Let them eat French Toast
I have a question. It emerged after reading the two paragraphs below while waiting for French Toast "delux" in a diner. There was nothing else to do but read the Washington Post (Apr. 4, 2009)
"The Obama administration is engineering its new bailout initiatives in a way that it believes will allow firms benefiting from the programs to avoid restrictions imposed by Congress, including limits on lavish executive pay, according to government officials.
"Administration officials have concluded that this approach is vital for persuading firms to participate in programs funded by the $700 billion financial rescue package."
So here's my question, when did it become necessary to persuade people to accept a bailout?
Isn't a bailout, by definition, the rescue of these firms to avoid their financial collapse?
After all, we hear that the financial and industrial giants will sink into oblivion unless we keep the trillions flowing. But this adds a new wrinkle. Maybe they don't need the money? Maybe this is like that season of "Dallas" that ended up being nothing more than a dream. Maybe we're being scammed.
The political stupidity of this move is simply stunning. There isn't a faction left, other than the principals, who have any sympathy for the Wall Street geniuses who were so totally incompetent that they've nearly ruined the nation's economy.
The incompetence was transferred to the White House, apparently, in the form of Secretary of the Treasury Tim Geithner. In January, this wonder worker of the New York Federal Reserve introduced himself by defending banks in front of his boss. He is, no doubt, one of the key movers behind this. Why wouldn't he ask the same question I asked if he's so smart?
The article had a fascinating conjecture provoking sequence deeper into the article See if it jumps out at you:
"The federal watchdog agency overseeing the bailout is looking into the matter, trying to determine whether the Treasury's actions are legal.
"Of the two major restrictions imposed by Congress in the bailout legislation, the limit on executive pay has been the most politically explosive issue.
"But officials at the Treasury and the Fed said they worry harsh pay limits will undermine critical bailout programs by discouraging financial firms from participating. Although many of these companies could survive without government help, they might lack money to ramp up lending, which officials consider critical to turning the economy around." Washington Post (Apr 4, 2009)
So now we've got two questions. Since it's Treasury mentioned above, we know what we already knew, it's Geithner. But now we have to wonder, who's on first? Obama's against it. Geithner's for it. Is this the policy difference and political faux pas that gets Geithner fired or will he survive yet another day.
But forget all that bonus business.
How can people who really need a "bailout" turnit down unless they get their $20 million dollar bonus for incompetency at everything (except selecting members of their board of directors)?
The CEO's have no bonuses. Then let them eat french toast.
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