Richard Grasso -- Predictable Symbol of American Greed
SEATTLE -- Life rolls on in George W. Bush's America, forcing us to invent a new word -- greeed, with three E's in the middle -- to cover cases like that of Richard A. Grasso, who recently resigned as chairman and CEO of the New York Stock Exchange.
Grasso has been doing such a swell job of policing any corporate irregularities -- surely you've noticed -- that his board members felt he should be rewarded with a pay package worth $139.5 million. But, hey, he was willing to kick back $8 mill. What a guy.
Now, those sophisticated folks at The Wall Street Journal keep pointing out that Grasso did nothing wrong -- he merely accepted a pay package that was foisted upon him by a board of directors who happened to be handpicked by Grasso, who were close friends of his and who kept their decisions secret. How could there be anything wrong with that? What a splendid example of open, transparent corporate governance and independent directors.
If you look around you on almost any level, you'll notice that people who have special advantages almost always manage to convince themselves that they are entitled to those advantages. This defensive reaction includes such immortal excuses as, "But ... we've always done it this way," or, "We got here first," or, "This is the way my daddy did it."
I mean, people will just get outraged if you try to correct even the most glaring inequities -- that sense of entitlement to special privilege is really tricky. Almost everyone who has previously enjoyed an advantage and is suddenly forced onto a level playing field will actually feel cheated, treated unfairly, singled out for undeserved punishment.
Surely the most shocking thing about Grasso's $148 million pay package is that no one involved noticed it was insane. Here we've been through more than a year of gross business scandals, from Enron to WorldCom to Martha Stewart. Presumably our more high-profile corporate execs have been reminded to mind their p's and q's. But here are the directors of the New York Stock Exchange itself, which theoretically regulates corporate malfeasance, so blind, so oblivious they just sleepwalked into this.
Interestingly enough, Grasso had rather sided with the corporate reformers, urging greater openness (for which the vogue word is "transparency") and public disclosure, which is how the pay package became public information. The NYSE has been urging more independent boards of directors and other steps toward improved corporate governance on the companies it regulates -- it just hasn't been taking its own good advice. "And why do you behold the mote that is in your brother's eye, but consider not the beam that is in your own eye?" -- Matthew 7:3
Meanwhile, most experts admit much of the same old stuff that led to Enron and WorldCom is still going on -- managing earnings, cleverly timing announcements, promoting stock prices and the continuing presence of corporate board members who are neither informed nor independent. On top of which, the SEC is conducting a new and stinky investigation into the same unwholesome practices on the trading floor of the NYSE.
Exit Grasso, enter John S. Reed, former head of Citigroup Inc. Reed comes in as a new broom and, in a brilliant public relations coup, announces his salary is $1 for as long as he serves. You will be stunned to learn that the SEC is prepared to conclude that self-regulation doesn't work and perhaps it is time to change the system on the stock exchange. (The Bush administration, undeterred by this unpleasant example, is forging ahead with its plan to let polluters regulate themselves.)
Now, Reed may be an improvement on Grasso, but it is discouraging to find the Journal reporting that at Citigroup he was especially noted for moving the bank's credit card operation to South Dakota, which specializes in legalized loan-sharking, and for pushing untold numbers of credit cards on people who were not financially able to handle them, and have since been caught in an endless nightmare of penalties, late charges and ever-higher interest rates. The only way out for most of them is bankruptcy -- and, of course, the Republican Congress is trying to make bankruptcy more difficult and destructive for average citizens.
Years ago, Jim Hightower decided the Dow Jones Average was a useless number, and what we really need is the Doug Jones Average. Doug Jones, average American -- how's old Doug doin' today? Is he up, is he down? Doin' better, or doin' worse? In case anyone who runs the country cares, the Doug Jones Average is terrible.