Bank of America - Merrill Lynch Merger

[monsoon]

BofA stock has already hit $3.77 this morning which I assume is going to be eye watering for a lot of people here in Charlotte. It amazes me how Lewis has gone from being looked at as a genius in the bank industry a little over a month ago, to someone being held up in the bad light that he is in today. The media has turned BofA into the whipping boy for this failed economy. Nevermind the bank has plenty of company, for some reason it's BofA that is the focus now. I am not sure why that might be except for the mess cause by having gone after ML.

[gman430]

BofA stock has already hit $3.77 this morning which I assume is going to be eye watering for a lot of people here in Charlotte. It amazes me how Lewis has gone from being looked at as a genius in the bank industry a little over a month ago, to someone being held up in the bad light that he is in today. The media has turned BofA into the whipping boy for this failed economy. Nevermind the bank has plenty of company, for some reason it's BofA that is the focus now. I am not sure why that might be except for the mess cause by having gone after ML.

The company is on a rollercoaster ride for sure. Today, their stock is up 16% and stands at $5.63 currently mainly due to analyst Dick Bove issuing a statement saying the current fears about the bank failing and being nationalized are false.

[Charlotte_native]

I love Lewis' move of investing even more of his own money in BofA. Though it is meant to make a statement about his confidence in the company (as if a man that makes multi millions can't afford to lose $200,000) it is really a very smart move that will benefit him greatly if the company does pull through. His buy at around $5.00 per share will be quite a gold mine if the stocks go back near their historic highs in a few years. I'm sure many people with money to spare would gamble on a 10X return...

[monsoon]

Indeed. People have been doing this with this stock since October when it was considered a steal at $38.15. It's mostly gambling now. Forgetting all the stuff we know about the toxic assets and so forth, the finance industry's biggest long term issue now is the industry as a whole is too large for the available customers now that investment banking is dead and people are being required to prove they can actually pay their bills. Which of the big banks that will be standing once this shakes out is anyone's guess.

I might be wrong, but I think from a political standpoint, it is going to be tough for the politicians to pass much more help to BofA specifically. It's now being constantly being held up as the example of corrupt Wall Street banking on most of the media outlets and that can't be good for its long term prospects if Lewis finds himself in the position of having to ask for more money. They will either have to fix this on their own or deal with the ramifications.

[Charlotte_native]

I might be wrong, but I think from a political standpoint, it is going to be tough for the politicians to pass much more help to BofA specifically. It's now being constantly being held up as the example of corrupt Wall Street banking on most of the media outlets and that can't be good for its long term prospects if Lewis finds himself in the position of having to ask for more money.

I think this will be one of the silver linings in this sh*t cloud we have now. For years CEO's and higher ups have been pilfering companies at will. Politicians are now openly questioning and combating this. It isn't that I, and probably most people, don't believe in free market pay, but with few exceptions no one is worth tens of millions per year but of course they reward it to themselves since they get to decide (or decide with others who get millions in bonuses) -- my primary example would be Steve Jobs or Bill Gates being examples of people who actually had a hand in inventing what brought their fortunes. If the gov'ment backs your business, insures your business, or in any way props up your business, they/we have a complete right to have a hand in deciding pay scales.

Our system at this level of reward regardless of performance is absurd.

[sharkdawg]

I for one don't think forcing the top executive salaries at the banks will change anything.

To me, the heart of the problem is the sturcture/culture of executive and corporate leadership in every sector of our economy. The true problem with the Keynesian mentality and non-existent regulations are the elite crowd running the big corporations and sitting on the boards. The problem lies in the fact that all boards are insured and indemnified from poor decision making and poor performance, so these numb nuts can't be held accountable for justifying ludicrous payouts/contracts. This then transcends throughout the ranks of these large corporations.

There is no accountability.

If you make a poor decision that effects thousands of peoples livelihoods you should be directly held accountable for those actions.

Open up the boards to the shareholders, accountability will be enforced, salaries will diminish, and risky decisions will be eliminated.

[Commoner]

I think this will be one of the silver linings in this sh*t cloud we have now. For years CEO's and higher ups have been pilfering companies at will. Politicians are now openly questioning and combating this. It isn't that I, and probably most people, don't believe in free market pay, but with few exceptions no one is worth tens of millions per year but of course they reward it to themselves since they get to decide (or decide with others who get millions in bonuses) -- my primary example would be Steve Jobs or Bill Gates being examples of people who actually had a hand in inventing what brought their fortunes. If the gov'ment backs your business, insures your business, or in any way props up your business, they/we have a complete right to have a hand in deciding pay scales.

