So let me get this straight: major financial institutions that were in serious financial trouble because they made poor or downright bad financial decisions were able to con Congress into giving them 700 billion dollars of taxpayers' money. That $700 billion representing some kind of debt that we will have to manage over time because so-called financial wizards a) exercised extraordinarily bad judgment, b) demonstrated fiscal irresponsibility and stupidity, or c) are just plain greedy. Perhaps d) all of the above.
Now, Treasury Secretary Ted Paulson's Goldman Sach's buddies are planning to their ineffective, perhaps even criminally negligent employees bonuses. According to an article in the Houston Chronicle, "bonuses for traders, bankers, and executives can be a multiple of their salaries, which range from about $80,000 to $600,000" (para 7). The bonuses are performance based. According to the same article and other sources, Goldman's profit has dropped 47% so far this year and the stock price has plummeted 67%. So these people are getting bonuses for what? In any other corporate environment, those folks would have been asked to pack up their personal belongings and clear out by the end of a business day. By my reckoning, and considering the writedowns, credit losses, and job cuts in most financial industry companies, performance was pretty shoddy. If anything, those people who got big bonuses last year and who still have jobs should just be grateful they aren't being asked to return funds and that they still have jobs.
Some companies, such as Citigroup and Wells Fargo, are suggested that bailout funds won't be used for bonuses. Like they can tell? How absurd is it that suggestion?
CBS News reports that the bailout package specified that the top five individuals cannot get a golden parachute; compensation is not limited for other employees.
Apparently spokespeople for these organizations are saying that compensation is important to keeping quality employees. Goldman Sach's CEO Lloyd Blankfein was quoted on November 11 as saying "The real core strategy of Goldman Sachs at its heart is to be able to recruit and retain the best people that we can get. Compensation plays an important role." In the CBS News report, Stephen Gandel, a senior writer for Money magazine, stated "Compensation should be down 70 percent but, because all this new money is coming from the government, the firms are now saying they can pay more, and so they're only going to cut bonuses by 40 percent."
Memo to companies: That new money is coming from the taxpayers, many of whom are in foreclosed properties, have lost their jobs, may lose their jobs, are struggling to make ends meet. You do not deserve any kind of bonus and certainly not with my money from my pocket.
Memo to Mr. Blankfein: You need to redefine what you mean by "quality" and "best" because clearly a whole bunch of folks at Goldman Sachs aren't very good at their jobs.