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Bill George
Scholar/Former CEO

Bill George

Bill George is a management professor at the Harvard Business School, the former Chairman and CEO of Medtronic, Inc., and the author of several best-selling books on leadership. His latest release is 7 Lessons for
Leading in Crisis
.

Political Courage Required

If Congress passes a retroactive, confiscatory tax on Wall Street bonuses, President Obama should veto it. Congress is in a feeding frenzy over the AIG bonuses, which were officially disclosed in a September, 2008, filing to the U.S. government. But Congress is shedding more heat than light on this situation. Wall Street cash bonuses for bankrupt companies like AIG that have lost billions are not appropriate in this environment. But the government cannot fall prey to destroying the financial institutions that are needed to restore confidence in the American economy. Financial incentives are at the heart of our capitalistic system. If Congress imposes a 90 percent tax on them, all they will do is force the best financial managers to move to private institutions like hedge funds or relocate to London. This will not serve anyone well.

This requires political courage, something that is a rare commodity in the U.S. Congress. I believe President Obama has the courage to do the right thing for the long-term health of the country.

By Bill George

 |  March 22, 2009; 9:48 PM ET
Category:  Presidential leadership Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati  
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"Wall Street cash bonuses for bankrupt companies like AIG that have lost billions are not appropriate in this environment."

This is the only sentence you wrote that is accurate. We, the not so privileged [middle class] have no advocates unless Obama stands up to the well-heeled and tells them NO, NOT THIS TIME!

And since when have we as a country ever rewarded bad decisions or bad behavior? I wasn't raised to even think about being rewarded for any bad behavior and that went without saying in a work environment.

And by the way, I have one of your Medtronic pumps, and I am surprised that you would even suggest Obama to act any differently than what I am certain he was taught by his mother and grandparents who most surely taught that there are NO REWARDS for bad decisions.

Posted by: MadasHelinVA | March 24, 2009 4:08 PM
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The President will be a hypocrite if he would veto such a bill and still support the Treasury plan to buy toxic asset at high prices to the tune of 750 billion dollars.

We reward high profits of 50 percent to investors to act as a front to bid up the prices of toxic assets. The government puts in 14 dollars for every 1 dollar of these "private investors".

Is there any difference in this plan from the manipulators that used to have front "investors" bid up the prices of penny stocks to pretend there was a real market and the stocks had value?

The only difference is that the taxpayers will be the victims of this scam.

There are already buyers in the real world market for toxic assets at 30 cents to the dollar while the Treasury has cooked up a fraud where taxpayers will pay high prices for these worthless assets.

Yes such a proposed bill is ludicrous and should not pass, but allowing the new Treasury plan which is simply a fraud of taxpayers is criminal.

Posted by: bsallamack | March 24, 2009 4:05 PM
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Unlike the Texas Moron, President Obama not only has intelligence, principles, and courage, but he also has lotsa cojones!

Posted by: analyst72 | March 24, 2009 4:05 PM
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It takes very little courage to go along with what the monied class and the well-heeled would like one to do. Real courage requires crossing them once and a while in an act of advocacy for the less influential. I'd like to know how Obama answers the charge that while he says he is outraged by these AIG bonuses and all they represent, that he hasn't used his office to enable them.

Posted by: SarahBB | March 24, 2009 3:37 PM
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i expect nothing different from a faculty member at one of the machines that churns out these crooks. they act in accordance with your teaching, so i guess you do at least deserve credit for backing them up in this, since the current strain in american 'leadership' (political, financial, etc.) runs contrary to this.

Posted by: praxitas | March 24, 2009 3:32 PM
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My hope is that, once he has finished using these financial institutions to solve the problems they created, the President will propose real reform to tamp down some of the greed driven abuses on Wall Street. For too long, hired managers have been robbing stockholders (owners of the companies) through self-hired 'independent boards' who rubber stamp huge stock incentive packages that encourage risky behavior to cash in quickly. 'Aligning the interests of the managers with the stock holders' has become a cover for stealing much of the company.

And in a perverse way, tax policy such as lower rates on income that don't progress much beyond the $500000 level and lower capital gains rates, that encourage getting paid in stock, are at the heart of the matter. They make greed without limit payoff in wealth without limit. Progress the tax rate more, especially at the very highest levels of income, and you might tax away much of the incentive to be greedy beyond reason.

