that these people (not all) pay little in taxes and I can’t back up my own statement. Truly some of these heavy hitters do create jobs through their donations.

    • james

      How can anyone condone these people making this much money. Almost one billion people last year did not have enough food to eat and 20,000 people die prematurely from related causes every day!!!Obviously there is a huge flaw how wealth is distributed in this world–especially in the United States. i don’t care how wealth is created and how he created it for others. That kind of a salary is absurd and why should one man make that kind of money

  • [...] interest group is making the effort. Hourly Rates: A Modest Essay about Extraordinary Paychecks, a just-released paper from Public Citizen, translates the nation’s highest annual individual earnings into hourly [...]

  • jerry markey

    Wall Street caused our financial woes but it is teachers and civil servants who must pay the bill. It is time to Tax all wall street transactions.

  • The writers of the Constitution created a system of government designed to protect us from dictatorship. It did not envision a future in which there is a dictatorship, not by a person, but by the corporations. Anyone who makes that much money from a hedge fund is in a position to bankroll a president and Congress to do his bidding. However dangerous it may be to try to interpret the intention of the “founders” it certainly was not this.

  • Cindy

    What K Makinney doesn’t seem to understand is that the actions of a few greedy people impact the environment and the public. REWARDING SCUMBAGS FOR THEIR GLUTTONY AND DISREGARD FOR THE ENVIRONMENT DOES NOT PROMOTE RESPONSIBLE & SUSTAINABLE BEHAVIOR.I am not going to get into an argument of how much is too much. We all have a good sense of what is necessary and what is indulgence. The facts are that all of us have a duty to preserve and protect this planet – it’s our home. Thus, it is not acceptable to encourage consumption or produce products that are unecessary and polluting. Much of what is on the market today could be produced with longevity in mind so that these products remain useful for years rather than in a landfill in a few short years. There are ways of doing this. It is possible. A tax on disposable items would be a good start. Certainly corporations will not lobby our governement to pass laws that will reduce the number of widgets it will sell in any given year. How selfish & shortsighted!

  • JS, Boston, MA

    And the net taxes paid by these parasites?

  • valerie

    F*CKING CRAZY TALK!!!

  • Edward B Winslow

    The greedy-rich hedge fund managers, who never produce any product other than funny-money flim-flams, should be taxed heavily. Nobody needs to make these obscene amounts of money, and then be taxed at the capital gains rate of 15 percent. Let’s revise the tax rates on incomes greater than $500,000 annually 75 percent. End the asinine capital gains and dividend tax breaks and bring sanity to AmeriKKKa–not to mention balance the out-of-control budget.

  • The “founding fathers” of the U.S. attempted to form a government that could be called a “democracy.” [Democracy: A government by the people; a government in which the supreme power is vested in the people and exercised by them through a system of representation involving free elections.] For many years we lived in an imperfect democracy. No more. Our country has devolved from an imperfect democracy into the country we have today, a plutocracy. [Plutocracy: Government of the wealthy; a controlling class of the wealthy.] It’s time to open our eyes to this fact.

    It will not be easy to change our country back to a democracy, but it’s in our best interest to try. The first step is to recognize what we have allowed ourselves to become, and spread that fact to all who are willing to listen.

  • Frances

    Mr. Tepper doesn’t make anything tangible. He just manipulates money markets for other greedy investors. Four billion is an incredible amount of money in one year. He gets a special tax rate for hedge funds. I wonder how much he actually pays on his loot.

  • Robert Leeds

    K. Makinney is quite mistaken in his analysis. The way Mr. Tepper made his billions was by buying Bank of America shares after the crash at bargain basement prices with leveraged money (i.e. he only had to have a small portion of the money he spent). The transaction was RISK-FREE because the taxpayers of the US were bailing out the bank and wouldn’t let it fail. Anyone could have made the same profit. Also, Mr. Tepper only paid capital gains taxes, not income taxes on his money, unlike us poor slobs.

