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.
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”?