Building upon my last post, it is important to emphasize how the problem with the bonuses and the bailout overall are connected. The reason the bonuses and compensation packages are a problem is because they demonstrate that the financial institutions to whom we are giving bailout money are simply acting in bad faith. While the Obama administration has created a bailout plan designed to fix the economy, they are giving the bailout money to people who don't care about fixing the economy, and are instead acting in bad faith. No matter what the people who run these financial institutions say, personal enrichment is their only purpose.
The Obama administration wants to fix the economy. That goes without saying. Even beyond their personal motives to help people, politically speaking, it is an imperative for them to fix the economy, since they will be tossed out of office, and remembered poorly in history if they do not fix the economy. The problem is, they have designed a bailout plan to fix the economy that requires the cooperation of people who don't give a rat's ass about fixing the economy, and who only care about making more money.
The leaders of these financial institutions are acting in bad faith. They say they need this money to fix the economy, but they don't actually care about fixing the economy. We know this because they told us they will only partner with the Obama administration if their huge compensation packages are left untouched (more in the extended entry):
A senior executive at one of the nation's largest banks said he had heard from several hedge funds that they would not partner with the government for fear that lawmakers would impose retroactive conditions on their participation, such as limits on compensation or disclosure requirements.
Personal enrichment is their primary motive, not fixing the economy. We know this because they said they won't participate in the bailout unless they get rich. We know this because they claim that making themselves rich is necessary to fix the economy:
The attack by lawmakers on AIG pay has provoked renewed complaints from some financial company executives that federal involvement in business decisions is making it difficult for struggling firms to return to profitability. In particular, executives say they need to offer bonuses to keep and motivate their most valuable employees and are already seeing an exodus of talent.
They say they won't help us fix it unless we make them richer. They say they can't help us fix it unless we make them richer. Hell, they broke the economy in the first place as part of their never ending attempts to make themselves richer. And they keep lying to us about how much they are making themselves richer:
A month earlier, he testified to Congress that his compensation for 2008 was just $1 million.
There is no reason to believe that the people receiving the bailout money will do anything with it expect try to get even richer. They are acting in bad faith, and trying to partner with them is foolish. They want our money alright, but only if it will make themselves richer. Whether or not the economy gets better is entirely incidental to them. If it happens, it will be a coincidental accident.
The bonuses are yet another demonstration that they are using the bailout money in order to make themselves richer, not to try and fix the economy. They don't care about fixing the economy--they only care about getting richer. We know this because the reason you join one of these institutions in the first place is to get rich, not to engage in the public service of helping the economy. While the bonuses are a small percentage of the money involved, if you think these people are acting in the public's interest with the rest of the bailout money, then you are getting played.
The bonuses show why the bailout won't work. We are giving the money to people who only care about making themselves richer, not about fixing the economy. If we give our money to people who don't care about fixing the economy, then it is a pretty safe bet the economy will not be fixed.
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