  • seg003

    Mr. Tepper may have made a fortune for the top 1% of the wealthiest people in the world as well as himself but he did so on the backs of the remaining 99% of the population. His hedge funds use gross leverage to bet against the very products he sells. He is just as guilty of fleecing America by selling worthless “assets” that have no value other than the greater fool theory. I implore you to watch the documentary “Inside Job” for detailed analysis.
    Also I would like to point out that these same hedge fund managers are allowed to speculate on all commodities as well as oil and gas. This rampant speculation is what is driving the price of oil through the roof. Who suffers? the working class people. Mr. Tepper and croonies could care less if the cost of living goes through the roof as they “earn” more than enough to cover expenses. I wonder how much Mr. Tepper and the like paid in taxes?

  • Daniel Fratus

    I don’t have a problem with reasonable profit. I do have a problem when a relatively small group of people have manipulated the system to enable them to make an obscene profit doing senseless things that harm the planet and the welfare of the rest of us that they think deserve to live with struggle and hardship because they weren’t blessed with the ability to make money or inherit it. This isn’t the game that they think it is. This comes seriously close to my concept of the Antichrist. I don’t claim to be a fundamentalist Christian or a Bible reader but I find this idea quite intriguing.

  • Sara Peterson

    The article is interesting. Why isn’t the Federal Government a client of either Teppers or Paulson? In fact, why doesn’t the Federal Government take a page out of the State of North Dakota and have its own bank. I don’t know if they could make enough money to reduce taxes for the rest of us, but it certainly couldn’t hurt. Maybe those profits could be used to fund the programs that actually benefit the majority of us.

  • Michael C

    No one has such wonderful brain power and is worth that much money.

    The upber rich don;t mind paying it because they do not work to earn the money they make on his paper profits. These greedy rich are all parasites who make their money on the backs of the working people. They create nothing, they do not create any wealth. They make their money speculating and gambling on market fluctuations. And why are we taxing these ill gotten gains at a lower rate than we do for people who earned their money?

  • Christy DuCharme

    There are no easy answers but something is fundamentally wrong here……

  • Clive Roberts

    “The hedge fund managers largely profit in a zero sum game. They don’t produce or provide services in the ordinary sense. They place bets against other gamblers, and for every dollar they win, someone else loses.”

    And in Paulson’s case he rigged the game by lobbying to block home loan mods.

    Time to confiscate their earnings. Yeah, socialism is good in their cases.

  • We should certainly differentiate between what a man ‘earns’ and what he ‘takes’, home or wherever he takes it. He might ‘make’ money, but I think as a society we should have a discussion about what are legitimate earnings and what are simply takings.

  • Grace Adams

    Maybe it would be possible to pass a sumptuary law setting $1 million a year as the most anyone deserves as an employee. Fund managers should have to buy at least 100 shares either before or right at the start of their employment as fund managers. And dividends from stocks is an entirely separate issue from employee compensation.

  • Jim Snead

    All the movements that are afoot to remove the “fat cats” from our nation’s financial systems are but the moaning sounds of a winter wind. The reasons are so apparent that we can not see them. We have learned from our educational system to think in prescribed symbolisms. Therefore when we think we are thinking outside “the box” .. we really are not doing so. The way we have done “capitalism” since the beginning of our society has set us up in a “party machine” system where government and corporate worlds are but two sides of the same coin. They are the “insiders” The general public at large are the outsiders. No. Most likely, we will not get rid of “futures”, hedge funds,etc…. until we have to face some cataclysmic time which is far more reaching that what the middle east is experiencing now.

  • blueink1026

    TOBIN TAX, NOW!
    All these jerks producing nothing but paper ought to be able to generate some income for the treasury of the nation that lets them get away with it!

    • OAK4SocJustice

      When will we Stand Up and Unite and Be Heard! I live in Rochester,NY In the last year workers at a plant that was making profit for a corporation were mandated to have thier hourly wage reduced even though they have a union and held a strike eventually giving in because they were told that their wages were above market value! Today 900 employees will be layed off from our cbail outsity school district while Wall Street and corporations make record profits with goverment bailouts. I would like some help organizing or uniting groups to stop Corporate Socialism and tax the ones fleecing our country and not give tax breaks for sending jobs overseas! If anyone can give me help or guidance in helping citazens stand up to these injustices please email me at oakaltenrgsol@gmail.com I,m Mad as Hell and can’t take it anymore!!!!

  • mrummel

    Mr. Tepper is a good investor but he should pay more taxes. A part of his earnings are shown as capital gains, which are taxed at 15%. This in contrast to average American workers, who pay up to 35%.

