Ward on Words

Execs at "too-big-too-fail" AIG got fat bonuses this week, despite the fact that their company has in reality failed and would be out of business were it not for a massive infusion of federal (tax) money. And people on Wall Street and in Washington seem caught off-guard by the populist outrage spawned by these bonuses. The legal obligation claimed by Tim Geithner to use tax dollars to pay large sums of money to failed execs has apparently enraged large numbers of people who live outside of NY and the Beltway. They simply do not understand why, at a time when the economy is in the toilet and millions of people have lost their jobs, the people who played a role in the collapse of the economy are being rewarded with millions of dollars in bonuses. And it is puzzling. We keep hearing that bonuses for performance are an integral part of how Wall Street does business. These struggling firms need to pay large sums of money to "the best and brightest" in order to re...

"Greed Is Good" is the headline of a story in yesterday's Wall Street Journal , reminding me, of course, of Oliver Stone's wildly successful movie about the biz, Wall Street . "Greed is good," says Gordon Gecko at one point in the movie, but in true Hollywood style, the greedy guy gets sent to jail. In reality, the greedy gents on Wall Street pay themselves bonuses out of federal bailout funds. Roy Smith, a former partner at Goldman Sachs, is the author of the WSJ article. In it, he argues that "bonuses are an important and necessary part of the fast-moving, high-pressure industry, and its employees flourish with strong performance incentives." How I wish bonuses had provided adequate incentive for sustainable profit on Wall Street! And how I wish that these banks had flourished along with the employees! Perhaps if bonuses had been tied to performance, we wouldn't be in such a mess today. I love how when the Wall Street insiders sp...

Oh to be a highly compensated Chrysler executive! You get to run your company into the ground, hold your hand out in the hopes it will be filled with government bailout money AND look forward to a big bonus at a time when everyone else is worried about hanging on to their job. According to this article in the Detroit Free Press, Chrysler plans to hand out $30 million in retention bonuses to its executives. And at least six Chrysler execs "are due to receive bonuses of more than $1 million a piece." As they move to line their pockets with millions, Chrysler executives are joining with Ford and GM leaders to ask the federal government for $25 billion in loans. Really? Seems that free markets are fab when you've got the feds to cover your losses. This I do know: when I buy my next car, it will not come from Detroit. Maybe the feds feel compelled to support failed business leadership - but I won't.