TARP money and hush money

TARP money and hush money

The steady stream of reports is becoming a torrent: Notwithstanding abundant evidence of shortcomings in-house and public revulsion on the street, firm after firm that benefited from taxpayer bailouts and other public funding is now—again–setting aside enormous funds for executive bonuses.

AIG

This morning’s Wall Street Journal reports that AIG—American International Group, is holding off on planned bonuses for executives, including $235 million specifically for its troubled financial products unit. Outrage over the planned bonuses, almost dwarfed by the bonuses contemplated at other financial firms, is leading to congressional oversight. The Washington Post, the Los Angeles Times, and numerous other metropolitan dailies are carrying the story of this quarter’s round of bonus revelations.

Yesterday Morgan Stanley was reported as setting aside $3.9 billion for payouts–in spite of posting losses of $159 million for the second quarter of 2009–an increase of 26 % over compensation from a year ago. That would be 72 percent of Morgan Stanley’s net revenues.

Last week Goldman Sachs reported setting aside $6.65 billion for executive compensation. Unlike Morgan Stanley, Goldman Sachs reported whopping profits for the quarter. Still, the amounts involved were enough to strengthen demand for a “say-on-pay” law in Congress, with Goldman, which repaid $10 billion to the U.S. Treasury, as Exhibit A in a general picture of shamelessness among Wall Street tortfeasors.

Meanwhile, J. P. Morgan Chase, Citigroup and Bank of America also posted windfall earnings—all financial giants bailed out by Lilliputian taxpayers. Citigroup is also among banks planning multi-year bonuses for executive recruiting.

The week before, AIG asked administration approval for retention bonuses, including bonuses for the financial products unit largely responsible for the troubled mortgage-backed derivatives commerce involved in the financial crisis.

Needless to say, all these bonuses come at a time when millions of ordinary people face job loss, foreclosure or bankruptcy, or at best diminished income from the general business downturn. Also, the companies involved are battling demands for greater oversight from the feds, going so far as to ramp up their lobbying—paying for the lobbying, while keeping the purse strings tight in their lending–to prevent more effective oversight. Financial companies are also fighting off demands for greater transparency from their shareholders—whose stock losses in their 401(k)s helped get the Wall Street no-strings-attached bailout passed in Congress, last fall, even under the outgoing and discredited Bush administration. And not only have stock prices suffered, but shareholders for the most part are not exactly being sweetened with increased dividends.

You really do have to wonder why some of the biggest financial entities on Wall Street would be so much more willing to send away their own shareholders angry, and to anger the public, than to send away some of their top management angry.

There ought to be a law . . .

Reforms are being contemplated by Congress, and some reform legislation will undoubtedly pass. In the interim, we do have law enforcement. The phrase “hush money” may be slang, but it is defined in Black’s Law Dictionary as “A bribe to suppress the dissemination of certain information; a payment to secure silence.”

Modest Proposal: Extend Medicare to 18-to-26 age group

A modest proposal: Expand Medicare to
college-age young adults

 

Even after Michael Moore