Corporate greed cannot be sanctioned with public monies and any deal between Congress and the Bush administration must include protections for American taxpayers that prohibits, among other things, the golden parachutes so often associated with the dysfunctional financial industry.
The numbers are so ridiculously inflated, no one can get their minds around the government bailout of the financial industry which will likely top $1 trillion when all is said and done.
But what the taxpayers who will be footing this bill can grasp are the obscene severance packages stuffing the pockets of disgraced CEO’s who are being rewarded for driving their institutions – and the American economy – into the ground.
This corporate greed cannot be sanctioned with public monies and any deal between Congress and the Bush administration must include protections for American taxpayers that prohibits, among other things, the golden parachutes so often associated with the dysfunctional financial industry.
Greed has been the driving force behind the most devastating economic collapse since the Great Depression – greed by subprime lenders, greed by bogus inflated auction-rate securities, greed by the “I’ve got mine” money traders who shuffle everyone else’s money but theirs from risky investment to risky investment.
Exit packages worth billions of dollars are easing the transition of scores of CEOs who are facing no threat of losing their homes:
Richard Fuld, who oversaw bankrupt Lehman Brothers self-destruction, reaped nearly a half-billion –$490 million – from selling his stocks before they hit worthless;
Jimmy Cayne, former chairman of Bears Sterns which was rescued when the feds threw a $29 billion lifeline, received $60 million when he was replaced;
Stanley Neal, who steered Merrill Lynch as the venerable financial institution collapsed before being taken over by Bank of America, was given a package of $160 million when he left his post last year;
Angelo Mozilo, founder and top executive at Countrywide Financial Corp. which has been at the forefront of the subprime fiasco, cashed in $122 million in stock options in 2007;
Robert Willumstad, CEO at insurance behemoth AIG which just got an $85 billion respite from Uncle Sam, was handed $7 million for his three months at the helm.
At least government officials are holding the line on the severance packages, worth a combined $24 million, for the ousted heads of Fannie Mae and Freddie Mac.
A recent survey by Forbes magazine found the average CEO is earning 364 times the salary of their average worker, up from 42 times the average salary of one of their company employees in 1980.
As maddening as those compensation packages are, when it involves private companies and private money in a largely unregulated industry, there’s little to be done by the government.
But if these companies now want to be put on the corporate welfare rolls to save them from themselves, they must agree to forego those scurrilous termination payments.
U.S. Rep. Barney Frank, who as chairman of the House Financial Services Committee will have much input on the final deal, also wants the bailout to include limits on executive pay as well stronger government oversight so taxpayers are not completely hung out to dry.
While some argue the pay agreements were put in writing when the executives were hired, if they want public money to save them then all deals are off the table.
Government regulators might also want to look back at many of the deals that were already paid out to see if criminal actions such as the sale of stock options cashed in on illegally inflated financial statements or bogus claims of solvency.
This is an unprecedented intervention on the part of the government, one the financial sector is begging to happen. It would be unconscionable to allow Wall Street to profit off its greed while many taxpayers will have to work five, 10 or more years longer to make up for their retirement fund losses.
The Patriot Ledger