CNBC EXCLUSIVE: CNBC TRANSCRIPT: CNBC'S "FAST MONEY" TALKS WITH U.S. PAY CZAR KEN FEINBERG
Following is the unofficial transcript of a CNBC EXCLUSIVE interview with Pay Czar Ken Feinberg today on CNBC's "Fast Money."
All references must be sourced to CNBC.
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MELISSA LEE: THE OBAMA TRADE, THE PRESIDENT UNVEILING A NEW BANK TAX TODAY TO BE IMPOSED ON THE DEBT OF THE LARGEST FINANCIAL FIRMS. A FEW WILL BE IN PLACE FOR TEN YEARS OR AS LONG AS NECESSARY TO PAY BACK ALL OF THE T.A.R.P. FOR MORE ON WHAT COULD BE AT STAKE FOR THE FINANCIALS. LETS WELCOME OBAMA'S PAY CZAR KEN FEINBERG. MR. FEINBERG, PLEASURE TO SPEAK WITH YOU.
KEN FEINBERG: GLAD TO BE BACK TO YOUR SHOW,
LEE: THANK YOU. I WANT TO ASK YOU ABOUT THE BAILOUT TAX. I DO WANT TO GET YOUR TAKE ON WHETHER YOU THINK THIS IS FAIRLY STRUCTURED ESPECIALLY CONSIDERING SOME OF THE FIRMS OUT THERE, WHICH YOU STILL REGULATE IN TERMS OF PAY HAVE ALSO RECEIVED EXTRAORDINARY ASSISTANCE FROM THE U.S. GOVERNMENT FROM TAXPAYERS. THEY'RE PAYING SOME BONUSES, BUT THEY'RE EXEMPT FROM THIS AT THIS POINT.
FEINBERG: WELL, I CAN'T SPEAK TO THE TAX. THE TAX IS NOT PART OF MY JURISDICTION UNDER THE LAW GOVERNING MY DETERMINATION OF COMPENSATION .I WOULD SAY THAT -- WELL, ONE OF THE ISSUES THAT'S POSED IS DESPITE MY PERFORMANCE-BASED CRITERIA THAT GOVERNS COMPENSATION , IT'S LIMITED TO JUST A VERY FEW COMPANIES AND DOESN'T DEAL COMPLETELY WITH THE OVERALL SIZE OF SOME OF THESE BONUSES. SO I CAN SEE HOW THE TAX WOULD FIT AS PART OF AN OVERALL MENU OR RECIPE FOR REFORM, BUT IT'S NOT ON MY WATCH.
GUY ADAMI: SO WHAT SHOULD THE METRIC BE FOR COMPENSATION FOR BONUSES FOR EMPLOYEES? WHAT METRIC WILL YOU USE OR SHOULD WE BE USING?
FEINBERG: THE PRIMARY METRIC I USE THAT HAS BEEN ADOPTED NOT ONLY BY THE TOP RECIPIENTS UNDER MY JURISDICTION, BUT AS I UNDERSTAND IT, FROM A GOOD PART OF WALL STREET THIS YEAR, IS THE METRIC THAT TIES YOUR COMPENSATION TO LONG-TERM PERFORMANCE IN STOCK.SO THAT THE DAYS OF GUARANTEED CASH ARE OVER, LARGELY, AND REPLACED WITH THE NOTION THAT YOUR COMPENSATION AND YOUR INCENTIVE-BASED BONUS IS ULTIMATELY GOING TO TAKE THE FORM OF STOCK AND, AND STOCK THAT'S NOT REDEEMABLE OR TRANSFERABLE FOR TWO, THREE, FOUR, FIVE YEARS. SO YOU'RE GOING TO HAVE TO SIT ON THAT STOCK. AND AS THE VALUE OF THAT STOCK GOES UP BASED ON THE PERFORMANCE OF THE COMPANY THATS HOW YOUR COMPENSATION WILL ALSO BE DETERMINED.
