Fat Cats Put on Diet

Riddle: How do you get an insolvent company to pay back the money it owes you? Answer: Threaten to cut the CEO's pay.

That's what "special master" Kenneth Feinberg (a.k.a. the Pay Czar) is doing. Appointed by the President, Feinberg is reviewing the executive compensation paid by firms receiving "exceptional assistance" last year from the Troubled Asset Relief Program, or TARP. He wields the kind of power that Huey Long-ed for 75 years ago.

Quick history lesson. Huey Long (pictured above) was a fiery populist from Louisiana who managed to serve as governor and U.S. Senator simultaneously. How's that for clout! He had such a stranglehold on state politics that he became known as The Kingfish. His popularity with the voters arose from his conviction that wealth in the U.S. should be distributed more evenly. He wrote a book titled Every Man a King and promoted a "Share Our Wealth" plan, calling for a guaranteed personal income of $2,000 and a maximum allowable income of $1 million. Anything over that would be subject to a 100% tax rate. An individual's accumulated wealth would also be taxed--at a rate of 0% for the first million, rising geometrically until it reached 100% for anything over $8 million. For the mathematically challenged, 100% is spelled C-O-N-F-I-S-C-A-T-I-O-N. (Multiply dollar threshholds by 15 to get today's inflation-adjusted equivalents.)

In 1935 Long was positioning for a third-party run for President, but then got himself shot to death in the state capitol building in Baton Rouge. By a doctor. Administering what they call high-velocity trans-abdominal lead therapy. Actually, there was no forensic examination to determine conclusively that Long was killed by his assailant, and not accidentally by one of his bodyguards, of whom he had many. Anyway, Huey was way larger than life. An estimated 100,000 mourners filed past his open casket in the state capitol rotunda.

But I digress. Today Ken-fish gets to finish what The Kingfish yearned to start: a whittling down of Wall Street salaries. In Round One, Feinberg went after the 25 most highly paid executives at each target firm. The cuts, announced in October, average 50% for total compensation (salary, stock, and benefits) and 90% for cash compensation. This week brings the bad news for second-tier executives, numbers 26 through 100, who are capped at $500,000 annually (no more than 45% to be paid in cash). Feinberg apparently can exercise some discretion. Exemptions may be granted for the most deserving, and the least deserving (think AIG) get hammered down further to $200K.

Huey must be salivating in his grave.

Sean Penn as Gov. Willie Stark in All The King's Men