Sweet Bailout
Looks to me like the $700 billion rescue package may have been $1.6 billion too large:
Banks that are getting taxpayer bailouts awarded their top executives nearly $1.6 billion in salaries, bonuses, and other benefits last year, an Associated Press analysis reveals.
The rewards came even at banks where poor results last year foretold the economic crisis that sent them to Washington for a government rescue. Some trimmed their executive compensation due to lagging bank performance, but still forked over multimillion-dollar executive pay packages.
Benefits included cash bonuses, stock options, personal use of company jets and chauffeurs, home security, country club memberships and professional money management, the AP review of federal securities documents found.
The total amount given to nearly 600 executives would cover bailout costs for many of the 116 banks that have so far accepted tax dollars to boost their bottom lines.
A lot of people are going to read this as a confirmation of the Sirota/Pence view that government intervention was unnecessary. I don’t see it that way. Credit conditions really did improve post-bailout, rather than get worse as it looked like they might have. The right thing to do is keep the crosshairs where they belong — on George W. Bush and Hank Paulson who decided to implement their recapitalization scheme in an irresponsible manner. Normally, when you “inject capital” into an enterprise you get a share of the action — board seats, voting shares, etc. — not just a dividend. That way, the public’s representatives would have had a way to ensure that the public interest was safeguarded as banks played with the public’s money. But Bush and Paulson care more about ideological correctness (free market!) and helping their buddies (Goldman!) than they do about safeguarding the public interest. Since there was no way to bring an alternative, less horrible administration to power back in October, I see no real alternative to doing something and then letting Bush and Paulson implement it poorly.
The question is, can Barack Obama do any better? With good reason, we’re not ordinarily comfortable with the government exerting vast control over the banking sector. But also with good reason, we’re not ordinarily comfortable with the government “injecting” hundreds of billions of dollars into the industry. But if the latter step is necessary, then so is the former.
73 Responses to “Sweet Bailout”
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December 22nd, 2008 at 10:22 am
OK, this is officially surreal.
December 22nd, 2008 at 10:24 am
It’s hard to consider your opinions till you address the elephant in the blog
December 22nd, 2008 at 10:25 am
OK, let’s be absolutely clear here. I think it’s obvious now that YGLESIAS IS NOT WRITING THESE POSTS. Jennifer Palmieri, CEO of Center for American Progress has hijacked this blog.
December 22nd, 2008 at 10:25 am
Wait — I’m no Sirota scholar, but did he really argue that no government intervention was necessary? I’m recalling him arguing that what was being done was an uncontrolled giveaway whose benefit to the economy was unjustified (I mean “unjustified” in the sense that no one was explaining how we would benefit); and that seemed to be tacitly admitted when Paulson remodeled the aid to look more like Gordon Brown’s intervention. But maybe he did, Sirota can be variable.
December 22nd, 2008 at 10:28 am
Jennifer Palmieri is the elephant in the party-hack room. Does Matt read his comments, or even his own blog?
December 22nd, 2008 at 10:30 am
The banking sector exerts vast control over the government, not the other way around. Kind of like the DLC exerts vast control over Matt’s blog. Wait, what?
December 22nd, 2008 at 10:31 am
Zombie blog needs brains.
December 22nd, 2008 at 10:32 am
I hope Matt’s not saying anything bc they had to wait until Monday and normal office hours before he could officially make the case that this moronic woman be fired. You know, ongoing investigation, etc, etc….
December 22nd, 2008 at 10:34 am
@Eric: LOL! Clearly, zombie blog started with the brain of Jennifer Palmieri, because she’s looking more and more stupid by the post.
December 22nd, 2008 at 10:35 am
dag, pot on your blog one time! can he keep this up all day? I feel like we’re all standing around going “chug! chug! chug!”
December 22nd, 2008 at 10:37 am
grr, that should be “post.”
December 22nd, 2008 at 10:38 am
I’ll keep this short because I don’t have much time. I’m not sure where I am; they took me late last night and in my fear I didn’t notice which direction we headed in. I do know that it was not a very long trip. Five, ten minutes max.