ADAMI: FAIR ENOUGH LET ME ASK YOU THIS QUESTION AND I GENERALLY DONT DO THIS BUT LETS SAY I PUT ON A TRADE IN SEPTEMBER AND BY OCTOBER I HAVE MADE A FEW HUNDRED MILLION DOLLARS WHICH IS NOT UNREASONABLE GIVEN WHAT GOES ON WHY SHOULD I THEN WAIT THREE OR FOUR YEARS IF IN A MONTH I HAVE MADE MY YEAR
FEINBERG: BECAUSE ITS THAT TYPE OF EXCESSIVE RISK THAT IS DETERMINED BY SHORT TERM SWINGS IN COMPANY PERFORMANCE THAT LED US TO CONCLUDE, YOU MAY BE RIGHT WITH YOUR HYPOTHETICAL, BUT IN THE OVERALL ECONOMY OF THE COUNTRY, ITS BETTER THAT YOU HAVE TO WAIT THE LONG TERM MARKET FORCES RATHER THAN SHORT TERM SWINGS OF THE MARKET
LEE: MR FEINBERG YOU MENTION THAT IN TERMS OF THE BAILOUT TAX ITS NOT UNDER YOUR PERVIEW AS A PAY CZAR SPECIAL MASTER BUT STILL YOU MENTIONED IT SHOULD PART OF A MENU OF REFORM BUT IS IT A BIT FRUSTRATING TO YOU BECAUSE INITIALLY WHEN YOU TOOK THIS JOB YOUR OVERSIGHT WAS OVER MANY MANY MORE BANKS THE BANKS RIGHT NOW WHOSE BONUSES ARE BEING CALLED BY THE PRESIDENT OBSCENE AND NOW THEY ARE NOT UNDER YOUR PERVIEW YOU LIKE TO SEE THIS REFORM IN TERMS OF COMPENSATION BUT YOU DONT HAVE THE POWER ANYMORE WHAT IS THE RIGHT WAY TO APPROACH THIS BECAUSE IT DOES SEEM SORT OF PIECEMEAL.YOUR OVERSIGHT IS OVER A HANDFUL OF ENTITIES WHICH RECEIVE GOVERNMENT ASSISTANCE AND ALL THE REST ARE OUT THERE BY THEMSELVES.
FEINBERG: FIRST OF ALL, THERE WERE ONLY TWO BANKS UNDER MY JURISDICTION. NOT MANY, MANY. BANK OF AMERICA AND CITIGROUP. I'M NOT FRUSTRATED. THEY PAID $85 BILLION BACK TO THE TAXPAYER.SO UNDER THE LAW THAT I'M WORKING UNDER, CONGRESS DECIDED IF $85 BILLION GETS REPAID, THEY ARE OUT FROM UNDER MY MANDATORY JURISDICTION. NOW, IT STILL APPEARS THAT NOT ONLY THOSE TWO BANKS BUT OTHER BANKS LIKE GOLDMAN ARE VOLUNTARILY ADOPTING MANY OF THE PERFORMANCE-BASED CRITERIA THAT I HAVE ARTICULATED. TRUE, YOU'RE ABSOLUTELY RIGHT, MELISSA, I'VE NEVER HAD ANY CONTROL OF THE GREAT BULK OF WALL STREET ENTITIES. AND THAT'S ONE REASON WHY I THINK THE ADMINISTRATION IS COMING UP WITH AN ALTERNATIVE PROGRAM.
KAREN FINERMAN: MR FEINBGER THIS IS KAREN FINERMAN. THIS IS A SERIOUS QUESTION. I KNOW YOU'VE HAD A LONG HISTORYOF PUBLIC SERVICE AND THIS IS PROBABLY THE MOST UNUSUAL OF ALL YOUR POSITIONS BUT WHAT DOES IT FEEL LIKE TO BE BOTH THE MESSIAH AND A PARIAH IN TERMS OF -- YOU'RE RIGHT REALLY AT THE NEXUS OF A LOT OF HEATED EMOTIONS ON BOTH SIDES.
FEINBERG: WELL, I DON'T CONSIDER MYSELF A MESSIAH OR A PARIAH. I'M PERFORMING A PUBLIC SERVICE AT A SPECIFIC REQUEST OF THE SECRETARY OF THE TREASURY. YOU DON'T SAY NO TO THE SECRETARY OF THE TREASURY.AND IF THE SECRETARY OF THE TREASURY AND THE CONGRESS WANT THIS ROLE FILLED WITH PAY DETERMINATIONS MADE, I'M HONORED BY AN OFFICIAL APPPOINTED BY THE SECRETARY, IM HONORED TO DO IT. I THINK THERE ARE MILLIONS OF AMERICANS ARE DOING WHAT I'M DOING, IVE BEEN ASKED TO DO IT. AND I THINK WE ARE GETTING SOME RESULT NOW I DON'T KNOW WHETHER THOSE RESULTS WILL BE LONG TERM OR NOT.IT'S A POLITICAL COMPONENT HERE OBVIOUSLY.BUT I AM PLEASED WITH THE FACT THAT OUR WORK IS GOING FORWARD AND WE HAVE HAD SOME REAL SUCCESS IT SEEMS TO ME.AS PART OF AN OVERALL PACKAGE, IT'S ONLY ONE ROLE THAT I PLAY.THERE'S ALL THESE OTHER ROLES, REG REFORM, CORPORATE GOVERNANCE REFORM, A TAX, G-20 PRESCRIPTIONS SET BY SECRETARY GEITHNER. ALL OF THESE ARE PART OF A RECIPE, A LIST OF REFORMS THAT I THINK DEMONSTRATE THE ADMINISTRATION'S COMMITTMENT TO REIN IN THIS PAY.
LEE: MR. FEINBERG, A PLEASURE SPEAKING TO YOU. HOPE YOU COME BACK TO "FAST" SOON.
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