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Re: CEO pay: What those involved in the financial meltdown made
From: David Farber <dave () farber net>
Date: Fri, 26 Sep 2008 16:40:30 -0400

Begin forwarded message:

From: "Perry E. Metzger" <perry () piermont com>
Date: September 26, 2008 3:56:49 PM EDT
To: Rich Kulawiec <rsk () gsp org>
Cc: David Farber <dave () farber net>
Subject: Re: [IP] Re: CEO pay: What those involved in the financial meltdown made

Rich Kulawiec <rsk () gsp org> writes:
On Thu, Sep 25, 2008 at 09:54:50PM -0400, Perry Metzger wrote:
Barclays bought Lehman's broker-dealer operations and wants the
employees to stay instead of flee. If they flee, the purchase would
have been worthless, because such a firm has few important assets
other than the staff. To keep people from leaving, Barclays, the
purchaser, is paying bonuses to the staff to keep them from leaving.

Given that Lehman's staff have just run the company into the ground,
why would anyone consider them an "asset" and not a "liability"?

If you had read the message I sent, you would be aware of the fact
that Lehman is a large company, and Barclays did not buy the
portions that were involved in the debacle. They bought the
broker-dealer operations, not the guys who packaged up mortgages, and
not the people who invested in them.

However, I will point out that the vast majority of the staff even in
the REIT, merchant banking and other operations, which Barclays did
not buy, are fine people who did nothing wrong -- accountants, clerks,
secretaries, etc.

Retain them with bonuses?  I think a much better strategy would be
to fire them outright by the busload, and then sue them to recover
any bonuses paid in the past decade.

What would the point of buying a company be if you did not plan on
having it be worth anything? How could the new owners sue people for
doing their jobs in the past before Barclays bought the firm, and why
would Barclays want to do such a thing?

To repeat the situation:

Barclays bought Lehman's broker-dealer operation. That includes many
many thousands of people -- computer programmers, people who clear and
settle trades, account representatives, people who work trades on
various exchange floors, secretaries, computer networking and systems
administrators, etc.

Barclays presumably bought this operation so that they could make
money off of it as a going concern -- they didn't buy it for the fun
of it. Destroying the company would eliminate any possibility of
getting a profit from the purchase, and without any of the staff
staying, there would be no company.

Now, why exactly would you sue, say, a computer programmer for being
paid bonuses over the last decade? The average Wall Street programmer
gets paid almost entirely in bonuses, you know, and the average Wall
Street programmer has nothing to do with business decisions. Do you
imagine that by "suing [the programmer] to recover any bonuses paid in
the past decade" that Barclays would manage to keep this person
working for them? Do you imagine they would have a case, given that
the person probably did nothing more than writing lots of C++ code? Do
you imagine that this would further Barclay's business interests or

Perry E. Metzger                perry () piermont com

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