  • Gle Earl

    Mr Makinney. Its apologists such as yourself that are part of the problem and none of the solution, and why now 400 people control 80% of the worlds wealth and with it the power over it. 1st of all, how do you know if Mr Teppers hedge fund made anything in 2009. And if it did, how do we know that it was not manipulated and inflated artificially in some form the same way the other various mortgage paper that caused the banking meltdown?.

    It is the mentality of greed for greed’s sake that is the problem, not all the small details that people like yourself want to spin and argue over. Its a fundamental, nearly genetic code that is built into certain humans thinking in regards to elitism. It has happened many times in history, and it has taken shape once again.

    It reminds me of a satirical skit I saw recently on you tube about how Bill Gates sold a company of his, along with all of its jobs to China because the business was losing $50 million dollars a year, and how at that rate he would be broke in 4,000 years.

    The problem with the thinking of apologists for capitalist’s. Is that there logic is flawed. They believe that they create the wealth and that it is in the air. The fact is that in a real and genuine monetary system. The money comes from somewhere else, most usually millions of middle class. And when it is piled and hoarded, it is taken out of the system for which it was meant to be circulated on a regular basis and be of use and benefit to the greater society. And that is what creates the gap that is getting wider by the day.

  • David Tepper is doing exactly what Bernie Madoff did, but out in the open. His promises are paying off–for now. When he fails to pay off, here comes the judge!

  • patrice woeppel

    If memory serves me correctly, Tepper pays the same tax rate on his $4 billion as someone who makes $39,000/yr.

    What have we become?!

  • Joe Atkins

    Clearly, the creation of derivitive bond funds, which tied up large numbers of bad mortages and the implosion of this bad investment, was the real cause of all the problems we’re facing, today. None of the scum who created these bad investments should have been bailed out. The were not “too big to fail” and should have just been allowed to fail. Another cause of our problems is the Federal Reserve and the central banks of Europe. They’ve been sucking our nation dry since 1913, have never been audited and we don’t even know, whether, or not, they are holding US gold and silver. Our nation is being destroyed by greed from Wall Street and the Fed. You scum don’t produce anything. All you do is speculated, drive prices up and suck the bone marrow out of society. The stock market is nothing more than gambling. If you play to win, you have to be prepared to play to lose. It’s going to happen. However, when you have Wall Street moguls creating phoney stock funds, then, when the house of cards fell down, they demanded a bailout from the taxpayers. I blame Reagan killing all the regulation that had, previously, prevented such crap from happening. Without rules, greed will run ammuck. However, this guy’s high salary was not the cause of today’s financial problems. I tip my hat off to him. My only reget is that I’m not making that kind of money.

  • Stewart Pamarino

    Tepper & his gang of Wall Street gangsters are engaged in economic terrorism. Look at your stocks, bonds and mutual funds for proof. The U.S. Attorney General must deliver a criminal prosecution against these gangsters. But don’t hold your breath.

  • I’m always amazed at how people who make huge profits in the stock market walk away like they’ve just won the lottery. Whenever someone makes money in the stock market, somebody else LOSES that money. It didn’t just materialize out of thin air. This is the sad part of someone “cleaning up” on Wall Street; others have lost, and sometimes lost everything. Yes, everyone is in this voluntarily, and you shouldn’t play unless you can afford to lose it. But we all know that’s usually not the case. Insider trading, I believe, is far more common than any of us can imagine, so the suckers lose and the “connected” ones win.

  • nuujumn11

    WAke up people! Mother Earth is taking herself back. So none of this stuff is going to mean rot in a couple of years…including the governments and their cronies, your life insurance policies, your degrees, your salaries, your homes, your status, your cars, your bank accounts, etc., even your lives. NOTHING but THE TRUTH will remain — that which you can’t buy or sell. So, go out and smell the roses while you can and let the ones who are REALLY in charge/power (in higher dimensions) do their job. Cause… do you really need all that STUFF anyway?

  • Tepper’s salary is a disgrace. I couldn’t live with myself if I was him.

  • Allen in Hartwell GA

    If hedge fund manager David Tepper and his ilk were described in general terms as a small organism living within a larger organism, they could easily be seen to be parasites. They are leeches on our society.

