Corpulent Compensation It’s unseemly.

And that’s the best one can say about the big banks on Wall Street making gobs of money again – with taxpayer help – or Baltimore County Councilmen (there are no women on the Council) taking pensions at 100% of their pay. Meanwhile, unemployment remains sky high; and although Maryland is doing better than most states, times are very scary for the average family here.

The big banks on Wall Street are back in business making money again, so much so that TARP funds are being repaid and huge bonuses are being handed out to employees.

What is galling is that these banks would not have been in a position to make money had it not been for the actions of the Bush and Obama administrations to shore them up with billions of dollars. And while they are generous with the money they have made using cheap money provided by the Federal Reserve, they are pretty stingy when it comes to doing what they are supposed to do: make loans.

It’s no wonder that the president is mad at them. The rest of us are too.

Both administrations were right to act quickly to stave off panic and a total financial collapse. But they were all too generous with the terms they gave these banks; and now that the TARP loans are being repaid, their leverage has been greatly reduced.

Jawboning by the president isn’t going to be enough to get the banks to rein in compensation and to start making loans again. Fundamental regulatory reform is what is needed.

The New York Times editorialized Tuesday that banks should be prohibited from becoming too big to fail. Separating commercial from investment banking would be one way to achieve that worthy objective.

Paul Volcker has advocated returning to the principles of the Glass Steagall Act that separated commercial banking from investment banking and proprietary trading. Glass Steagall may have been stodgy, but it worked in prohibiting the concentration of financial control that eventually resulted in the financial meltdown. Requiring investment banks to use their own capital instead of the public's would be another step in keeping a healthy relationship between risk taking and compensation.

In the not too distant past, investment banks were independently owned businesses. Risk was managed carefully because ultimately it was the partners’ money that was at risk. Compensation was more directly tied to the success of the firm; and while many partners, like those at Goldman Sachs, became very wealthy, it was hard to begrudge those partners who made a lot of money. As John Houseman used to say: “they earned it.” Today, the principals at those investment banks are relatively sheltered from the risks they take. Even if they fail, their pay packages are sufficient to provide financial security for many generations of their families. They just take their money and leave the problems to others.

Like pensions for county councilmen.

Even though the amounts at stake are wildly different, there are parallels between exorbitant executive compensation and outsized pensions being paid to retiring councilmen and legislators.

Goldman Sachs CEO Lloyd Blankfein justified the crazy compensation he and his fellow execs were getting by saying they were doing “God’s work”. Perhaps that same feeling of misplaced loyalty is behind the pensions Baltimore County Councilmen feel they are owed.

As the big Wall Street banks rush to pay back their TARP funds to get the government off their compensation committees, panicked contenders to the county executive position in Baltimore County are now proposing to cap the council’s generous pensions. But why are lawmakers at either the state or local level even entitled to pensions? After all, these are part-time jobs, and in a sense, voluntary since they don’t need these jobs. If they want pensions, like many of us do, let them contribute to their own 401k. But don’t ask us to contribute.

A favorite cartoon depicts a slight man standing in a huge office in front of an enormous desk with its equally enormous occupant. The man at the desk is saying: “Johnson, you have become indispensable to this company, and we can’t allow anyone to become indispensable, so you’re fired!”

Next fall we will find out if voters in Baltimore County are as fed up as they seem today and whether they will decide their representatives (and their pensions) are as indispensable as they apparently think they are.

With unemployment high and people worried about their future, people have a right to be angry with the Wall Street likes of Lloyd Blankfein and the current councilmen of Baltimore County.

The right thing would be for each to voluntarily cap compensation and pensions. But don’t expect a Christmas miracle.

At least one local company looks like they get it. In an overdue move, Constellation Energy’s Mayo Shattuck announced that the company is planning to give shareholders more say in executive pay and executives will forgo their golden parachutes.

It’s what the government has been rightfully demanding of its banking beneficiaries.

Lloyd should call Mayo for some advice.  7:57 AM •