I understand that the American public is upset with executives of major banks that received TARP money and will get tremendous end-of-the-year bonuses. What I don’t understand is why they’re upset with the notion of big bonuses all-together. I’m the first guy out there who will hate on a brotha making too much money for doing way too little, but when you’re an executive at a major bank, you make big bucks, and that’s something the American public is going to have to deal with.
I wouldn’t even write this post if I legitimately thought that the only resentment for big-time bonuses was directed at banks that have yet to pay back their loans from the U.S. government, but it isn’t. First of all, those banks have restrictions on the big bonuses, so they couldn’t give them out if they wanted. And secondly, most of the vitriol is pointed at Goldman Sachs, a bank that has paid off its debt to the U.S. government.
I understand the sentiment that banks that have paid back their dues are only in existence because the government gave them money, and otherwise these banks and their executives would be out on the street. However, the reason the government gave them that money was to protect the investments that millions of people across this country have embedded with the B of As, Goldmans and AIGs of the world. Do you have any idea how many pensions, retirement funds and savings accounts are tied up with these banks? That’s why the government saved them—to save you!
Quite frankly, if it weren’t for individuals giving them money, these banks wouldn’t be in existence anyway. When we invest with these guys, use credit cards, get crazy mortgages and the like, we leave ourselves susceptible to their rise and fall. I don’t like it, which is why I can’t imagine myself voluntarily turning my money over to these banks, but many people do, and it’s the system we live in.
So when TARP money was lent to these banks in order to save them from extinction, I understood the ramifications. Personally, I wouldn’t have minded seeing them fail, “supposedly” that would have been bad for the economy, so I’ll let it go this time. That said, I didn’t have any misconceived notions that by lending banks money, these institutions would somehow turn over a new leaf. Actually, the government gave banks money so that they could get back to business as usual. Yes, the Obama administration will tell you that they want banking reform, but when they gave out money, they wanted that DOW back at 10,000 and they wanted money flowing, even if it meant returning to status quo…and that’s what happened.
And in order to return to the status quo, to get this nation’s economy back to being respectable, some of the old ways had to be carried over from prosperous times. So yes, big bonuses are still a part of Wall Street, and they always will be. They can be in different forms, whether it be restrictive stock or deferred payment, but the bonuses will be there. No bank wants to executives that don’t want to make money, and you don’t want your money being handled by someone without real motive to make your money grow. It’s how the system works, and rather than be mad about it, I take it for what it is—the vanity of capitalism.