Wall Street makes huge profit off public money - and keeping it! Fair?

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Permalink Reply by Johnny Blue on October 16, 2009 at 1:04am

There was nothing more disheartening than hearing that high level executives were getting huge bonuses when their companies were tanking and needed a government bailout.

Now some of these same companies have bounced back and made huge profits. Do the executives deserve bonuses in this circumstance? Possibly more than before.

The thing that bothers me the most is that financial companies are making large profits partly because they laid off so many of their workers and trimmed the fat. Couldn't they have used the bonus money to save some jobs?

Is it fair? No. But that's the nature of the beast in a capitalistic market.

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Permalink Reply by Mark Huckabee on October 16, 2009 at 3:22am

This is one of the problems with bailing out companies. You have to make up new rules about what to do afterward. What obligations do they have? When does it end? We should never have interfered in the first place and we wouldn't have these questions now.

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Permalink Reply by Kevin on October 17, 2009 at 12:44am

I agree with what your saying but there were "experts" that said letting a company like AIG fail would bring down our whole economy. Scary stuff! I think we should bring back the regulations we set up after the Great Depression. We went decades avoiding this kind of thing.

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Permalink Reply by David Hanson on October 17, 2009 at 7:50am

It still bothers me that people are mad at these banks and business' for taking the money. Why wouldn't they? If someone came along and told you that they would give you money to pay off all of your personal debt, wouldn't you take it? I think the real anger should go to our government for giving it out in the first place! What business is to big to fail? Why is it too big? What would have happened even if there had been mass failures, (bankruptcies). Companies go in and out of bankruptcy all of the time. Even in a worst case scenario of an actual depression for 5 or more years - we as a country and economic power come out much stronger in the end. People and business got greedy and made stupid decisions. So, we bail them out? Why can't there be consequences for bad decisions? We have a "czar" tell a BofA executive that he can not take a bonus and must not take a salary for a year? This executive controls one of the largest banks in the world and our governments position is to tell him he can't be compensated for it? Why would we expect him to put any real effort into correcting ANY of the situations his bank faces thus improving our overall economy? If some government bureaucrat told me that I could not take a salary or compensation for my job, I might show up for work but I probably wouldn't put any effort into doing the job... Mass governmental involvement in business must stop or we will see a massive failure of our economy within 3 years.

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Permalink Reply by Mark Huckabee on October 18, 2009 at 5:05am

I'm not mad at them for taking it, I'm mad at their lobby for setting it up so they got the money and I'm mad at our Congress for being stupid and corrupt enough to give it to them. NOBODY is too big to fail. TOO FREAKIN BAD! You screwed up, you pay the price. All this does is set up a situation where there are NO CONSEQUENCES for taking on so much risk that you could've destroyed your whole company. The economy would've recovered just fine. The good pieces of these companies would've been sold off and the bad pieces left behind. Now there is NOTHING to stop them from doing exactly the same thing again.

The reason we can't go back to any previous set of rules is that these new derivatives are different. They are much more complex than anything in the past and NOBODY really knew correctly how to price their risk. They thought they did and they bet everything on that. Guess what? They were wrong! Even if we put rules in place now on how to correctly account for risk on these derivatives the situation will repeat with some new product no one has ever heard of. Only now the banks know there will be NO CONSEQUENCES if they screw it up!

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Permalink Reply by Mark Huckabee on October 19, 2009 at 5:54am

The fundamental problem is that these financial institutions are making HUGE amounts of money off of turning over corporations and selling instruments based on the pieces. NOTHING new is being created but enormous amounts of money are being sucked out of the economy. Take a look at this article in the New York Times: http://www.nytimes.com/2009/10/18/opinion/18rich.html?_r=1

Also read this heart-breaking story about Simmons Bedding. They've been bought and sold 7 times in the last 20 years by private-equity firms.

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