The Bank Executive Bailout Shame
The Associated Press has crunched the numbers: "Banks that are getting taxpayer bailouts awarded their top executives nearly $1.6 billion in salaries, bonuses, and other benefits last year, an Associated Press analysis reveals."
The CEO of Goldman Sachs, Lloyd Blankfein: $54 million. The CEO of Merrill Lynch, John A. Thain: $83 million. The chairman of Capital One, Richard D. Fairbank: more than $17 million. The average for each of the banks' top executives: $2.6 million
Yes I know, private schools cost a lot, and these are hard-working men, and by gosh, they had no idea they were profiting for years on a scheme that now imperils every hardworking family in the world. Yes I know, some did better than others, and we need them now to help clean up the mess. Some have even been so noble as to announce they are taking pay cuts next year. But to all that I will also say this. This current financial crisis, we now know, began in the summer of 2007, a year and a half ago. And these men are already rich--ridiculously so. And they have failed, in many cases almost completely, in their mandates, not just to protect their own investors, but to protect the public trust. If they now beg of the public trough, if they feel themselves fit to claim the mantle of the "public interest" for their own enterprises and fortunes, then they must also accept a public responsibility, not just a private one. And if James Dimon, the CEO of JPMorgan Chase, needs more than $200,000 a year to commute by private jet between Chicago and New York, then I dare a patriotic American, or anyone with some sense of communal responsibility, to stand up and say Dimon should not damn well pay the fee himself, even as his company continues to suck from the public tit.
It all calls to mind the words of H.L. Mencken, who wrote in 1922 of the country he loved and ceaselessly exposed:
And here, more than anywhere else I know of or have heard of, the daily panorama of human existence, or private and communal folly--the unending procession of governmental extortions and chicaneries, of commercial brigandages and throat-slittings, of theological buffooneries, of aesthetic ribaldries, of legal swindles and harlotries, of miscellaneous rogueries, villainies, imbecilities, grotesqueries, and extravagances--is so inordinately gross and preposterous, so perfectly brought up to the highest conceivable amperage, so steadily enriched with an almost fabulous daring and originality, that only the man who was born with a petrified diaphragm can fail to laugh himself to sleep every night, and to awake every morning with all the eager, unflagging expectation of a Sunday-school superintendent touring the Paris peep-shows.
Except I don't feel like laughing, just now.
-
1
Michael,for once I agee with you. I find it preposterous that despite the mismanagement, shortsightedness, MBA-driven failings of the auto industry the government is only willing to bail them out to the tune of 17 billion dollars. They actually make something. The financial industry- AIG alone- is into us for hundreds of billions more. My bank, PNC, instead of using the money to aid people with imminent foreclosure, is out buying up another bank. I think I'll go watch "It's a Wonderful Life".
-
2
.
I'm glad to see the outrage, Scherer.
. -
3
Michael, once again you miss out on the real stuff.
Do you recall who was fighting to put in place limits on executive compensation before the bailout was passed?
And who agreed verbally to do it while botching the details: http://www.washingtonpost.com/wp-dyn/content/article/2008/12/14/AR2008121402670.html?hpid=topnews
-
4
Just in case anyone was cheered by any aspect of MS' post, I offer this quote from Robert Patterson in a Fallows piece:
.
The search for efficiency and the urge to consume has set us all up like a row of dominoes - there is no buffer, no resiliency. As one problem rises it causes another. As one solution is tried it drives another problem. We all pull back and the consumer economy stalls. The auto industry and credit firms feeds the media (40% of conventional advertising). Papers and TV and Radio networks, many subject to LBO's will have to fail as per the Tribune. Every sector will be laying people off. Sales of all things fall off a cliff - driving more business failures and layoffs. Cities and states that depend on sales tax and property tax and the credit markets can rely on none of these. So they too will have to lay off millions - thus making all the problems worse. National governments will be asked to save us all and of course cannot. As States and Cities get squeezed and cannot borrow, they will too lay off millions - teachers, firemen police. No one will be safe.
.
Fallows follows the above cheery thoughts with this:
.
This is very close to what I was trying to explain three and a half years ago in my "Countdown to a Meltdown" imagined-history article in the Atlantic. The way that everything really is connected -- I recently saw a school in southern China that will be in trouble because its donors are losing money through the Madoff fraud in New York -- and that no one has "any buffer, any resiliency" is something we've known in theory but are only now comprehending in its daily, cascading reality. It's worth looking at the summary for similarly uplifting thoughts.
.
Happy Holidays???????? -
5
.
Still, I'm glad to see a DC journo drop, even for a moment, that blase cocktail-party disinterest in domestic affairs.
. -
6
Write about it in Time. Every week. What reason do they have to believe that they can't get away with it?