Our system at this level of reward regardless of performance is absurd.

I understand your sentiment, and it's legitimate, but the government screwed up -- they can't now have their cake and eat it.

If the state feels that it's worthwhile to borrow hundreds of billions from China to stabilize the banking industry by taking stakes in the companies, it needs to buy common stock. By buying preferred, with onerous yields and dividend restrictions, the government should not expect the same influence as an equity holder with a comparable amount of common stock. If the government wants to recapitalize the sector's biggest names, and wants to push its populist agenda throughout management, and if the banks agree that this is a more desirable alternative to risking insolvency and receivership, then the banks should have issued tens of billions of common stock to the Treasury.

What you're describing is private equity ownership. And if the government wanted it, then it should have done it that way. Preferred equity holders don't get this degree of influence (air travel, bonuses, salaries, mortgage cramdowns, etc.) -- they get yield, priority over common in dissolution and some warrants. It's an important distinction.

Again -- I don't disagree with your sentiment. But if the government wants to be private equity, they need to invest like private equity.

[Commoner]

I for one don't think forcing the top executive salaries at the banks will change anything.

To me, the heart of the problem is the sturcture/culture of executive and corporate leadership in every sector of our economy. The true problem with the Keynesian mentality and non-existent regulations are the elite crowd running the big corporations and sitting on the boards. The problem lies in the fact that all boards are insured and indemnified from poor decision making and poor performance, so these numb nuts can't be held accountable for justifying ludicrous payouts/contracts. This then transcends throughout the ranks of these large corporations.

There is no accountability.

If you make a poor decision that effects thousands of peoples livelihoods you should be directly held accountable for those actions.

Open up the boards to the shareholders, accountability will be enforced, salaries will diminish, and risky decisions will be eliminated.

You're right that shareholder access to the BOD slate is key. The problem has been drafting effective access rules that prevent overly disruptive shareholder initiatives. The Bush administration proposed a regulation that would empower shareholders to nominate directors (a departure from the traditional regime whereby the board nominates directors and shareholders simply vote) but the SEC couldn't muster the votes to make it happen after substantial negative public comment.

Attached is a link to, in my opinion, a workable shareholder access regime (if anyone's interested). It's the first article in the issue. http://www.sodali.com/pdf/media/200807.pdf

I disagree that there is a lack of accountability throughout management, but at the BOD level (where I believe most of the breakdown have taken place over the last 10 years), a limited shareholder access regime would go a long way toward fixing that. I also disagree that any moral hazard created by O&D Insurance has caused excessive risk-taking. Ample judicial precedent grants enormous discretion to officer and director "business judgment."

[monsoon]

If one believes the reports in the Observer, it sounds as if BofA, locally, is resorting to commando style layoffs where they strike a department without warning, the poor employee's access to everything all of a sudden is cut off, they are informed they are history at the bank, and no doubt asked to sign a release form in return for some severance. This style of layoff allows a corporation to avoid having to deal with WARN laws and their repercussions. (it's been watered down significantly to the favor of large corporations) It also minimizes most reporting on the issue so the corporation does not get much negative press in the local media.

Anyone reading this have more details of what is going on there?

In any case there were earlier claims in this topic the ML merger would not result in many layoffs in Charlotte. This does not seem to be the case given the reports in the press. The paper also said there is a lot of resentment amongst the employees still left at BofA against the new ones that came in through the ML door.

Meanwhile, Lewis is now saying, again, the bank won't need anymore bailout money. Of course if they did take it, the limits on executive compensation get slapped on the bank. I'm fascinated by the number of bank supporters that have come on TV and said that $500k/year just isn't enough salary for a banker.

[HopHead]

If one believes the reports in the Observer, it sounds as if BofA, locally, is resorting to commando style layoffs where they strike a department without warning, the poor employee's access to everything all of a sudden is cut off, they are informed they are history at the bank, and no doubt asked to sign a release form in return for some severance. This style of layoff allows a corporation to avoid having to deal with WARN laws and their repercussions. (it's been watered down significantly to the favor of large corporations) It also minimizes most reporting on the issue so the corporation does not get much negative press in the local media.

Anyone reading this have more details of what is going on there?

