Fat Cats on Hot Tin Roofs

It probably won’t happen, even if the conservative newspaper The New York Post demands it on its Tuesday front page. Because this week it’s Citibank. Last week it was the auto industry. New crises emerge – and new calls for government aid, while businessman Warren Buffet calls this an “economic Pearl Harbor.”

But there are surprisingly few leaders who are willing to admit even one mistake. Rather it seems like most of them feels that everything has been done by the book – and bonus programs. It just went horribly wrong.

This arrogance, which the usually careful newspaper USA Today calls it, has created outrage from politicians and average people. When the heads of the three giants–Ford, General Motors and Chrysler– flew the short 90 minute flight from Detroit to Washington in three separate corporate jets, the outrage peaked. Their errand was to beg congress for money to survive.

This irony made congressman Gary Ackerman say “Couldn’t you all have downgraded to first class or jet-pooled to get here?” But that idea had not struck any of the three corporate heads. The idea of cutting their own wages seemed just as alien. Like down to one dollar, the symbolic and powerful gesture Chrysler-boss Lee Iacocca made famous three decades ago when he received government aid to save the company.

Ford’s Alan Mullaly flatly refused. But then, he did make 154 million dollars last year.

Listening to and understanding the music of our society has never been the best ability of corporate leaders. Still, it is an almost astounding deafness that has been demonstrated by many corporate leaders this fall. Like when congress found out that Richard Fuld, head of Lehman Brothers, the bank who kicked off this financial crisis with its bankruptcy on September 15th, almost ridiculed a suggestion to hold back bonuses of the CEO’s to send a strong signal to employees and investors just three months before.

“Dont worry”, Fuld said in an email, “they are only people who think about their own pockets.”

These ideas are obviously alien to Richard Fuld. He’s only gotten 2.45 billion NOK in the last even years it took him to run this once proud institution into the ditch.

Citigroup’s councelor Robert E. Rubin – Bill Clinton’s former Secretary of the Treasury – received 749 million NOK before he left the sinking ship in August. By the way, he is the role model for the top economic advisors of Barack Obama.

The fat cats, as they are called, are wandering on hot tin roofs these says. Perhaps there can be some comfort that professor Dan Ariely recently presented research showing that people work better without promises of extra rewards. It simply distracts and creates stress.