They are treating me OK but I don’t know how long that will last. When I asked if I could talk to Matt, they just said: “Good things come to those who wait.”
I’m really scared. Please send help.
December 22nd, 2008 at 10:38 am
I would just like to say, that we here at Think Progress appreciate the blogging that Matt does. We also have a very good relationship with the banking industry and have partnered with them on many occasions. We wish to make it clear that comments made by Matt do not reflect the opinion of the Think Progress management, or that of our affiliate partners.
Thank You
- The Management
December 22nd, 2008 at 10:44 am
The Great and Glorious Oz speaks? Or what?
December 22nd, 2008 at 10:47 am
OK guys, enough.
Further off-topic coments are subject to deletion, epecially if they mention CAP/Third Way related matters.
December 22nd, 2008 at 10:48 am
Of course, as far as Palmieri is concerned, this would be good practice for a position as a Pentagron PR flack. If her controllers don’t like their coverage, co-opt a few journalists. And if anyone points it out, just keep putting out new stories and ignore the controversy. “Nothing to see here, folks.”
December 22nd, 2008 at 10:50 am
Well it wasn’t just Sirota. Markos Moulitsas was railing against it and about had a stroke that the freakin’ House GOP was the voice of reason on the issue. Jamie Galbraith and Dean Baker opposed it as well.
All four of them are OK with government intervention but are against corporate welfare. Leaving aside CEO pay (which could have easily been tied to 20 times average worker’s pay or capped at no higher than the President’s $400,000 salary), the big issue is the one you touched on– why the hell weren’t the shareholders wiped out when the government bailed out companies that were almost literally on the steps of bankruptcy court? I suppose it makes sense to keep companies out of bankruptcy (with its impact on workers, creditors, vendors and the economy as a whole) but its insane to reward shareholders who’ve allowed management to run multibillion dollar companies into the ground.
Every poor decision of this administration (or to put it another way, every decision of this administration) raises the question– was this incompetence or design? Is there any question, this was definitely by design? Its like they say in military intelligence,”Once is happenstance, twice is coincidence, three times is enemy action”.
December 22nd, 2008 at 10:53 am
Its clear you are fundamentally misrepresenting Sirota’s point and are making his real point quite nicely for him.
He did not oppose a bailout; rather, he opposed the free-for-all money give away that 1) did not alter the financial system 2) did not hold accountable the people of chief responsibility and 3) ignored the needs of victims in greater need - like homeowners.
And the absurd rush to provide the money - through the use of transparent fear mongering - only sought to ensure that such accountability was not included.
As a result, we have banks handsomely rewarding execs, refusing to fix their balance sheets and in no way easing the burdens on normal taxpayers.
No, they are using the money to procure failed banks and improve their market share and positioning. This is exactly why people like Sirota opposed this.
While you were trying - and continue to - act Serious by mislabeling the very warranted - and now founded - opposition to the no holds barred bailout, you have exposed yourself as intellectually insincere.
In addition, the incredible double standard to which you held the auto industry exposed your dubious political compass even greater.
It showed that you are both morally shallow and intellectually dishonest. By continually suggesting that a large segments of the American population should suffer when you full well new the aggregate economic consequences exposed you as neither Serious or thoughtful.
It retrospect, whatever hangs up people have about people like Sirota and myself, Matt’s rash push for the financial bailout - and subsequent mislabeling of opponents - and his doctrinaire obstinacy to assist the American auto industry show him to be neither principled nor decent -during this financial episode, at least.
December 22nd, 2008 at 11:10 am
Further off-topic coments are subject to deletion, epecially if they mention CAP/Third Way related matters.
The only thing off-topic on this blog are your posts today, Matt.
You need to address the subject at hand.
December 22nd, 2008 at 11:12 am
@15 if you are the real Matthew Yglesias how about giving us an update about the background, what happened, how it happened, and why it happened.