In any case there were earlier claims in this topic the ML merger would not result in many layoffs in Charlotte. This does not seem to be the case given the reports in the press. The paper also said there is a lot of resentment amongst the employees still left at BofA against the new ones that came in through the ML door.

Meanwhile, Lewis is now saying, again, the bank won't need anymore bailout money. Of course if they did take it, the limits on executive compensation get slapped on the bank. I'm fascinated by the number of bank supporters that have come on TV and said that $500k/year just isn't enough salary for a banker.

When I was up in NYC a few weeks ago visiting friends, one of whom is an Investment Banker with BofA, I noticed how much resentment there is towards ML folks--not just in Charlotte, but in NYC as well. Like this article stated they are doing the same thing up in NYC with the sneaky "layoffs". However, it is a majority of BofA employees and not Merrill Lynch. My one friend pretty much knows that he's going to lose his job, but I certainly understand his resentment. It's not just the bonuses, but for one reason or another BofA isn't getting preferential treatment in the cutbacks either--no matter what city they are in.

[RiverwoodCLT]

I know more than one who have been layoff. It is a sad time for these people. None knew they were going to be layoff.

[Commoner]

...

Meanwhile, Lewis is now saying, again, the bank won't need anymore bailout money. Of course if they did take it, the limits on executive compensation get slapped on the bank. I'm fascinated by the number of bank supporters that have come on TV and said that $500k/year just isn't enough salary for a banker.

With respect to compensation issues, it's one thing for the C-level to take no more than $500k for a year or two, while you're still partially owned by the government. The issue is where the line is drawn. There are M&A advisory positions in most of these institutions that might generate up to $50M in no-risk (non-trading) revenue in a single transaction (the Wyeth deal comes to mind). You can't pay this person $500k and expect to keep them. And if you can't keep risk-free generators of revenue (when a boutique like Lazard can easily pick them up), the amount of time it takes to emerge from the morass is only longer.

I think the government could run into a problem if, by virtue of any common ownership or board membership that might emerge under the new plan, they start to fire C-level managers, they're going to have a hard time finding managers. That doesn't look like something a rational person would want to do for $500k, to answer to (eventually) bureaucrats and legislators, take Amtrack to D.C., and become accountable to private shareholders who have been pissed for two years now.

[mad_park]

For $500K per year, I'd sure give it my best effort!

[monsoon]

...There are M&A advisory positions in most of these institutions that might generate up to $50M in no-risk (non-trading) revenue in a single transaction (the Wyeth deal comes to mind). You can't pay this person $500k and expect to keep them. ....

I've heard this before. Exactly where are these folks going to go if the banks does limit their salary to 1/2 million. It's not like they can pack their bags and go down to Wendys and demand a 1/2 million dollar salary frying hamburgers. The head of Toyota for North America only makes $1M/year and he is responsible for a heck of a lot more revenue than $50M.

[Charlotte_native]

I've heard this before. Exactly where are these folks going to go if the banks does limit their salary to 1/2 million. It's not like they can pack their bags and go down to Wendys and demand a 1/2 million dollar salary frying hamburgers. The head of Toyota for North America only makes $1M/year and he is responsible for a heck of a lot more revenue than $50M.

I've always loved the 'if you don't pay them this much they'll go...' argument. So go. And go fast before you bilk your company of any more unwarranted funds. While you're at it, take your overpaid lackeys with you. They won't find another job for millions per year, they just don't exist and if they do doubtful the position isn't filled. And who cares if a CEO of a failing company leaves...it wouldn't appear that they were instrumental in success if their company's performance is the measure.

It's one thing to see someone who has created a company that is enormously successful or a family run company pay themselves a fortune. They created the fortune. These guys just stepped into the job for a company that already existed. I'll bet there are ample qualified brilliant people that could run a big corporation for a measly $1mil or even half of that per year. As pointed out, Toyota seems to be doing just fine.

[Commoner]

I've heard this before. Exactly where are these folks going to go if the banks does limit their salary to 1/2 million. It's not like they can pack their bags and go down to Wendys and demand a 1/2 million dollar salary frying hamburgers. The head of Toyota for North America only makes $1M/year and he is responsible for a heck of a lot more revenue than $50M.

There are certainly M&A boutiques that they could leave for. They can indeed pack their bags and leave for Lazard, etc.; not Wendy's, or pursuing something different.

