President Obama has nominated Antonio Weiss as Undersecretary of Treasury overseeing domestic finance. Senator Elizabeth Warren takes umbrage; mouthpiece for the rich and powerful Andrew Ross Sorkin defends the choice.
Weiss is the lead investment banker for Lazard, an investment management firm overseeing $186 billion in assets. Literary aficionados will note that he uses his substantial fortune to prop up The Paris Review, where he is publisher.
Senator Warren's central problem with Weiss's appointment (beyond his deep Wall Street credentials) is his role in the Burger King/Tim Horton's merger, which she calls:
a tax deal, plain and simple. It was designed to reduce Burger King’s tax burden, and Weiss was an important and highly paid part of the team.
Sorkin, naturally, waives off the Senator's concerns, calling it a mischaracterization of the merger.
More troubling to me is Weiss's stock vesting contract with Lazard. Many people working in high finance have employment contracts which give them a stock option bonus if they stay with the company long enough. For example, an employee may have two million dollars in stocks vest only after they stay with the company for five years (think of this like a retention bonus-- a reason to stay with the company long-term). These contracts, however, also allow the employee to receive their bonus early-- even if they don't stay for the full time period-- if they take a high-level government finance job. The contracts usually specify that these have to be "high-level" and "finance-related," or else they don't get paid the bonus. In other words, banks pay their employees a bonus become government regulators. Weiss has one of these for $20 million.
Now, proponents say this is an incentive for financiers to devote part of their life to the public sector without feeling they have to work around bonuses. Opponents say these firms have no incentive to pay their employees bonuses for unfulfilled future work for the company which doesn't get done, that these companies never once do something out of the good of their heart, and that these contracts are there only to keep the revolving door between government and Wall Street a-spinnin'. Are the opponents right? Probably? Definitely? Absolutely? Is it troubling that Weiss is being paid an 8-figure bonus by a domestic investment bank specifically to quit and head a regulatory body that oversees domestic investment banks? Gosh. I don't know. Jury's out.
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