Well, isn’t this special? Despite Washington’s assurance to us angry commoners that its Wall Street bailout scheme would, by gollies, include a crackdown on excessive pay to top executives – there seems to be a few loopholes.
The Guardian newspaper in London analyzed corporate pay plans that were recently drawn up by Citigroup, Goldman Sachs, Merrill Lynch, Morgan Stanley, JPMorgan Chase, and Lehman Brothers. The highest-ranking executives of these banks are to split a total of $70 billion in salaries and bonuses this year.
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Bonuses? The stock prices of the firms have plummeted in the past year, Lehman Brothers has collapsed completely, the bungling executives have caused a global financial crisis, and the five remaining banks are down now down in Washington loading up their share of a $700 billion taxpayer bailout. They get bonuses for that?
The math is infuriatingly easy here: This $70 billion executive payout means that honchos in these firms will siphon off 10 percent of the bailout funds that were supposed to shore up our economy – not reward executive failure.
Meanwhile, there’s the loudly ballyhooded effort by Congress to restrict future pay for the big shots at banks getting bailout money. Congress’s bark was ferocious, but its bite turns out to be harmless. The banks are limited to a tax deduction of only $500,000 for each executive’s pay. But there’s no limit on how much total money is doled out to the execs – meaning they can still be paid $5 million or even $50 million a year. The banks wouldn’t get a tax break on the big sum, but – hey – they’re already getting billions of our tax dollars from the bailout, and that money can be used to maintain the extravagant paydays of those at the top.
These are not merely loopholes in the bailout scheme – they amount to blantant frauds.
“Call of inquiry into Wall Street bank bonuses,” www.guardian.co.uk, October 21, 2008.
“Banks’ Bailout Unlikely To Crimp Executive Pay,” The New York Times, October 15, 2008.
“Wall Street banks in $70bn staff payout,” www.guardian.co.uk, October 18, 2008.
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