I get it. I do. Madigan is a good man, a very smart man (B.A., Economics, St. Joseph’s; M.A., Mathematics, George Mason; Ph.D., Economics, Penn State). I have no reason to believe he is not the most ethical man that offices in the Fed’s white marble, post-modern palace on Constitution Avenue — a stone’s throw from the Lincoln Memorial. He will bring to Barclays his judgment, his experience, his understanding of the process. He will add value. Mr. Madigan will facilitate Barclays’ compliance with all those rules and regulations that may be part of Dodd-Frank. (KaChing … millions saved.) He will allow Barclays to have an internal sounding board for those inevitable questions that come up every day for an international money center bank under the general rubric of: “What did the Fed mean by?” (KaChing, millions more saved.) That will surely lead to greater certainty in planning and serving its depositors and investment customers, and all will be right with this very savvy world-leading bank (fourth-largest in the world, with $2.2 trillion in assets).
Mr. Madigan will surely earn every penny of what will easily be a million-dollar-plus pay package consisting of a sizeable salary, a bonus, stock, and options. And grants. And spending allowance. And did I mention life insurance? Heck it’s Barclays for crying out loud. (a half a trillion in …). But come on now, what is Barclay’s really buying and what is it Mr. Madigan is selling? Indeed, when that proverbial “revolving door” circles from every major regulator in this town to the entities that are regulated, what is being offered? It’s access.
Pure and simple. Access, and the influence access creates. If Barclays wants approval for some new debt instrument or an interpretation of a rule that will be to their benefit, or finds itself subject to some investigation, someone in upper management will say, “Hey get Madigan on the phone, have him call one of his buddies at the Fed and let’s get this worked out …. What are we paying him for?”
And so it goes. Bryan Madigan will do what he is asked without breaching any legal rules. He will dial the phone or send an email to a colleague of 20 years from the Fed, maybe the father of a kid Madigan coached in baseball or lacrosse. And a conversation will ensue, and Barclays and its shareholders will be better for it, because one day Madigan’s friend at the Fed, facing college tuitions and not-so-robust returns on his 529 accounts, will need a job too in the “private sector”.
It is the way it is, but the game remains at a tilt because small community banks and consumer groups don’t have the allure or the money of a Barclays.
Brian Madigan, “good luck in your new position, work hard, make a lot of money and don’t forget your ethical compass at the door.”