  • tuulen

    I am all in favor of money, and I believe in reward for honest effort. Yet, in recent years we all have seen the national and global effects of reckless financial speculation. Granted, banking and other forms of investment necessarily do include financial risk, but there needs to be a legally recognized tipping point, between justifiable speculation and gambling, especially as the effects of such high level gambling can be so devastating. That is where such gambling should be viewed as a crime, and such criminals should be sent to jail.

  • Robert Morris

    It doesn’t matter what these people make. It matters at what rate they are taxed. For someone like Mr. Tepper 95% would be appropriate. A graduated tax is what this country needs and it will curb the incentives for selfish greed.

  • Richard Patten

    Tepper and other traders take a huge cut from simply trading and from the profits ‘he makes’ for clients, but-and here is the trading slight-of-hand: he does not take a hit (loss) for the wealth his customers lose using his services. Using this device, I could make $millions predicting the sex of unborn children. This kind of no-risk trading is a scam.

  • Kay

    This is so utterly obscene I can’t believe it. And we bailed them out? They should be bailing those of us who are struggling to pay our bills and keep food on the table and a roof over our heads out.

  • Mark Bales

    Wealth is CREATED, not shuffled into existence. Work creates wealth.

  • Steve Flora

    Agree with everyone above … EXCEPT K Makinney … who sounds like he is probably Tepper using an alias …..

  • Laura Page

    I’ve worked for very big companies quite a fews years back as an accountant and have realized that upper management pretty much won’t let you stop working unless they get the numbers they want to see, or close to it. I even called the Dept of Labor to question my rights. Big companies dictate some shady practices and I am glad not to be working in that environment anymore. In my opinion, Wall Street is not ethical at all.

  • Dave

    No one person on the planet is worth a $2 million dollar an hour salary. A small number of extremely wealthy people enjoy a lifestyle created on the backs and sweat of millions of employees. Currently, working Americans continue to see cuts in wages, pensions, and healthcare. Not to mention many of them are watching home values shrink and savings vanish as they try to survive. As large organizations and the wealthy dodge taxes, the working poor bare the brunt of the tax burden for our society. At the same time, the wealthy strive to find more cuts while making it nearly impossible to achieve the American dream.

  • [...] David Tepper, received the equivalent of the annual salary of the President of the United States every 14 minutes. His $4 billion in earnings works out to $2 million/hour. All as corporations registered their [...]

  • L Tyvol

    Mr. Tepper and all Wall Street hedge funders/speculators are a large part of destroying the economy. Ordinary people are really suffering. The laws must be changed to disallow such enormous salaaries. No one needs that kind of money. Our country is failing, and with the Republicans enabling every kind of ripoff for the already rich, the United States is fast falling apart. They all need to developo some conscience!

  • Glen Earl

    I now remember that I have seen this name K Makinney on other websites comment boards using the same paragraph to defend other high salaries and company profits. I then did a search and apparently it is one of the many names and handles of a Wall Street PR firm that works for many banking industry organizations in what is described as internet “dissent quelling campaigns”. Well, at least they are listening and concerned.

  • Thanks for this essay. I am glad to see that people are getting angry, still not as angry as we should be. What started out as an economic practice with good intentions has proven itself a complete failure. The idea of making money because you have money is actually a ridiculous notion that when thought through can only lead to what it has led to here! There are people who still have this idea of trickling down when the reality is that it just keeps evaporating and the clouds won’t rain. We have ideologies about hard work and perseverance but they are obviously false, it is ownership that “pays off”. The whole thing is sick but the problem is deeper than I think most people realize. We need to see that it is an unsustainable way of life that we are practicing, that the system has already failed and is now held together with bandages. Luxury is incompatible with a peaceful world if it isn’t extended to everyone. We all have an innate sense of justice and it has been there for thousands of years and it will not go away. Until we learn how to put this internal sense of justice out into the world, we’ll just keep repeating the revolutions. I made a piece of social commentary video if anyone wants to see it (and no I’m not trying to sell anything). I hope this is acceptable and if not don’t click http://www.youtube.com/watch?v=NBHzLrEu3Oc

