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Rescued Firms Just Not Getting It

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An interesting headline caught my eye this morning.  “Obama imposes limits on executive pay” is about President Obama and other Democrats introducing common sense limits on executive compensation if their firms receive bailout money from American taxpayers.  Why do I think they’re not understanding the environment?  Executives have been allowed for a generation now to run free at the helm.  They’ve been more than happy to take millions of dollars per year from firms, regardless of whether they succeed or fail.  They shouldn’t earn anything if their firms fail due to horrible executive decisions.  That’s more true than ever if firms accept American taxpayers’ money.

What Pres. Obama and other Democrats want to introduce in this recovery and reinvestment legislation is public accountability and transparency.  Private firms have been able to do whatever they want with consumers’ investments.  They’ve done whatever they want with the corporate welfare money they’ve taken from the public.  Now it’s time for change – that’s what the 2008 election was all about, after all.

Out of the $350 billion financial firms received from “president” Bush and Secretary Paulson, they decided to use it to buy other banks.  They decided to use it to pay for $18 billion worth of bonuses for executives!  What was the money supposed to be used for?  Balancing out the crappy financial instruments the firms decided to gamble with.  They money was supposed to increase the credit flow to Americans so that our economy could continue to function.  The same executives that decided to not use the money as it was intended by Congress are now warning Congress that

intrusion into the internal decisions of financial institutions could discourage participation in the rescue program and slow down the financial sector’s recovery.

Call me underwhelmed.  That warning is a good indication of just how alternate the reality these clowns have been living in.  If private firms want public money to bail them out from their disastrous decisions, the terms for doing so need to include public transparency and accountability, as Sen. Dorgan is recommending:

On Tuesday, Sen. Byron Dorgan, D-N.D., introduced amendments to the Senate’s economic stimulus legislation that would require firms that receive bailout funds to disclose the bonuses they paid during the time they received government funds. The bonuses would be posted on the Internet and included in a report to Congress.

Why would executives not want their bonuses made public?  Because they know they’ve made unethical business decisions in the past and they think that a different set of rules should apply to them just because they’ve been financially successful.  All this while millions of Americans that actually work for a living have lost their health insurance, their jobs and their houses.  Those losses have come about as a direct result of the executives’ immoral decisions.

Sen. McConnell offers up another b.s. talking point:

“I really don’t want the government to take over these businesses and start telling them everything about what they can do,” Sen. Mitch McConnell of Kentucky, the Republican leader, said this week. “Then you truly have nationalized the business.”

Fine, Sen. McConnell, then the businesses should take care of themselves.  If the market is truly free, as you and other ideologues constantly assert, then they shouldn’t need billions of Americans money.  If they don’t want the oversight and the accountability that Pres. Obama and Congressional Democrats are proposing in return for a public bailout, they don’t have to take the money, do they?  They have the choice to do what they want.  Let’s see what happens when they refuse the money and oversight and fail.

Perhaps the scariest part to all of this is considering the “solution” the Cons would be offering if they had won the 2008 elections.  They were successful in giving away $5 Trillion of Americans’ money under 8 years of Bush rule.  This meltdown would only provide them an excuse to give away trillions more.  Democrats are coming up with solutions that will result in a healthier economy in the medium- to long-term.  Democrats want transparency and accountability, two items that were not considered under the Cons.

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