Why is Our Bailout Money Going Towards Paying for Executive Bonuses

by David@MoneyNing.com · 25 comments

executive bonus with our bailout fund

The newest on the corporate corruption front seems to be that the employees at financial institutions are still expecting to be paid employee bonuses. It’s crazy to think that while we have to downsize and try to save more money to anticipate higher taxes for paying off the bailout, it is actually money that is being used for paying executive bonuses.

First, the $700 billion bailout plan was supposed to buy troubled assets. Then $250 billion of it was used to buy stakes in banks because they aren’t capitalized enough to lend, with $125 billion already going to just 9 banks. Now, we are hearing that instead of using the money to lend, the bailout fund are used by banks to buy other banks, give employees a raise and executives a bonus.

I don’t really care that they can legally do this or not because something is definitely wrong when 100 people have to eat less so 1 person can buy a more luxurious car. It just does not make sense to me and it never will.

What congress needs to do is bring those CEOs to a meeting and tell them that if they decide to pay bonuses or use taxpayers money to do irresponsible activities, the government will start stepping in and dictate how businesses should be run.

If the government doesn’t play hardball with these firms, they will just end up wasting our money to make themselves wealthier. If nothing is done, everyone will be outraged and America will get into much more trouble long term.

Stop letting those pigs get all the water.

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  • Shawn says:

    The executives should have been relieved from their positions, not paid mind boggling bonuses for being incompetant at their jobs, or jailed for fraudulent use of government funds. I wouldnt be surprised if some money was skimmed off the top to line some politicians pocket. Its these same people who will put your family on the street when you balk on your loan. Real fair!

  • dave says:

    We need to ask the question about our representatives and senators responsibility first. If the law allows them to be unethical than they will
    do what they can get away with. We dont need to blame them for something that it is legal to get away with. There needs to be oversight from them not to take or give themselves a bonus when they didnt earn it and some sort of regulation on how much of a bonus is correct under any situation. If the bank or company looses stockholders monies from their preformance that requires the directors and Excutives to own up to it and not, of all things, get a bonus. Congress can be responsible if they choose, but they are allowing them to get away with it. It is just like a parent that cant control their children. When the child does something illigal it is not their fault, but when they do something great they want part of the credit. You cant have it both ways. By the way, you dont have to be that smart and have a college degree to know what is right and wrong. Do the right thing and most of the time you will be alright.

  • Doug says:

    Is there a lawyer that has the guts to file a class action suit against the banks and executives taking bailout monies to hold them accountable for their actions????

    Think about it, if someone causes you to not be able to work because of thier actions (ie. auto accident) are they not held accountable for thier actions and forced to pay you damages….

  • Ria Brown says:

    I don’t see why CEOs can’t cut their pay and use THAT money to bail out their own organizations that THEIR greed ran into the ground. Why do taxpayers have to help them out when they were at fault and made decisions that caused their companies to need help. Once they’ve shown a willingness to give up their extravagant lifestyles, THEN they should be offered help. Giving money to someone who is already earning $25 million a year doesn’t make any sense. Obviously, earning that $25 million didn’t qualify them to run an organization. Anyone else who mismanages funds doesn’t get rewarded with a bonus; they get fired.

  • cece says:

    I’ve been searching around for any sign of a movement not to pay taxes. I just watched Bill Moyer’s Journal, a story on the sit-in at the window and door company in Illinois, about how the workers’ picket signs indicate that they are clearly aware of the connection between the finance/banking industry and their situation–they’re not picketing against their company, but rather the bank that finances the company, the bank that got 25 billion and was using it to pay dividends to shareholders rather than give the workers their month’s layoff pay and their health insurance, as stipulated in their contracts.

    The story went on to show the questioning of the Asst. Sec’y of the Treasury, who was being asked why somebody got a $3 million bonus from the bailout money. It talked about the political parties getting contributions from the companies that we are bailing out.

    That this bailout money is being given out with no conditions is insanity. Insanity, doing the same thing over and over and expecting different results. If you expect the market to “correct itself”, you are insane. That is not how people work. Human being test the limits of everything…everything. Jeff Skilling ran amuck because nobody and nothing told him to cut it the hell out.

    It’s up to us, it seems. We have to stop giving them tax money until they do what is right, don’t you think? I want us to organize. They can’t throw us all in jail, if we do it in sufficient numbers. I think they’d come around quicker than we think, just like B of A did in Illinois.

    God, I know this is disjoint and I’m sorry. This is making me nuts. When are we going to finally have enough of this b.s.? What the hell is it going to take?

    Point me in the direction of the pay-no-more-taxes-until-someone-takes-the-g.d.-reins movement.

    • bob says:

      good luck.. i suggest in the mean time just follow what you know is best.. i like to think that if you resonate without contradictions to your beliefs and you do this throughout your life you will attract and be attracted by like entities. not only is our tax money being spent like this.. it is wasted in many many other ways.. i think taxes are more to just supress us than anything else.. an added link in the chains that secure our state of slavery..

  • jeff says:

    The government has seen fit to bailout companies like AIG whose top managers seek and get multi million dollar bonuses continued under the plan. I feel the American Taxpayers should demand a majority seet on any Board of Directors from a company getting these monies. We would then be in a position to bring those Directors back to physical responsibility, or lose their jobs like millions of working Americans are doing now.

  • CD Rates Blog says:

    Jeff, that is a great idea. The problem is the seats would most likely be given to people who are spineless and as a result nothing would change.

