Punitive Against TARP Recipients
In a Reuter’s article, a lawyer is quoted as saying,
I don’t understand why it is in the taxpayers’ best interests for us to be punitive in regard to TARP recipients.
Here’s my answer. Taking public funds of the magnitude that financial corporations and car makers took (e.g. multi-billion dollar loans that are becoming hand-outs with no securitization), should be prejudicial. If the burden is too heavy on those institutions and they lose their “best and brightest” to other institutions like Goldman-Sachs because Sachs was able to generate enough non-underwritten capital so that they could pay back the TARP loan then those weaker institutions should fold. They should go under. Capitalism is, to some reasonable degree, the survival of the fittest, not the survival of the top 30,000 financiers regardless of the quality of the product they produce. If AIG, Bank of America or CitiGroup are poorly managed to the point that it cannot pay competitive wages and bonuses vis~a~vis JPMorgan or Goldman Sachs then let the best and brightest of AIG, Bank of America and CitiGroup flood JPMorgan and Goldman Sachs. You know what will happen? JPMorgan and Goldman Sachs will realize that they can get rid of their worst producers and pickup better talent, perhaps for even less. THAT is how capitalism works in every other industry in the westernized world. You must stay lean. You must reinvent yourself, your business, your services to stay competitive in capitalism.
I’m in full support of what some might call punitive bonus slashing. Instead of Bank of America handing out $26 billion in bonuses in 2009, let them hand out less than half that amount. I still think $13 billion is more than most people get for doing as poor a job as the financial industry has done. If the employees of the companies affected by this policy don’t like it, let them fight it out in the halls of those banks who realistically have the funds to pay them instead of us shoring up the weaker banks so that they can barely retain folks who might not be able to cut it at better institutions.