Only way to stop it really.
December 22nd, 2008 at 11:13 am
Wow, this is really the way to tank a well-respected blog in about 3 days.
Step One, have The Boss drop in from Mt Olympus and spank the blogger for unsanctioned thoughts.
Step Two, readers get ticked off at the rudeness and, most of all, the incompetence involved.
Step Three, threaten to delete the posts of the readers who are defending you.
Step Four, total alienation of your entire readership. Brilliant.
December 22nd, 2008 at 11:15 am
A Special Note RE: My last post
In light of the orwellian machinations used by Jennifer Palmieri, I almost feel bad posting such harsh material.
I did not realize the Jennnifer P. incident until now, and frankly, it is disgusting. It makes people very wary of both CAPs liberal bona fides and it suggest and overbearing attempt at creating groupthink.
Next, she will interrupt Matt’s blog to tell us “Special Note RE: Resumption of screaming time at Emmaneul Goldstein.”
What this makes quite clear is that Matt - and CAP - need union representation to contractually ward off management from needless and intimidating editorial overreach.
December 22nd, 2008 at 11:15 am
It’s factually inaccurate to say I thought we should do nothing, or that I thought government intervention was unnecessary. That’s just a made up fabrication.
December 22nd, 2008 at 11:16 am
Good lord, Matt, Palmieri currently has your balls sitting in a jar on her desk. Readers are quite rightly concerned about if and when you plan to retrieve them, because an emasculated blog is a horrible thing.
I think perhaps you’re not embarrassed enough about this yet, and also not protective enough of the Yglesias brand, which actually has more currency than CAP’s.
December 22nd, 2008 at 11:19 am
you know, my read on this is that a lot of blog-commenters have issues about their masculinity, and matt does not.
he’s running a blog; it’s a place to discuss issues. it works better if people stay on topic.
there’s a whole thread back a ways devoted to talking about palmieri’s fuck-up. this one is devoted to discussing the bail-out.
wanting to keep the conversation on topic is not a sign of timidity on matt y’s part. it’s just a sign that he wants to run a good blog.
December 22nd, 2008 at 11:26 am
No David, you wanted to do nothing until Obama was president because nothing bad would or could happen in between, because the crisis was mostly overblown hype.
True, that position leaves you enough wiggle room to try and claim now that you weren’t against action per se, but had people listen too you, the result would have been the same as if he had listened to people who didn’t want action at all.
So Jennifer Palmieri’s statement in this post here is accurate enough.
December 22nd, 2008 at 11:26 am
there’s a whole thread back a ways devoted to talking about palmieri’s fuck-up. this one is devoted to discussing the bail-out.
Well, kid, that’s kind of the point isn’t it? There isn’t a discussion, because we don’t even know if Matt considers it a fuck up. Or whether she actually hijacked the blog, or posted that with his permission. Or anything, for that matter.
Palmieri is the one who went off topic for this blog. MY has a boss who is willing to humiliate him in front of his readers, which raises the question of what other pressure Matt is receiving to write or not write about things.
There’s no point in keeping the conversation on topic if it’s not an honest conversation.
December 22nd, 2008 at 11:27 am
kid,
When I read the ThinkProgress blog, I assume writers there are somewhat in the tank for Obama and the Democratic Party (although sometimes they do criticize them, e.g. Biden posts yesterday).
But when I read Matt’s posts I have assumed so far that they were products of his own, independent mind. He has to adress the fact that a CAP official can just come here and post propaganda non-sense if he wants to be taken seriously. If he doesn’t do anything, there is no need for him anymore. We can just watch Gibbs’ press conferences at the White House to get the official party line.
December 22nd, 2008 at 11:27 am
@kid - I know that remote psychologizing about people’s masculinity issues is a hallowed Internets tradition, but usually the idea is that there should be some attempt to make it sound plausible - it’s not like Godwinning, there’s an art to it.