-
A fine post-- this isn't intended as a complaint. Thanks for highlighting this. -
7
Michael, you are as priceless as your cited H.L. Mencken quotation.
I read his memoir about fifteen years ago. He was an incredibly hard-working and disciplined person. His daily routine consisted of a large breakfast after which retired to his writing room and wrote for ten straight hours, with only bathroom breaks interrupting his writing. At 6PM each day he would get up from his chair refresh himself in the bathroom, dress for dinner, and go out on the town. After dinner, he usually joined a group of friends at a local bar and like a good German he loved his beer. He would retire around midnight, and wake up 7 the next day and repeat the whole thing again. His epitaph read: "If, after I depart this vale, you ever remember me and have thought to please my ghost, forgive some sinner, and wink your eye at some homely girl." And this: “When a stripteaser asked him to coin a "more dignified" term for her profession, Mencken suggested 'ecdysiast,' meaning 'one who sheds'.”
Twitter.com/bobpeo
P.S. Is Joe Tumulty (trusted Woodrow Wilson adviser and friend) related to Karen's husband?
-
8
I'm not sure if it's the time off or just events in general that you find so libertating but let me just chime in to say I appreciate the more aggressive tone your writing style has taken. Even in situations where we don't agree, its nice to get the feeling that your speaking honestly and from the heart rather than sticking to a script.
Thanks....
-
9
It's hard not to think that this kind of greed and hypocrisy presages something like the fall of Rome. How can these people look themselves in the mirror, play with their grandchildren, keep their lunch down?
-
10
Shall we start taking bets on when the High Sheriffs will notice that Jay Carney is still listed as Time's Washington Bureau Chief? And no fair tipping them off, Michael.
-
11
Scherer
.
In the third paragraph I think you meant "should damm well pay the fee himself" rather than "should not"
.
I am still amused at the game the Fed gets to play because they are not legally a govt entity though they act like one. How they are getting away with not disclosing who they gave money to is beyond me.
.
As for the executive compensation, I wonder why there aren't any articles or Swampland posts comparing and contrasting the Southern Republican Senators reactions to the wages of these CEOs of failed companies to the reactions of wages of union members of failed companies. What makes them think that those banks/insurers will do any better than they have in the past? AIG has already blown through their money but has any executive been fired or had his compensation mandated that it be lowered by Congress or the President?
.
Of course not. If they don't get paid, who would contribute to the RNC right? -
12
sgwhite, I think i have it right. I am daring someone who supports Dimon's corporate compensation to stand up. That is, I am daring someone to stand up and say his company should keep paying for his plane--that he should not pay for it himself. Obviously, it is confusing, but I have been reading a fine biography of Mencken on my vacation, The Skeptic by Terry Teachout, which encourages me, if nothing else, to more ornate rhetorical flourishes.
.
Bobpeo, those are fine quotes. I would add this one, which Mencken wrote to describe a bestselling novel of his day, and which still be easily applied to much of what we now produce in books, television and film:
.
"Its aim is to fill the breast with soothing and optimistic emotions--to purge the tired businessman of his bile, to convince the flapper that Douglas Fairbanks may yet learn to love her, to prove that this dreary old world, as botched and bad as it is, might yet be a darned sight worse."
.
Fine stuff. -
13
Such people as these should be incentivized by the lack of a prison sentence.
I'd rather hire monks to run the banks. The worst they could is what...screw up?
-
14
Scherer
.
I just reread it and I was wrong. So many words that the sentence threw me for a minute. -
15
even as his company continues to suck from the public tit
.
Heheheh, titties.
.
No, but seriously, who cares about this? I want to hear why Obama hasn't confessed to being Blagejovich's BFF!
.
Also this:
which encourages me, if nothing else, to more ornate rhetorical flourishes
leads to this:
So many words that the sentence threw me for a minute
.
which to me indicates bad journalistic writing.
-
16
.
Ah. Not outrage but ornate rhetorical flourish. My bad..
. -
17
No worries guys...
Maybe some of you played already the famous game "grand theft / san andreas" .. If you want to know how the future looks like ... play it again.
-
18
Actually, MS, this is a Republican shame.
.
No doubt about it. After all, Micheal, just what are the party affiliations of these execs?
.
Just who is handing out the 7,600,000,000,000 dollars.
.
And, Micheal, just who is it that will not reveal, even under the FOIL, the particulars of just who is getting what?
.
Micheal, I think, at this point, besides holiday greetings from blizzardland, a clue:
.
They isn't Democrats, neether... -
19
littlebonaparte:
.
"..."grand theft / san andreas"...
.
Let me guess. I've never played the game, but this sounds like looting after a major earthquake.
