Throw the Bums Out
THROW THE BUMS OUT....Hilzoy is peeved at the terms of the Citigroup bailout:
The people who either ran Citi into the ground or were asleep at the wheel need to go. That should be the condition of a bailout: if you turn out to need public assistance, you lose your job. No golden parachutes either.
As I've said before: we absolutely need to make sure that the people who run these banks do not conclude from our unwillingness to let them take down the entire financial system that it's OK to run these risks. The best way I can think of to do that is to make sure that they, personally, pay.
Agreed. But how? Sure, the government could insist on resignations in return for a bailout, but what can it do beyond that? We can't take away money these executives have already earned, nor can we take away their pension benefits or anything else they're contractually entitled to. Like it or not, that's how limited liability corporations work.
So, yeah, we could fire a bunch of people, and I suppose we probably should though that's hardly without some risk too. But let's face it: that's not really much of a lesson to future generations. If we want banks to limit their risk, our only real option is to put rules in place that force them to limit their risk. The threat of being fired has never kept BSDs from taking chances in the past, and I doubt it will do us much good this time around either.