BAILOUT BABIES….Hilzoy speaks for everyone who lacks a chauffeur when she wonders why banks that are getting federal bailouts “awarded their top executives nearly $1.6 billion in salaries, bonuses, and other benefits last year”:
The very people who are getting these bonuses and chauffeurs and private jets and financial planners have just sent the entire global economy into a nosedive. They have caused massive amounts of money to disappear. They are getting bailed out for their mistakes by the rest of us the people who, if we’re lucky, get to fly coach, and if we’re not, drive across the country or take a bus.
If they had any shame at all, they would stop. More than that: if they had any sense at all of how angry a lot of us are getting, sheer prudence would do the trick. This is our money. We are giving it to them to get all of us out of a problem that they caused. They should bear that in mind, not treat us as if we were one great big cookie jar.
This is not the first time, of course. When LTCM imploded in 1998, Alan Greenspan arranged a bailout and saved the world. Yippee! But his bailout didn’t wipe out the fund’s backers. They took a big haircut, but they didn’t lose everything. For endangering the entire world economy and bringing Wall Street to the brink of disaster (or so we’re told), their reward was to take home a pretty nice piece of change when everything was said and done.
(And all the warnings about how we should prevent the kinds of practices that led to the LCTM debacle in the first place? You can guess what happened to those.)
Of course, there’s another problem here: not every big U.S. bank is in trouble, but Henry Paulson forced them all to accept bailout funds anyway. Not only was that probably a bad idea in general, but it makes it hard to figure out who’s really playing games with the taxpayer’s dough. If Wells Fargo is doing OK, and didn’t want any bailout money to begin with, there’s no special reason to object to their salary and bonus structure. But AIG and Citicorp? Different story. It’s yet another reason that bailouts should have been restricted to only the banks that really need it.