There seems to be a distant, but appropriate, connection between Casablanca and Washington as Congress and the Obama administration give near lip service to the issue of corporate compensation reform.

Placating public concerns of excess, the reform effort perhaps has focused on the wrong five suspect companies, allowing another set of five to continue business as usual.

What a difference a day makes. One year ago this coming week, five of the world’s top hedge fund managers appeared before a congressional oversight panel intending to discover how personal compensation in excess of a billion dollars was received as the country wallowed in economic despair.

Each individual manager was to submit documents showing the income of their top executives, their involvement in mortgage related investments and the dangerous roles their activities may have played in the economic meltdown.

By the time the hearing was actually held, the panel’s anticipated hard-line inquiry gave way to an odd discussion of curiosity and awe bordering on admiration. The earnings list of the top five hedge fund managers for 2008 included several of those that provided testimony: James Simons, Renaissance Technologies Corp., $2.5 billion; John Paulson, Paulson and Company,          $2 billion; John Arnold, Centaurus Energy, $1.5 billion; George Soros, Soros Fund Management, $1.1 billion; and Raymond Dalio, Bridgewater Associates, low man on the pole at $780 million.

The tone of that testimony and the path that compensation reform is taking give doubt that there is really any serious intention to follow the money trail or expose a reality of how such extraordinary corporate profits were made to justify extraordinary personal compensation.

The suggestion of public sour grapes may hold some water, but if meaningful reform of corporate culture is truly the goal of Congress, their attention and ours should turn from the top 25 earners at AIG, Bank of America, Citigroup, General Motors and Chrysler to the top 25 earners at hedge fund corporations where business prospered as the world economy was in meltdown.

In a summary narrative, investor columnist Louise Story observes of the 2008 hedge fund successes, “the financial crisis may have turned much of Wall Street’s wealth into a dross, but a select group of hedge fund managers has managed to maintain a golden touch that might make King Midas blush.”

Alpha Magazine said, “As major markets and economies careened downward last year, 25 top managers reaped a total of        $11.6 billion in pay by trading above the pain in the markets.” The creation of complex and exotic investment instruments that only the authors understand has created its own industry with profit its only product. Not constructed under the light of day or in any form of formal regulation, little is know about the mysterious world of derivatives and hedge funds.

In the words of New York Times columnist Floyd Norris, “Rather than have a pay czar try to determine fair compensation for bailed-out banks while others do as they please, Congress could look at changing the environment that produced this mess.”

As the aspirations of reform focus on the usual suspects, we can only hope the true perpetrators of our economic demise are not running free in this most recent round of public reprimand.

Charles Bogue is a real estate broker in Napa. He can be reached at 486-5511 or e-mail: cbnapa@napanet.net.