Bailout Nation — Same As It Ever Was

On Saturday, this article was front page news in The Guardian, with this choice bit of reporting:

Financial workers at Wall Street’s top banks are to receive pay deals worth more than $70bn (£40bn), a substantial proportion of which is expected to be paid in discretionary bonuses, for their work so far this year – despite plunging the global financial system into its worst crisis since the 1929 stock market crash, the Guardian has learned.

This $70b is 10% of the talked about bailout figure of $700b. The real figure will, of course, be higher.

You really should read the whole thing. What is clear is what many folks on the outside looking in have long suspected — that the bonuses paid at these firms really have no relationship to any kind of work performance. The article highlights instance after instance of where the bonus pool is equal to or close to the actual value of the company. Here’s just one:

At one point last week the Morgan Stanley $10.7bn pay pot for the year to date was greater than the entire stock market value of the business. In effect, staff, on receiving their remuneration, could club together and buy the bank.

And there it is — burn out your own company and rake in the cash. An old school, Tony Soprano-style bust out. Except this time, these guys get to keep their bonuses because the American taxpayer has been generous enough to throw money at these dysfunctional organizations, without subjecting these organizations to a demand for better behavior. Indeed:

Many critics of investment banks have questioned why firms continue to siphon off billions of dollars of bank earnings into bonus pools rather than using the funds to shore up the capital position of the crisis-stricken institutions. One source said: “That’s a fair question – and it may well be that by the end of the year the banks start review the situation.”

So there you go. The government of the UK did this with a few more strings attached — including making some actors resign their executive seats, taking some seats on boards and just being more active in making sure the investments made on behalf of their taxpayers are closely managed. We are going to throw more money at these people before it is all said and done. And the money being injected into banks now are largely free of requirements, as befits the ideology of the current thieves in charge. And for reasons that just escape me, Congress seems hell bent to just let them do what they want to do.