One of the arguments Wall Street advocates and opponents of compensation reform like to make is that if financial institutions start slashing their pay, their top "talent" will flee for greener pastures. And then where would we be? goes the refrain. More screwed than we even are now! Imagine how bad things would be if the financial system was run by a bunch of people who didn't really know what the hell was going on!
All of the industry would go everywhere else and China would get all the bankers and bottle service and we'd be the ones eating with chopsticks! Or something. Depending on how you tell the story, it can be a terrifying apocalyptic scenario. But this morning's Times tells us that, in fact, it may be just another urban legend:
Of the 104 senior executives whose pay was set by the federal pay regulator in the last two years, 88 executives, or nearly 85 percent, are still with the companies even though their pay was drastically cut back, according to people briefed on the government data.
Hmmm. So is it that the financial-services people who threatened to leave were merely lying? Or as they call it on Wall Street, "repackaging the truth"? We hope so. Otherwise, it's that the 85 percent left are the untalented ones.