As Jesse Walker noted this morning, Kenneth Feinberg is likely to become the "Special Master for Compensation" to enforce executive-pay guidelines on companies receiving federal bailout money. The Wall Street Journal's Deborah Solomon describes the thicket of fairness guidelines and restrictions on compensation Feinberg will be negotiating.
If you want to get an idea of how Feinberg might approach his task, you may want to check out his 2006 book What Is Life Worth?, which details how he ran the 9/11 compensation effort. I should warn you that I speed-read that book a few years back (I'm interested in the topic) and now can't remember a damn thing about it. Amazon reader Kate Tippett-bowles "Beachbum" says, "I was perplexed as to why he felt the need to continually bombard the reader with his credentials. I felt quite bogged down with his repeated self-aggrandizing and was rather turned off."
A search the Google Books version reveals some interesting stuff, including that Feinberg's "blue-collar background and Jewish heritage" inclined him "to defend the underdog." But he insists he wasn't out to be a class warrior:
One or two of the press accounts of my work referred to my "Robin Hood" approach. I don't think the description fits. The legendary bandit was famous for "taking from the rich to give to the poor." But I didn't do that at all. The 9/11 fund had no overall appropriation to be parceled out, so the amount given to one person couldn't possibly affect the amount someone else would receive. I didn't take anything away from the rich; all I did was make certain that rich and poor alike received their fair share according to the statute.
That positive-sum environment was new to Feinberg, who had previously done Agent Orange compensation:
[I]n no previous case had I been required to calculate awards based on the principle of economic loss. And in all of my other cases, a finite amount of money ($180 million in the Agent Orange case) had been made available for me to distribute to eligible claimants based upon a fixed formula: X amount for a case of cancer, X amount for emphysema, X amount for a broken arm or leg. The 9/11 statue was entirely different. There was no fixed, appropriated amount for me to distribute; I would tally the total check as I went along. And there were no fixed rules for allocation.
Feinberg believes the 9/11 fund should not be used as a precedent for future compensation programs, but it will be interesting to see how he goes about doing executive comp.
If I'm sanguine about the prospect of introducing yet another czar into our late-Romanov political economy, it's because this is a fleas-on-the-dog situation. The original sin was giving out the TARP money. Unlike the government's efforts to violate contractual obligations to GM bond holders, AIG executives and the UAW, here it's just a paymaster deciding what he pays. If Feinberg screws it up and drives the talent out of these banks, all the better. I say fooey to the argument that Dick Kovacevich and the other bank bosses were strong-armed into accepting TARP funds. History is full of people who resisted more forceful blandishments than Henry Paulson's and suffered worse punishments than being denied a new solid-gold hat every quarter.