Comparing the auto industry to the banking sector, in terms of which employees are responsible for which revenue streams, doesn't work. It's very easy to determine which investment banking employees are responsible for which revenue streams. Absent one-time divestitures (arguably), you can't track revenue back to C-level employees. Their fortunes are made with the overall perforamnce of the institution. That's why C-levels shouldn't have as many gripes as the hypothetical (but quite real) M&A advisor in the above post. That being said, find me a CEO with the insight and leadership ability to make Citigroup profitable, and I'll show you an employee worth many multiples of $500k.

If one's perogative is that income disparity, as a whole, needs to be addressed and reduced, then that's a whole other discussion.

[Commoner]

I've always loved the 'if you don't pay them this much they'll go...' argument. So go. And go fast before you bilk your company of any more unwarranted funds. While you're at it, take your overpaid lackeys with you. They won't find another job for millions per year, they just don't exist and if they do doubtful the position isn't filled. And who cares if a CEO of a failing company leaves...it wouldn't appear that they were instrumental in success if their company's performance is the measure.

It's one thing to see someone who has created a company that is enormously successful or a family run company pay themselves a fortune. They created the fortune. These guys just stepped into the job for a company that already existed. I'll bet there are ample qualified brilliant people that could run a big corporation for a measly $1mil or even half of that per year. As pointed out, Toyota seems to be doing just fine.

In what way is a $60M revenue-generator "bilking" his employer or shareholders? Please explain. Do you have any idea what kind of revenue is generated by certain segments? Or do you think that thousands of profitable employees should be punished for the poor esoteric investment choices of a tiny (highly leveraged) segment of the bank? You do understand that these groups are distinct, correct?

I mean this with the utmost respect, but are you at all familiar with contemporary financial institutions (especially the corporate and investment banking functions)? Terms like "lackeys" and "bilk" (along with the ubiquitous "fat cats" -- my personal fav) usually indicate a modest knowledge gap.

You might want to find a non-Toyota example. They're sucking wind.

[Charlotte_native]

The point is would they really just be unemployed rather than take a pay cut. It doesn't appear that paying certain people immense amounts of money equates to a successful company. If they want money from our government to bail them out, they need to be willing to do what it takes. I get that certain parts of certain companies bring in a lot of money -- are there enough multi-million paying jobs out there for these CEO's to really leave and recapture the pay they they are receiving? If not then they aren't really being paid what the market will bear, but what they've all set up for themselves.

Do you believe if they left that there would be a void - no one that could do their job would do it for far less and be at least as successful? (not bringing in how unsuccessful their companies appear right now). How about some reward for success pay? I'd love to be paid the most I've ever made even if what I did wasn't working any more. Not much incentive there...

[Charlotte_native]

In what way is a $60M revenue-generator "bilking" his employer or shareholders? Please explain. Do you have any idea what kind of revenue is generated by certain segments? Or do you think that thousands of profitable employees should be punished for the poor esoteric investment choices of a tiny (highly leveraged) segment of the bank?

I mean this with the utmost respect

OK, I will explain, and with complete respect as well:

How are thousands of employees being punished if the guy on top takes a pay cut or has to leave and someone else comes in? If you are referring to my 'lackeys' part, I don't mean all those folks, just the very top tier that pay themselves millions annually. If there is some way that restraining this pay effects the whole company in a negative way, please explain how because I really don't see that. As it is, those people we are discussing are being shed left and right, so it seems they actually are being punished right now for the poor esoteric choices of a tiny segment of the bank.

One your first point above, they might have been a $60M generator at one point, but are they now? How many industries continue to pay enormous salaries regardless of whether you are continuing to bring in money? When a company succeeds, I fully believe in rewarding whomever is responsible, but it goes both ways. Don't croon for the good years and expect everyone to give you credit for it if you aren't willing to take the credit for the crash.

[monsoon]

....Comparing the auto industry to the banking sector, in terms of which employees are responsible for which revenue streams, doesn't work. ....

The point you made in the defense of these people is there are no industries other than the finance industry that passes out these kinds of salaries to people, for doing their job and thus, a comparison to a successful company such as Toyota is not warranted. The automobile industry actually produces a useful tangible needed set of product(s). The finance industry, on the other hand, makes money by selling ink on paper. One wonders how much more society is going to allow this kind of nonsense to go on. There really isn't any sense, at the macro level, for this proportion of society's wealth to be allocated to people supporting ink on paper processes. Bankers don't create value to economies.

