Which Wall Street CEOs should walk the plank?

So far, the U.S. has committed $12.8 trillion to bailing out Wall Street. Does this mean that Wall Street CEOs made mistakes? Apparently not. Because if it did, the Wall Streeters who cost taxpayers all that loot would be out of their jobs.

A few have moved on -- consider Merrill Lynch's former CEO Stan O'Neal, who, after leaving the investment bank with a then-record $2.24 billion loss, received a "kick in the rear" amounting to a $161 million retirement package. (O'Neal is just one of the Harvard MBAs whose destruction of the global economy is prompting some navel gazing at HBS.)

Most, though, are still at their desks, gamely calling the shots. Yesterday, Treasury Secretary Tim Geithner suggested it could be time for that to change.

As I posted, it's illogical that an auto industry CEO should pay the price for his failure while Wall Street CEOs get a trillion-dollar mulligan. But as today's puff piece on Steve Rattner, the Wall Streeter who fired General Motors Corp. (GM) CEO Rick Wagoner, reveals, it is different when a Wall Streeter fires a Main Streeter. (Actually with Rattner engaged in an orgy of self-promotion, as a second puff piece suggests, he could be upstaging his boss, Tim Geithner -- which may not go over so well with President Obama.)

It could be a much more delicate matter for a Wall Streeter like Rattner to fire another Wall Streeter. And that's a problem for an administration that is crawling with them -- including economic adviser Larry Summers, who got $5.2 million from $30 billion hedge fund D.E. Shaw to give speeches that would draw in wealthy clients.

Until there is some other way for talented people to make that much money that fast, it is hard to believe that Obama's Wall Streeters will start firing their own, since it would strain their ability to reenter the game after their government service is over. But let's assume for a minute that Geithner was serious about canning the individuals who led the financial system into catastrophe. He could demand that each Wall Street firm requesting additional taxpayer money put together a viability plan -- just as he did with the auto industry. (A mere stress test won't do). Then if the viability plan was not viable, Geithner could fire the responsible CEO.

Having really smart people running the country is a double-edged sword. If they come up with solutions that are in the country's best interest, it can be good. If they get clannish and protect fellow club members regardless of performance, it can be a disaster.

We'll soon see which it is.

Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College. His eighth book is You Can't Order Change: Lessons from Jim McNerney's Turnaround at Boeing. He has no financial interest in the securities mentioned.

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