.
Now I propose that you are in fact referring to the present:
.
"Grand Theft / 2008 Election"
.
In this game, its about looting taking place after a major election... -
20
There are lots of people who have been shaming themselves in recent years. It's good to have some adults back in charge.
.
Speaking of adults, I just forwarded this to my congressional delegation:
.
http://www.desmogblog.com/big-ask-act-now-global-warming-video
.
(It would be good if we had a *lot* of people forwarding this to their delegations...) -
21
This is swamp blogging Mr. Scherer. You know very well that Wells Fargo and J,P. Morgan did not request or do they need TARP money which was forced on them by Hank Paulson. We are still a capitalist society and there is no need to drag two well run institutions into the mire.
-
22
Amazing how much whining the GOP is doing over the unions with the auto bailout yet nothing much over the outlandish actions of the financial industry with their share of the government pie.
-
23
Mavisbank, I did not mention Wells Fargo above, though I would note now that the bank will soon be the beneficiary of a tax break, written by its oppressors at the U.S. Treasury that will grant them a $25 billion tax break.
http://swampland.blogs.time.com/2008/11/15/the-silent-change-to-section-382/
And the fact that Dimon ran an institution that was, perhaps, better capitalized and less reckless than some of his peers does not erase the fact that he is sitting on about $25 billion in U.S. government investment, which, incidentally, he is not lending out without as much alacrity as many had hoped. Though I know Dimon has made this case, I have trouble seeing him as a victim here of an unwanted bailout. As the NY Times said at the time, Dimon was "receptive, saying he thought the deal looked pretty good once he ran the numbers through his head." He called it a "fair deal" according to the Times.
http://www.nytimes.com/2008/10/15/business/economy/15bailout.html
In 2007, Dimon made nearly $60 million, according to the Forbes, using values at the time. Maybe he deserved every penny. Maybe he was profiting on an irrationally unregulated financial system. My broader point is simple. The nation needs leadership. It needs public confidence. And the public was sold on the notion that executives would get "a haircut" in exchange for bailout funds. As it stands, we have mortgaged about half the nation's GDP to solve a credit crisis that is quickly becoming a liquidity trap. Dimon, by his choice, to his benefit, or otherwise, is now running a company with government funds. I think he can afford his own flights.
-
24
53_3, It's tough to fit this stuff into partisan holes. The "they" who are not telling people what banks are getting what includes one Timothy Geithner, who is Obama's choice for Treasury Secretary. And with a few isolated examples, there was no great rallying cry to regulate all the shadow banking products that led to this mess, not from Democrats nor from Republicans. (One big-time Democrat, Charles Schumer of New York, was actually took some positions that seem pretty embarrassing in retrospect)
http://www.nytimes.com/interactive/2008/12/12/business/20081214-schumer-table.html
Deregulatory Republicans have certainly been proved wrong here, but the major issue with this mess was not deregulation. It was never-regulation. And that is, for the most part, a pox on both houses. Everyone liked the going when the going was good. -
25
I'm going to give it up to Joe Klein. He represented on Chris Matthews show today
.
http://crooksandliars.com/media/play/wmv/6996/24748
- michaelscherer Gibbs says Desiree Rogers will not testify tomorrow before House on WH gatecrashers. - 3 hours ago
- michaelscherer Always a bad sign when you (NBC) have to preface every news report (Salahi) with big disclaimers that the parent company is not a factor. - 7 hours ago
- michaelscherer Ah.... Richard Wolffe. - 20 hours ago
Most Popular »
- "Personal Sins Should Not Require Press Releases"
- False Economy: Think You're Saving Money? Think Again
- The 'Alice' Interview: A Very Different Brand of Wonderland
- Congress's Tepid Reaction to Obama's Afghanistan Plan
- Tiger Speaks
- Gleeks and Shrieks: Fox Unveils Midseason, Glee Gone Until April
- State Dinner, Uh, Fashion
- Rep. Woolsey: Majority Of Dems Will Vote Against War Funding
- White House Hypocritical Attack on Politico
- The Dreaded X
- Can Attack Dogs Be Rehabilitated?
- Helicopter Parents: The Backlash Against Overparenting
- Rachel Uchitel: Tiger Woods' Alleged Affair Connection
- Italian Town Dreams of a White (No Foreigners) Christmas
- Europe's Secret Nuclear Weapons: What Should NATO Do?
- Why Fritz Henderson Resigned as GM's CEO
- Ireland: Lack of New Catholic Priests Spurs Campaign
- The End of the 2000s: Goodbye to a Decade from Hell
- Study: Loneliness Can Be Contagious
- Could White House Party Crashers the Salahis Go to Jail?
Quotes of the Day »
RSS