They take the risk

For a long time now apologists for stratospheric executive compensation would say (regarding executives) that "they take the risk" and hence they deserve the rewards.

Did anyone ever really believe that? I think many thought this concept would never really be tested - but now it is, and it's clear that it's us (the taxpayers) who were always taking the risk.

Many of the complex structures born of "financial innovation" are now crumbling and it is the U.S. taxpayer -not the high paid executives- who it turns out is on the hook. We had over the last 30 years an extraordinary privatization of reward (while times were good) and now that times turn bad we get the socialization of risk.

In 2007, Lehman Brothers CEO Richard S. Fuld raked in $34,382,036 in total compensation according to the SEC. In 2008 - and for many years to come, some of the taxes paid by Janet Mckenzie (Brockton MA, salary $28,436, three kids) will go to fund the bailout of our financial system made necessary because of the irresponsibility and greed from likes of Mr. Fuld. In 2007, Daniel H. Mudd (CEO of Fannie Mae) raked in $11,648,409 in total compensation according to the SEC. Fannie Mae's bad assets will now be guaranteed by taxes paid by Roger Santeria (Bakersfield CA, salary $41,822, wife, 2 kids) and millions of others at his level. According to Forbes Magazine, AIG honcho Maurice Greenberg is the 98'th richest person in America (2.8 billion). The government bailout of AIG could be worth a billion to Greenberg personally. Taxes paid by John Barstow (Sanborn Minnesota, salary $39,832) will contribute to this billion for Greenberg.

If something good can come out of all this mess it might be the revamping of executive compensation in America. The idea that "they take the risk" has been exposed as fiction. WE take the risk. Not the CEO's but all of us. This is nothing new. Government action (and taxpayer money) was required as early as 1893 to stabilize markets. It happened again in 1907 and again in 1929 and again in 1991 and most recently in 1998 (Resolution Trust Company). The long time between 1929 and 1991 may be explained by that being a period of strong regulation and governmental involvement (until 1980 or so). Has it not been proven beyond a reasonable doubt that unfettered capitalism without some sort of collective safety net will collapse?

That being the case, who exactly is taking the risk.