So, we got punked on the bailout? Here’s an idea to keep in mind for a condition on the next $350 billion installment.
If banks want to reward their investment bankers with bonuses, I say let ’em. So long as they follow the Credit Suisse example.
Kudos to Credit Suisse. Drowning in red ink, the Swiss bank announced it would pay bonuses to senior investment bankers not with cash but with mortgage-backed securities, high-yield bonds, and other forms of the untradeable junk now clogging the world’s banking system.
Reportedly, investment bankers at the firm are steaming mad over the plan, but we think the idea is ingenious. After all, if these toxic securities were good enough for Credit Suisse’s customers, they should be good enough for the bankers who cooked them up too. Don’t you think?
Meanwhile, it turns out that bailed-out bank executives took home $1.6 billion in salaries, bonuses, and other benefits.
Banks that are getting taxpayer bailouts awarded their top executives nearly $1.6 billion in salaries, bonuses, and other benefits last year, an Associated Press analysis reveals.
The rewards came even at banks where poor results last year foretold the economic crisis that sent them to Washington for a government rescue. Some trimmed their executive compensation due to lagging bank performance, but still forked over multimillion-dollar executive pay packages.
Benefits included cash bonuses, stock options, personal use of company jets and chauffeurs, home security, country club memberships and professional money management, the AP review of federal securities documents found.
The total amount given to nearly 600 executives would cover bailout costs for many of the 116 banks that have so far accepted tax dollars to boost their bottom lines.
And a huge loophole in the bailout package makes it likely that the bonuses and big paychecks will keep right on coming.
Oh, and remember how outraged we were that the Big Three CEOs flew to Washington in private jets to ask Congress for bailout?
Some lawmakers lashed out at the CEOs of the Big Three auto companies Wednesday for flying private jets to Washington to request taxpayer bailout money.
"There is a delicious irony in seeing private luxury jets flying into Washington, D.C., and people coming off of them with tin cups in their hand, saying that they’re going to be trimming down and streamlining their businesses," Rep. Gary Ackerman, D-New York, told the chief executive officers of Ford, Chrysler and General Motors at a hearing of the House Financial Services Committee.
"It’s almost like seeing a guy show up at the soup kitchen in high hat and tuxedo. It kind of makes you a little bit suspicious."
He added, "couldn’t you all have downgraded to first class or jet-pooled or something to get here? It would have at least sent a message that you do get it."
Well, some Wall Street residents who came to Washington with "tin cups" in their hands and got those cups filled with tax dollars are flying around in whole fleets of private jets.
Crisscrossing the country in corporate jets may no longer fly in Detroit after car executives got a dressing down from Congress. But on Wall Street, the coveted executive perk has hardly been grounded.
Six financial firms that received billions in bailout dollars still own and operate fleets of jets to carry executives to company events and sometimes personal trips, according to an Associated Press review.
The jets serve as airborne offices, time-savers for executives for whom time is money – lots of money. And some firms are cutting back, either by selling the planes or leasing them.
Still, Wall Street’s reliance of the rarified mode of travel has largely escaped the scorn poured on the Big Three automakers.
The auto industry had to crawl and beg to get about $13.4 billion in loans, with all sorts of conditions attached, but Treasury has altered a $200 billion loan program to give access to hedge funds. And Paulson is already asking for the next $350 billion, even though we still don’t know where all of the first $350 billion went.
So, let’s make the next bailout disbursement conditional on at least one thing. Those bonuses and pay raises, etc., can be handed out as always, but instead give it to them in the same junk the financial sector has been creating. After all, the idea of having taxpayers absorb it is that its going to be worth something someday, right? So, it will do them as much good as it does us.
Why not? If it’s good enough for America, it ought to be good enough for them. Why should taxpayers be the only ones left holding all that "untradeable junk"?