Posted by: mgferrebee | March 24, 2009 2:34 PM
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You've got this exactly backwards. Political courage involves standing up to the Beltway establishment and Wall Street and signing this bill.

To all of you suckers out there: you just got fooled by a bunch of con men who told you that the markets could only go up and that it was safe to invest for the long term. Despite all of the evidence which was right in front of your eyes to the contrary. Now the same con men are telling you that the world economy will collapse unless you empty out your pockets and give them every cent you have, with no oversight, transparency or moral responsibility. You are a bunch of idiots if you're going to let yourselves get fooled again.

Just for perspective, Monday's commitment of $1 trillion amounts to about $3000 out of the pocket of EVERY SINGLE MAN, WOMAN AND CHILD IN AMERICA! And this is just the latest commitment. These ridiculous bailouts are bankrupting our great nation.

President Obama should be working to claw back EVERY CENT of ill-gotten gains from these crooks instead of knuckling under to their blackmail. He has faced his first great test as President -- and has failed miserably...

Posted by: jerkhoff | March 24, 2009 2:19 PM
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John Kennedy too admired personal courage in politicians. He wrote a book on the subject. The other book Kennedy wrote dealt with why England slept while Germany built its war machine. Barack Obama has also written two books. Not about history or politics or public policy. Obama's books were both about himself. This man's narcissism is monumental. His executive experience is non-existent. The American people bought a pig in a poke and we can only hope that the man's political instincts include courage and the capacity to know what is right for the United States. That kind of hope is a very thin reed.

Posted by: mhr614 | March 24, 2009 1:22 PM
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Thank you for expressing your hopes here. I'm afraid, though, that political courage and all vestiges of leadership rode out of town long ago.

On a matter -- AIG end-of-year salary -- that is of no financial consequence whatever, the HR has demonstrated an incredible ability to play can-you-top-this as our representatives (after having been aware of the payment agreement all along) express Deep Outrage and knock one another over to jump on the populist bandwagon.

The Senate, which one might have expected to act more .. well, deliberatively .. is as liable as not to send along a bill whose only effect will be to destroy any remaining trust financial firms and partners in the economic rescue may have had in the government.

And the president: with every opportunity to attempt to educate the public on the real issues involved and the stakes at hand, instead became an instant cheerleader for "retribution" and even now mumbles ".. but let's not make things worse."

We don't have a leadership vacuum in this country. That would suggest it could return one day. It seems instead that leadership in Washington has gone the way of the Dodo, and is represented only in books and by a few wax figures in museums.

Pity.

Posted by: spectEIGHTor | March 24, 2009 1:01 PM
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Financial incentives "for doing a good job" are at the heart of our capitalistic system.

- you left that part out. You're welcome. Financial incentive "for doing bad job or no job at all" is one of main reason why capitalistic systems get replaced by totalitarian socialist regimes. Check Cuba, Russia, N. Vietman, Venezuela, etc. And I don't want to see that, not for these bums.

Posted by: AllTooEasy | March 24, 2009 12:54 PM
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Political courage, Mr. George, would entail shining a very bright light indeed on those who played the greatest role in making it possible for a handful of miscreants to treat the American economy as their own private casino.

(Has anyone heard from former Senator Phil Gramm lately?)

This courage would also entail giving the "go" signal to a very tough bunch of federal prosecutors and investigators, hiring as many more as needed, and convening a few grand juries along the way to help sort out the payers from the players.

They played, we've paid. When they won, they took their winnings; when they lost, it was the rest of us who've had to reimburse them and pay off (who else?) their buddies at the table.

Matt Taibbi's written one of the best summaries so far, and I hope President Obama reads it and begins to understand the kind of "courage" we're hoping for now.

http://www.rollingstone.com/politics/story/26793903/the_big_takeover/print

Posted by: jas_john128 | March 24, 2009 12:24 PM
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A former CEO defends the right of demonstrably incompetent executives to take bonuses from government money given specifically to prevent their firms from collapsing- which would have left those executives with nothing.

What a disgusting parasite you are, Mr. Bill George. I can think of no greater argument in favor of taxing those bonuses than this.

Posted by: Anglia123 | March 24, 2009 10:55 AM
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