  • Dirk

    So Tepper makes billions off (among other things) Bank of America. BOA sent me an “offer” today. I can write a check and pay 18.24% on it — month after month. BOA may have gotten this money from the taxpayers (The Fed) for about 0%. So I get to borrow my money for thousands of percent markup. And for this, I should give Tepper a big cut? Come on now! We used to have usury laws to prevent this sort of outrage but the banks (and others) lobbied (with our money) to get govt to do away with them. It’s house of cards and one of these days the public is going to be pushed over the edge (like you see in the MidEast now) and big business is going to be shocked, just shocked that the masses are in revolt. Well, they have it coming. And I for one won’t be especially saddened to see Tepper swinging from an oak tree. That’s the nice thing about ‘we the people’ …. we can be pushed only so far and then there is corrective action. The pot’s about to boil.

  • John

    Notice what these numbers say. Many object that Babe Ruth made “$80,000 … in 1930 ($1.05 million in current dollar terms)” while President Hoover made only “$75,000.” But President Obama was only paid “$400,000 in 2009” that would mean the salary of the president has decreased while that of star athletes skyrocketed. By virtue of the prior statement, Obama’s $400,000 in 1930 dollar terms would be the same or less than Hoover was paid in 1930!

    This is a perfect statement of America’s shallow corporate consumerism celebrity values. A dunderhead juiced up ‘role model’ has a hundred times more market value than the most powerful man in the world. That’s life in government for ya. If we privatized the presidency the president would get a more fair wage?

  • nurse sherrell

    Horrah for greedy wall street white collar crooks who don’t pay taxes like the rest of us working slobs! The Republicans protect them; they protect the Republicans. Both tell the ‘tea party’ and uneducated, struggling citizens what to think and what to do. What shall they do? Vote Republican.

  • Earlier this year, I read Lewis’ “The Big Short,” Sorkin’s “Too Big to Fail,” Mallaby’s “More Money than God,” and Heath’s “Economics without Illusions,” and watched “Wall Street: Money Never Sleeps” and have started, but not yet finished, “Inside Job.” A little knowledge is a dangerous thing, but I have a little better understanding of the causes of the recent financial crisis, reluctantly conclude that the noxious ‘taxpayer bailout’ probably averted a much worse meltdown of the global financial system that would have hurt way more people, and keenly regret that our regulators allowed misguided taunts of ‘socialism’ to prevent them from insisting, like any private ‘white knights,’ on massive ownership interests in the financial institutions that received taxpayer assistance.

    I commend Bart and his organization for juxtaposing facts and figures on extraordinary earnings, which has elicited comments raising questions such as: should there be legal caps on earnings? would higher tax rates be a sufficient proxy? do hedge fund managers like Mr. Tepper “earn” (or are they “worth”) their extraordinary paychecks? do they perform any economically constructive role, or are they just “shuffling money around,” skimming money from the backs of the majority of American working men and women?

    For a counterintuitive perspective that hedge funds could (with appropriate controls) be part of the solution, not the problem, I commend Sebastian Mallaby’s “More Money than God” (e.g., pp. 12-14):

    “The other skewed incentive to finance involves traders’ pay packages. When traders take enormous risks, they earn fortunes if the bets pay off. But if the bets go wrong, they don’t endure symmetrical punishment – the performance fees and bonuses dry up, but they do not go negative. Again, this heads-I-win-tails-you-lose problem is sharper at banks than at hedge funds. Hedge funds tend to have “high-water marks”: If they lose money one year, they take reduced or even no performance fees until they earn back their losses. Hedge fund bosses mostly have their own money in their funds, so they are speculating with capital that is at least partly their own – a powerful incentive to avoid losses. By contrast, bank traders generally face fewer such restraints; they are simply risking other people’s money. Perhaps it is not surprise that the typical hedge fund is far more cautious in its use of leverage than the typical bank. The average hedge fund borrows only one or two times its investors’ capital, and even those that are considered highly leveraged generally borrow less than ten times. Meanwhile investment banks such as Goldman Sachs or Lehman Brothers were leveraged thirty to one before the crisis, and commercial banks like Citi were even higher by some measures.