  • John says:

    This whole bailout effort reminds me of that old movie “Weekend at Bernie’s”. The economy is about dead and the government is propping it up with more borrowed money to encourage more of the same bad lending practices.

  • Jerry says:

    Come on, you can’t cap CEO salaries. This is America (still, as far as I know). However, you CAN let their companies fail, if that is what they deserve from their own mismanagement.
    I believe it is the CEO of Costco who pays himself a very reasonable salary each year (not including his stock options worth millions, of course, which is only fair), and makes it his personal goal to be certain that his employees are paid a good wage, with excellent insurance benefits, and a strong pattern of promoting from within. He’s a visionary, and the antithesis of the WalMart mentality… and it leads to success. May he somehow inspire others to be more like him.

  • Paul says:

    The only fair and just thing to do was to let the companies fail. Enron style. Complete with a whole big investigation including jail time for those who did things illegally and class action lawsuits against them by employees and other stakeholders for acting irresponsibly.

    By stepping in and bailing these places out the government has essentially said that what they did is okay.

    For publicly traded companies, I don’t mind one bit if the executive management makes a lot of money, in fact I think their compensation should be based directly upon how profitable the company is – real profit, not manipulated numbers. This gives them incentive to improve the company, but if the company loses money one quarter then the executive management shouldn’t make any money either.

  • marci says:

    The photo said it all.
    Luv your sense of humor 🙂

    We are expecting those folks/banks to adhere to our (readers of this blog) own moral/fiscal standards, and they obviously don’t believe the way we do or they wouldn’t be in the fix they are in.

    What is morally and fiscally responsible does not matter to some folks.

  • Compare CD Rates says:

    And there is the downfall of a bail-out. What else did you think would happen? Why would the same people who were untempered in their pursuit of money suddenly start behaving responsibly?.? The bail-out should have never passed and those that couldn’t whether the storm should have been allowed to blow away.

    I don’t agree with passing laws on people’s compensation. However, if people can not have the integrity to govern themselves, what else can be done?

    The bail-out was not meant to be used to buy banks or pay people’s bonuses. Those that are bailed out should have their compensation limited until such time as they pay it back.

  • Aaron says:

    While I think Dario’s a little extreme, I do agree that the compensation is simply what the market supports. Don’t you think professional athletes are paid too much? Executives get paid so much because they generally bring in so much money. Their jobs really are high pressure; you hear about turnovers at large corporations all the time. If larger bonuses will entice executives to perform better, then perhaps it isn’t so bad that the bailout goes to their pockets.

    • bob says:

      where is this money coming from that these executives are ¨bringing in¨ isnt existence of the company bringing in the money.. if the original idea of the company wasnt a good one it would fail right away., unless of course they find a way to cheat others..or mislead them..

  • Dario says:

    Yes. lets cap CEO pay and then all these people who get excellent educations, spend absolutely no time with their families, are twice divorced, work constantly and are in the public spotlight and scrutiny all the time can finally say “Since the government is capping my pay, its not worth it to make this company (and by default this country) great”

    Then while the “common man” will feel better knowing that no CEO is making 200 times he is, the United States can fall from being a super power and we can all be happy with $2,000 GDP per person while we fight for the scraps that Free Market economies give us.

    Stop Complaining America. If you don’t like the fact that CEOs make more than you, then start working 120 hours a week.

    • bob says:

      there are plenty of people that work as much as these ceos and dont make any thing.. the fact is simple.. do your job.. whatever it is.. do it well… and hope that you keep your job… do your job poorly… get fired.. why should it be different for them?

  • Philip says:

    Please vik, don’t pass a law that would do that. I don’t make anywhere near that kind of money, likely never will but why completely disrupt free market? We need to let some companies fail, and then people will start to see what these execs are actually (not) worth and market will pay them accordingly. Why do we need the gov’t to hold our hands all the time and try to stop us from hurting ourselves.

    Yes, now that the money is coming from this dumb bailout they should not increase their money, but the bailout is not free market money and is skewing everything.

  • Vik Dulat says:

    I completely agree with you. Execs are getting paid way too much money. It is ridiculous.

    I think we need to pass a law that says execs can get paid only a certain amount of salary.

    • Barry says:

      So you are saying communism? You want the government to decide how much one can make? That is deplorable. If you work to get where you are at then you deserve the pay that comes with that position. It is not their fault that people choose not to work and live on the streets.

      • bob says:

        and if your company fails , then you should be responsible for that failure and not make more money because of it.. you should get nothing.. the top people obviously made the wrong decisions . either they made the wrong decision to be a part of this kind of bank or company. or their decisions while working for them were wrong. wrong in the sense that they weren´t what were necessary to insure their security.. how many people every year decide to invest in a company that fails.. should they get money for failing? the investors of a satan worshiping theme park the size of washington get bailed out when the trillion dollar park is built but no one decides to ride the rides.. and you say ¨its not their fault that people choose to not be satan worshippers¨

      • Shawn says:

        It was communist for the government to get involved period. The government got them out of a pickle, Id say that makes it their duty to get involved. Or do you want to bail the banks out again?

  • Oblivious Investor says:

    I agree completely. Executive pay is completely out of proportion.

    The following remark made me snicker a bit though: “while we have to downsize and try to save more money to anticipate higher taxes for paying off the bailout”

    …as if we’re actually going to raise money to pay for it. That’s not what we do here in America. We just keep spending, regardless of revenue. 😉

  • Donny Gamble says:

    Are money is going to these high paying executives because our economy is all screwed up with scam artist and cheaters who try to cheat the system. Everyone now a days is trying to make money to quickly instead of making gradually over time.

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