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GRETCHEN: REMEMBER ALL THE
BAILOUT OUTRAGE OVER THE
BONUSES.
CITIGROUP SAYS IT'S GOING TO
RAISE SALARIES BY AS MUCH AS 50%
TO COMPENSATE.
IS THIS A WAY TO SIDE STEP
GOVERNMENT REGULATIONS OR
NECESSARY TO KEITH KEEP GOOD
EMPLOY YESES.
JAMES PRESIDENT OF GLOBAL ALL
RIGHT LC ADJUNCT PROFESSOR
SCHOOL OF PROFESSIONAL STUDIES
ANDMAN SPENT FIVE YEARS AT
GOLDMAN SACHS AND BARCLAYS
CAPITAL AND SUNRISE
ENTERTAINMENT IN MIAMI.
GOOD MORNING TO BOTH OF YOU.
>> GOOD MORNING, HOW ARE YOU?
GRETCHEN: LET ME START WITH YOU,
I KNOW I BELIEVE THIS IS A GOOD
MOVE BY CITIGROUP TO RAISE
EXHIBITION OF SALARIES BY 50%
BECAUSE AS WE ALL KNOW IT USED
TO BE THAT YOU MADE YOUR MONEY
IN THE BONUS STRUCTURE.
NOW YOU ARE PUTTING IT RIGHT
INTO THEIR SALARY.
GOOD TO KEEP THE GOOD EMPLOYEES.
WHY?
>> WELL, YOU KNOW, I THINK
CITIGROUP NEEDS TO PROTECT ITS
ABILITY TO COMPENSATE ITS
EMPLOYEES.
I WAS AT A COCKTAIL PARTY HERE
AT THE BANK ATLANTIC.
I MET A COUPLE, HUSBAND AND
WIFE, BOTH WORK AT CITIGROUP
BOTH ARE MAKING PROFITS FOR THE
FIRM.
CITIGROUP NEEDS TO BE ABLE TO
COMPENSATE THESE PEOPLE.
LOOK WHAT'S HAPPENED AT MERRILL
LYNCH.
OVER THE LAST SIX MONTHS.
MOST OF THE INVESTMENT BANKERS
HAVE LEFT BECAUSE THEY HAVEN'T
BEEN ABLE TO COMPENSATE THEM.
EVEN AT CITIGROUP NOW.
YOU HAVE GOT HEAD OF THEIR
PACIFIC ORGANIZATION JUST LEFT
TO GO TO MASTER CARD.
IT'S A REAL PROBLEM FOR
CITIGROUP, IT HAS BEEN IN TERMS
OF ATTRITION AND CITIGROUP NEEDS
TO BE ABLE TO PROTECT ITS
ABILITIES.
GRETCHEN: I HAVE GOT TO GET
JAMES IN HERE BECAUSE YOU ARE
ABOUT READY TO COME OUT OF YOUR
SUIT.
YOU ARE SAYING THAT HEY, THESE
WALL STREET GUYS AND GALS DON'T
HAVE ANYWHERE ELSE TO GO ANYWAY.
>> THEY ARE NOT HANDING OUT JOBS
ON WALL STREET LIKE CANDY THESE
DAYS.
I THINK THAT'S CLEAR.
TRY TO LEAVE A JOB AND SEE WHAT
CAN YOU FIND.
LET THEM LEAVE.
THE GOVERNMENTS CITIGROUP
NOW.
YOU AND ARE AS TAXPAYERS WE OWN
THIS COMPANY.
WE SHOULD DETERMINE COMPENSATION
OF THESE EXECUTIVES.
GRETCHEN: BUT THE BOTTOM LINE
IS, YOU BELIEVE THIS IS A WAY TO
SUBVERT THE REGULATIONS IF YOU
TOOK TARP MONEY NOW WE TELL YOU
WHAT YOU ARE GOING TO PAY YOUR
EMPLOYEES.
THIS IS WAY TO GET AROUND THAT.
>> ABSOLUTELY.
>> CAN I SAY SOMETHING HERE?
>> LET ME FINISH.
I THINK THIS IS A WAY TO HAVE
BONUS RESTRICTIONS THAT ARE NOW
BEING SUBVERTED BY BRINGING THE
SALARY UP.
THEY HAVE RESHUFFLED THE KARZAI.
IT'S SAME OLD DECK.
IT'S THE SAME COMPENSATION AS
BEFORE.
AND, AS YOU WERE SAYING, THE
IDEA HERE IS THAT YOU ARE NOT
GOING TO HAVE ANY TROUBLE
ATTRACTING GREAT TALENT TO WALL
STREET TO CITIGROUP.
IT DIDN'T WORK OUT SO WELL THE
LAST TIME AROUND WITH THE
COMPENSATION THEY HAD.
GRETCHEN: SHOULD THE TAXPAYERS
BE CONCERNED?
THE FACT THAT THEIR MONEY NOW --
>> -- YOU KNOW WHAT I THINK,
LISTEN, MAYBE AT NYU YOU ARE
PREPARING GRADUATES FOR A
SOCIALIST COMMITTEE BUT AS FAR
AS I'M CONCERNED I'M NOT READY
FOR THAT LET ME TELL YOU
SOMETHING, THE GOVERNMENT SHOULD
NOT BE INVOLVED IN SETTING
COMPENSATION FOR EMPLOYEES.
THIS IS A REALLY SLIPPERY SLOPE.
WHAT HAPPENS NEXT IS SUDDENLY
THE GOVERNMENT IS RUNNING
COMPANIES WITH SOME SORT OF
POLITICAL AGENDA.
CAN YOU IMAGINE A SCENARIO SOME
DEMOGRAPHIC GROUP LIKE SENIOR
CITIZENS DOESN'T HAVE ACCESS TO
CREDIT CARDS OR DEBTS.
YOU KNOW WHAT CITIGROUP YOU
SHOULD BE MAKING LOANS TO THIS
DEMOGRAPHIC GROUP.
SUDDENLY THE RETURNS AREN'T SO
GOOD.
GRETCHEN: A LOT OF PRIVATE
ENTERPRISE PEOPLE AGREE WITH YOU
EXCEPT FOR THE FACT THAT THEY
TOOK BILLIONS WITH OF DOLLARS OF
BAILOUT CASH.
>> THAT'S NOT SOCIALISM.
THIS IS CAPITALISM.
SHAREHOLDER RIGHTS.
THE GOVERNMENT OWNS CITIGROUP
NOW.
YOU AND I, WE ARE TAXPAYERS.
WE OWN IT IF YOU DON'T BELIEVE
SHAREHOLDERS, OWNERSED OF FIRMS
SHOULD DETERMINE COMPENSATION,
THAT'S DIFFERENT THAN ANY SYSTEM
I HAVE EVER HEARD.
IT'S NOT SOCIALISM.
IT'S CAPITALISM.
GRETCHEN: I HAVE GOT TO WRAP IT
UP THERE.
SORRY.
>> SHAREHOLDER PROTECTION.
I'M ALL FOR SHAREHOLDER
PROTECTION BUT YOU KNOW WHAT?
WE CAN TAKE STEPS TO MAKE SURE
THAT WE HAVE THE ABILITY TO
THROW OUT MANAGEMENT BUT WE
SHOULDN'T BE METTLING IN
COMPENSATION.
>> GLAD TO HEAR YOU ARE FOR
SHAREHOLDER PROTECTION.