I am going to say that any company that is having to go to the public for handouts, is a failure. If these people are actually worth more than 1/2 million, then I would say they are not being used properly in these failing business models. However I also think it is very difficult to argue that anyone has more responsibility than the President of the USA who only makes $450K/year. Populism has never been a province of the well off and the well off will do what they can to continue to justify their existence.

[Commoner]

The point you made in the defense of these people is there are no industries other than the finance industry that passes out these kinds of salaries to people, for doing their job and thus, a comparison to a successful company such as Toyota is not warranted. The automobile industry actually produces a useful tangible needed set of product(s). The finance industry, on the other hand, makes money by selling ink on paper. One wonders how much more society is going to allow this kind of nonsense to go on. There really isn't any sense, at the macro level, for this proportion of society's wealth to be allocated to people supporting ink on paper processes. Bankers don't create value to economies.

I am going to say that any company that is having to go to the public for handouts, is a failure. If these people are actually worth more than 1/2 million, then I would say they are not being used properly in these failing business models. However I also think it is very difficult to argue that anyone has more responsibility than the President of the USA who only makes $450K/year. Populism has never been a province of the well off and the well off will do what they can to continue to justify their existence.

You've made this point before and I've made this reply: by your logic, no services create value to economies. Debt is an integral part of capitalization for everyone from Goldman Sachs to Niche in South End. Until Niche (and the rest of the 95+% of businesses) are investment grade and can issue their own paper in order to obtain their debt capitalization, guess what: bankers are creating value.

It looks like we disagree on what drives compensation. I believe that value added (or revenue generated) to the enterprise is where one starts. It sounds like you believe that greater responsibility should mean greater compensation, with the inverse true.

Finally, w/r/t to the auto industry-banking juxtoposition, I did not say that finance is the only industry that justifies this compensation. Top performing sales people in all industries (for example) should be commensurately compensated. I said that the comparison of a high earner (to the company's bottom line) is not a fair comparison to the president of a division (of any industry).

If you want to continue the banking-auto analogy, though, we can. If auto workers (and I guess that also includes the controller's office, the marketing people, the in house legal department and the CFO suite) are contributing value to the economy (as opposed to finance employees) because they're putting metal in show rooms, does it matter that their companies have dramatically underperformed for a multiple of the amount of time the financial sector has underperformed? Does it matter that they also lose money on a quarterly basis? If you exclude services from GDP, and if you compensate based solely on productivity (without regard to revenue), where does that leave us? 1950 USSR? I don't mean it metaphorically -- doesn't it really put us around there and then?

[Commoner]

OK, I will explain, and with complete respect as well:

How are thousands of employees being punished if the guy on top takes a pay cut or has to leave and someone else comes in? If you are referring to my 'lackeys' part, I don't mean all those folks, just the very top tier that pay themselves millions annually. If there is some way that restraining this pay effects the whole company in a negative way, please explain how because I really don't see that. As it is, those people we are discussing are being shed left and right, so it seems they actually are being punished right now for the poor esoteric choices of a tiny segment of the bank.

One your first point above, they might have been a $60M generator at one point, but are they now? How many industries continue to pay enormous salaries regardless of whether you are continuing to bring in money? When a company succeeds, I fully believe in rewarding whomever is responsible, but it goes both ways. Don't croon for the good years and expect everyone to give you credit for it if you aren't willing to take the credit for the crash.

Gladly (thanks for the substantive reply, as well).

A lot of the contraction (at BAC, I assume you're referring to) has to do with the MER purchase. I'm equally perplexed as to how many legacy MER employees are being retained in lieu of legacy BAC employees. I think that weighing the management of the new BAC-MER CIB with MER talent has a lot to do with it, and I think that was a mistake. I think we see layoffs differently. I (and BAC, probably) don't think of these layoffs as punitive. It's cost reduction, any way they can get it. Hell - we're all paying for poor esoteric choices of tiny segments of all money center banks and for the poor lending/borrowing practices of certain mortgage underwriters/broker and borrowers.

Your second paragraph (and last sentence) is precisely what high producers are crying right now, with respect to their bonuses*. The same push and pull is taking place within these banks. Lots of segments are still quite profitable. Lots of trading desks are quite profitable. M&A advisory services, while lower than past quarters, is still risk-free and wildly lucrative. It's also more dependent upon the individuals in your group than most other bank functions. Clients still largely follow individuals. And to the extent these individuals continue to bring in substantial (desperately needed) revenue, to not compensate is to risk losing that revenue.

