“WASHINGTON — In heated questioning that at times took on the air of a cross-examination, Treasury Secretary Timothy F. Geithner on Wednesday defended his role and the government’s actions in bailing out the American International Group, saying Washington did what was necessary to prevent “a second Great Depression.””
Berating Geithner gets things nowhere. He may very well be right that the financial bailout actions of the Obama administration prevented a new Great Depression that was in part caused by the irresponsible financial policies of the previous administration. But looking for scapegoats is not the essential question.
The essential question to our mind in the A.I.G. bailout is not the bailout itself – but always the essential question is – WHO has the money? or, more likely, who GOT the money ultimately?
It is on this question that Congress should concentrate – there should be laws in place requiring full disclosure of the recipients of government bailout money – these can only be institutions – and there should be draconian penalties for individuals profiting from any bailout – and this should include unconscionable bonus provisions in contracts, which should be rendered void and unenforceable by the very fact of the payment of a taxpayer-paid bailout.
We have not found anyone who can explain to us cogently why the principle of salary caps as placed on the salaries of professional athletes is not transportable to salaries and bonuses paid in business. We exclude here profits made by entrepreneurs – about which we have no quarrel – but we do have quarrel with business executives or otherwise beneficially situated persons pillaging the till under the cloak of legality.
We posted about this before at:
What Congress should do is to hold hearings on a “salary cap” law in which corporate salaries at the top are strictly bound by the productive “economic growth” of a company rather than being tied to inflationary market capitalization and to unconscionable bonus-augmented contracts. Our suggestion is that no company executive – we are not talking here about entrepreneurs – be permitted to earn more than 10 times the lowest full-time wage in the company which he runs. Now THAT would get the boys at the top on the ball to raise those salaries at the bottom. You bet.