    The very structure of hedge funds promotes a paranoid discipline. Banks tend to be establishment institutions with comfortable bosses; hedge funds tend to be scrappy upstarts with bosses who think nothing of staying up all night to see a deal close. Banks collect savings from households with the help of government deposit insurance; hedge funds have to demonstrate that they can manage risk before they can raise money from clients. Banks know that if they face a liquidity crisis they have access to the central bank’s emergency lending, so they are willing to rely heavily on short-term loans; hedge funds have no such safety net, so they are increasingly reluctant to depend on short-term lending. Banks take the view that everything is going wonderfully so long as borrowers repay; hedge funds mark their portfolios to market, meaning that slight blips in the risk that borrowers will hit trouble in the future can affect the hedge funds’ bottom line immediately. Banks’ investment judgment is often warped by their pursuit of underwriting or advisory fees; hedge funds live and die by their investment performance, so they are less distracted and conflicted. For all these reasons, a proper definition of hedge funds should stress their independence. So-called hedge funds that are the subsidiaries of large banks lack the paranoia and focus that give true hedge funds their special character.

    As I finished writing this book, in early 2010, regulators seemed poised to clamp down on the financial industry. To a large extent, their instincts were right: At their peak, financial companies hogged more human capital than they deserved, and they took risks that cost societies dearly. But Wall Street’s critics should pause before they sweep hedge funds into their net. Who, in the final analysis, will manage risk better? Commercial banks and investment banks, which either blew up or were bailed out by the government? Mutual-fund companies, which peddled money-market products that the government was forced to backstop? And which sort of future do the critics favor: one in which risk is concentrated inside giant banks for which taxpayers are on the hook, or one in which risk is dispersed across smaller hedge funds that expect no lifelines from the government? The crisis has compounded the moral hazard at the heart of finance: Banks that have been rescued can expect to be rescued all over again the next time they blow up; because of that expectation, they have weak incentives to avoid excessive risks, making blowup all too likely. Capitalism works only when institutions are forced to absorb the consequences of the risks that they take on. When banks can pocket the upside while spreading the cost of their failures, failure is almost certain.

    If they are serious about learning from the 2007-2009 crisis, policy makers need to restrain financial supermarkets with confused and overlapping objectives, encouraging focused boutiques that live or die according to the soundness of their risk management. They need to shift capital out of institutions underwritten by taxpayers and into ones that stand on their own feet. They need to shrink institutions that are too big to fail and favor ones that are small enough to go under. The story of A.W. Jones and his successors shows that a partial alternative to banking supermarkets already exists. To a surprising and unrecognized degree, the future of finance lies in the history of hedge funds.”

    Some commentators seem to feel that no individual should be ‘allowed’ to earn a billion dollars a year. Karl Marx said in another context that ‘a difference in quantity makes a difference in quality’ – perhaps, to paraphrase Justice Stewart on pornography, people recognize unconscionable pay when they see it. But people probably respond to a spectrum of views, perhaps against the Cuban government’s single payer average salary for doctors of $25 a month as being too low, and perhaps against Britney Spears earning her millions, as too high in relation to her social contributions. Should there be a priori limits on the annual gains in wealth of LeBron James, or Oprah, or Bill Gates, or Warren Buffet, or David Tepper? Only by reading the aforementioned finance books did I begin to make a distinction between inventors of essentially fraudulent (given the ratings) segmented mortgage-backed synthetic securities (who seem to have created financial products of dubious value) and those who did the hard work to determine that such securities were naked emperors, then sought out and made gutsy bets against foolish counterparties (presumably a socially useful service, although it turns out to have been a destabilizing activity, given the huge volume of unsound derivatives that had been issued).

    Perhaps legislators and regulators could harness the brains and guts of hedge fund traders who make counter-conventional wisdom bets, while adopting some dampeners to destabilizing excesses: e.g., giving shorted institutions a little more breathing room; requiring reasonable capital reserves and limiting excess leverage to keep institutions small enough to fail; requiring ‘locked in’ portions of personal funds in megatrades; regulating esoteric derivatives that approach gambling rather than financial instruments; increasing marginal tax rates (to e.g. 50%, rather than a confiscatory 95% that is the functional equivalent of prohibiting the activity) that allow taxpayers to participate in profits of canny traders without eliminating socially useful ferreting out of capital inefficiencies…

    - from one who (to paraphrase Churchill’s comment about democracy) believes that the ‘free market’ is the worst form of economic organization, except for all the others

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