Unintended Consequences of Demonizing Banks

Looks like the efforts by Democrats to demonize the banks and limit executive pay is having unintended consequences.

Citigroup Inc.,Bank of America Corp. and smaller banks struggling to attract talent and regain ground on stronger peers may face a new obstacle resulting from the global push to rein in executive pay.

Group of 20 standards barring bonus guarantees for more than one year and requiring deferred pay for top executives would take recruitment tools away from banks already burdened by diminished share prices and damaged reputations, some recruiters said. The plan adopted at last week’s G-20 summit may benefit Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley, which have been quicker to repay government aid.

“Limiting guarantees to one year could hurt banks like Citigroup and Bank of America by putting them at another disadvantage in hiring,” said Colleen Westbrook, a partner with Morrison Cohen LLP in New York and a former counsel at the Federal Reserve Bank of New York.

The reality is that banking is a competitive business. Being able to attract, develop and retain talent is a key element to being successful. Talented employees are going to move to where their income is maximized. It just stands to reason that when there are pay caps put on some of those banks, the talent drain will be noticeable.

Of course, the left will see this as justification to cap all pay levels. All that will do is drive the top talent overseas to uncapped countries and damage the U.S. banking system even further.

This administration is slowly turning the U.S. banking industry into a government bureau office.

NYT Stock Tanking

Looks like a major stock holder of the New York Times has had enough and is bailing out.

Shockingly enough, the Times reports this itself.

WSJ account here.

Morgan Stanley has sold off its 7.2 percent stake in The New York Times Company, people with knowledge of the matter told DealBook Wednesday. The divestiture marks the end of a bitter two-year fight between one of the bank’s asset managers and the beleaguered newspaper company, which publishes DealBook.

The sale took place in a block trade handled by Merrill Lynch, these people said. It is unclear who the buyer or buyers were.

In a statement, Morgan Stanley said: “As a matter of policy, Morgan Stanley Investment Management does not publicly comment on changes in its portfolio.”

Morgan Stanley will file a 13D regulatory document Thursday, these people said.

The New York Times Co.’s stock fell about 2.5 percent to $18.44 in midmorning trading, a 52-week low amid an annus horribilis for the industry in general and the company in particular.