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Yash Gupta
Business School Dean

Yash Gupta

Yash Gupta is Professor and Dean of The Johns Hopkins Carey Business School.

Cool the Anger, Negotiate with Congress

The rhetoric about these bonuses has been over the top. Nerves are raw among the public and members of Congress. Even President Obama's own rhetoric about this issue has been hot at times.

But now he needs to use the bully pulpit of the presidency to cool things down. Leaders often must be educators, and he needs to educate people so that an informed decision can be made. Better decisions are made when they aren't based on the kind of overheated emotion we're seeing.

This can be a teachable moment for the president. However, he has to manage it very carefully. A big part of this is accepting responsibility for how we got here. If a mistake has been made - for instance, when the Treasury Department asked Congress last month to water down the language in the stimulus bill that would have limited these bonuses - then the president has to explain how and why this decision was made, and take responsibility for it.

A leader sometimes has to show a sense of vulnerability. He has to show that he's human; like anybody else, he can make a mistake. He has to sincerely explain his actions and describe how he would prevent such a problem from happening again. This would help to ease the anger out there.

The president also has to use another vital tool of leadership, and that's the art of negotiation. He has to start talking with Congress to bring the temperature of the rhetoric down. He needs to make Congress see that they, too, must take responsibility. After all, they passed the stimulus bill; they're the only ones in our government who can appropriate funds. A lot of them were in office when this economic crisis was taking shape. Right now, they're fanning the public's outrage. They just can't suddenly start acting as if they're guiltless. In skillful negotiations, the president could point this out and draw them toward a calmer, more reasonable resolution of the bonus issue.

The country is facing almost insurmountable problems. People are losing their homes and jobs. Nobody feels secure from the ravages of the economic tsunami we are facing. AIG bonuses, though symbolically significant, are unimportant compared with the economic Katrina we are experiencing. As for whether taxing these bonuses would hurt industry and hamper our ability to raise capital, we don't really know. However, ex post facto taxation is a slippery slope. The president has to place this issue in the proper context and articulate the importance of making progress.

By Yash Gupta

 |  March 23, 2009; 10:45 AM ET
Category:  Presidential leadership Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati  
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Yes, and that context is that the elite Wall St. traders do not believe that rules of propriety apply to them! Our big problem is that former Wall St. wizards and now in the position of policing the same. There is an inherent conflict of interest playing itself out as the house is burning down around us and the arsonists are helping to put it out.

Come on! These crooks were just trying to milk one last big paycheck before heading off to the Caribbean for an extended vacation until the economy turns around in a few years and they can get back to their larcenous pursuits. Someone in Bush's OMB should have looked into the compensation plans for AIG after the bail out and put a quick end to business as usual. No executive at AIG should be getting any incentive to do what they should have been doing in the first place, managing the risk. As far as I'm concerned, they should be wearing orange jumpsuits and working for free until this mess is cleaned up!

Posted by: old_sarge | March 23, 2009 2:09 PM
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