There's a difference between the companies and the individuals crooning for good years/whining about bad years. In many instances, the individuals have a good gripe.

Take a look at the linked article. If you can get through it (I say that because it's so contrarian to prevailing views on this board and on "Main St."), it does a better job than I do of defending the industry and its participants. http://www.slate.com/id/2210720/?from=rss

*Bonuses have taken on a life of their own in the mainstream media. Many CIB employees' compensation is 50+% bonus - and most of them are paid salaries in the mid-to high-5 figures before that bonus is paid. Most of these employees have been quite profitable (some have had record-level performance) for the last two years and beyond. Many of these legacy BAC CIB employees have received either a dramatically reduced bonus, or no bonus at all. BAC employees, who have largely outperformed peers in CIB functions, are one of the hardest hit groups w/r/t reduced bonus compensation, for the last couple of years.

[atlrvr]

I think what Commoner is pointing out, and might not be intuitive to a lot of people not familiar with Inv. Banking is that in terms of total compensation, Ken Lewis probably isn't even in the top 20 highest paid people in Bank of America. The highest paid people are the people that generate the greatest profit (distinctly different from revenue).

You don't cut off the hand that feeds you in terms of reducing compensation for individuals responsible for the highest margins in the organization. These people however, ARE NOT, C-level executives.

To use an analogy, if a fisherman on a boat catches $10M worth of fish a year, and is paid $200k to do it, and the captains tells him that he is going to now be getting paid $40k per year and he better catch the same amount of fish, he's going to tell the captain "see ya", he is either going to look for a new captain that will pay similar to what he made before, or he will buy a boat and start his own company. He may stick it out while he explores his options, but I can guarantee he's not worried so much about fishing for his old captain. He's also smart enough to not waste his time applying at Wendys.

[Charlotte_native]

Commoner: I wasn't really referring to BofA specifically, but to the many CEO's who are paid massive amounts of money -- right now focusing on those leading finance companies and banks.

ATLrvr -- I also don't mean chopping what high PERFORMERS are paid. If someone is selling something or performing well, I fully believe they should be compensated for it. I'm 100% commissioned -- if I do a good job, I'm paid really well. If i don't, I'm not.

Again, this from me is just speaking to those sailing the ship that were at the helm when it crashed. I completely feel for those working at those companies that didn't 'do' what is killing us right now that are either being laid off or are suffering for it. But for the guys at the top to keep awarding themselves millions for failure...that's hard for a lot of us, millions of us, to swallow, especially when the hand goes out for help.

I'll check out the article linked when I have more time later...

[monsoon]

I think what Commoner is pointing out, and might not be intuitive to a lot of people not familiar with Inv. Banking is that in terms of total compensation, ...... To use an analogy, if a fisherman on a boat catches $10M worth of fish a year, and is paid $200k to do it, and the captains tells him that he is going to now be getting paid $40k per year and he better catch the same amount of fish, he's going to tell the captain "see ya", he is either going to look for a new captain that will pay similar to what he made before, or he will buy a boat and start his own company. He may stick it out while he explores his options, but I can guarantee he's not worried so much about fishing for his old captain. He's also smart enough to not waste his time applying at Wendys.

I completely understand commoner's point about compensation of investment banking. That is a person doing X amount of business is deserved a percentage of X as compensation for doing it. The point being made in response to that is that once the organization holds it's cup out to the federal government because it failed at these deals, then expect the scrutiny of the public who has little sympathy towards these levels of compensation. Going back to the auto industry for example, an engineer can make a change to an automobile that may represent hundreds of millions of dollars in revenue, but I can tell you that engineer will not get a percentage of those sales in the form of compensation. Why should finance be different? This is the question that is not being answered.

I accept your fishing boat analogy even forgetting that in this case it is producing something needed by people. The part you left out is where the boat caught the fish in an unsustainable manner by abusing the intent of the fishing regulations on the books. As a result the fish supplies collapsed the public turned against fish in response and now you have a bunch of fishing boats that can't exist without government handouts. The question becomes, should the fisherman still be paid $200K in that situation? The public paying the tabs for these boats will say no. The boat captain is always free to walk away from the government but that may mean shutdown. Either way the $200K fisherman is no longer going to get $200K. He is free to leave, but it would be my guess is that he won't find another place to go.