Tuesday, February 03, 2009

Banks paying executive bonuses

Should any of us be surprised that banks that have received bailout funds are still providing bonuses to their executives? Once you have given someone money, it is theirs to do as they wish. Any special requirements must be spelled out in advance. If you want money to be spent in a special way, spend it yourself.

Personally, I can’t even bring myself to get upset over this. I’m upset that they were given taxpayer money in the first place. A bank is either solvent or it isn’t. If it isn’t, it will make the needed cuts like eliminating bonuses and dividends or it will simply fail. A few banks failing isn’t the end of the world, since savings accounts of working class Americans are covered by the FDIC. There are still plenty of banks and credit unions willing to lend you money if you have a good credit rating.

4 comments:

gadfly said...

If banks are paying bonuses, it might be worth considering that they are paying for performance, which is what bonuses are all about.

Companies with wage structures that include bonuses have already lowered base salaries below normal levels in order to extract more effort and results than might otherwise be had.

Not all companies are structured like the auto industry where workers are paid not to work on the line and are paid 90% of wages when they are laid off.

We do not have the right and we do not have the talent to tell management how their company will be run. This whole MSM program to attack bonuses (with snipets from Obama and his folks) is designed to encourage earnings envy and to start a class war.

Get a life people!

Phil Marx said...

Let's suppose a friend calls you and says "I drank too much and spent all my money, now I can't pay the bills. Please give me more money."

And that's all he says. He doesn't actually say he'll use the money to pay the bills or even that he won't use it to buy more booze. He simply asks for more money.

So yeah, when we hand the drunk a fist full of cash, then he turns around and buys more booze with it, I agree that we are as much to blame as he is.

Phil Marx said...
This comment has been removed by the author.
Phil Marx said...

Gadfly;

I think the fact that these companies (Financial and automotive) are going before Congress and saying they need money proves the point that they have not performed well. And I think the fact that we are giving them money does give us the right to attach conditions.

It never ceases to amaze me how a person can see the overpaid and underperforming executives in a different light than the overpaid and underperforming laborers. To pay for nonperformance is very inneficient, regardless of whether it is labor or management work that the person is being paid not to do. If a business is self supporting, then it is entirely up to them how they squander their money. But if they are asking me to bail them out, then I certainly should have a say in how they manage their business.