@Matt/Jennifer/whoever - My theory is that the hit on Sirota is an attempt to make nice to Third Way by demonstrating that CAP/Yglesias (we now know that anything the latter says is representative of the former unless otherwise noted, after all) can go after people to their left, too. Amirite?
December 22nd, 2008 at 11:28 am
@22:
There’s no big conspiracy or sinister machinations going on here. I had been mistaken about certain of Third Way’s policies and practices, and Jennifer Palmieri dealt with the situation in a timely and appropriate manner while I was away.
Though the CAP management has graciously provided me with a soapbox to spout off as I please, in fact my posts appear here at their sole discretion. They have a perfect right to make edits to my blog posts before, during, or after posting. The fact that they have never made edits to my post beforehand is more a function of the practicalities of doing so (submitting my posts to a lengthy editorial process would obviously slow down posting prohibitively) than of any kind of “editorial control” on my part over this blog. It’s simple: I don’t have any.
When I decided to join CAP and become active in the progressive movement, there were admittedly certain freedoms I gave up. But it’s more than worth it in order to have the opportunity to partner with movers and shakers like John Podesta, the incoming Obama administration, and yes, even organizations like Third Way.
And by the way, the suggestion that Third Way is engaged in any improper behavior vis-a-vis their tax status is just outrageous and borderline defamatory.
December 22nd, 2008 at 11:30 am
This discussion is, frankly, bizarre. So what if some bankers continue to get big pay packages? Those are the people who have been working for, say, $20-million a year, and somehow you expect the banks to retain the talent suddenly with a $200,000 package just to please brain-dead Congressmen?
And since those are healthy banks we are talking about, this means those people have BEEN DOING THEIR JOB RIGHT and thus DESERVE TO CONTINUE GETTING PAID AS THEY DID.
And they aren’t just getting paid $20-million for nothing. There is a reason they get paid that much, and it is that they generate enough economic value to warrant the compensation, i.e., way more economic value than $20-million.
This discussion is veering into pure class envy. It’s pathetic.
December 22nd, 2008 at 11:37 am
Matt:
1. You need to front page that, not bury it in comments.
2. That’s incredibly depressing.
3. Palmieri did nothing to constructively deal with the situation while you were away. If you were mistaken, you should have posted a retraction, or a clarification as to specifically what you were mistaken about. Palmieri’s post did nothing to correct any false impressions about Third Way you may have made on your readers, and likely made them worse (hence, these “borderline defamatory” accusations.
4. submitting my posts to a lengthy editorial process would obviously slow down posting prohibitively
LOL! No commmment.
December 22nd, 2008 at 11:38 am
@Matt (if that is really you):
I had been mistaken about certain of Third Way’s policies and practices
Come on - this is thin to the point of transparency. Which policies and practices? Neither your post nor Jennifer’s “correction” contained any concrete, falsifiable claims about Third Way’s positions; rather, you posted a value judgment that they were “bullshit” and that the group was at best useful for marketing rather than analysis, and Jennifer decided to correct this. What’s going on here is not the correction of a factual error, and attempts on your part to pretend that’s the issue are far more damaging to your credibility than anything earlier in this saga - Jennifer’s post just made CAP & Third Way look bad.
December 22nd, 2008 at 11:38 am
FYI, the person posting as “Matthew Yglesias” isn’t actually me.
I’ve been asked by CAPAF and CAP management not to discuss internal policies or mention Third Way any further, and I’ve agreed. I’m asking my commenters to respect that too.
December 22nd, 2008 at 11:38 am
That’s bull, kid, and you know it. Back when Petey would turn every thread into a referendum on Matt’s trust-fund-scumbagdom, or when Steve Sailer would turn every thread into a discussion of how stupid black people are, Matt did nothing. He’s never cared anything about his comment section, which is regularly horrible. Right now he’s obviously scared for his job — people scared for their jobs don’t run good blogs.
December 22nd, 2008 at 11:40 am
@31–just read 26, to which i was responding.
it took no great powers of remote psychologizing to tell that 26 had a little problem, and was projecting it on m.y.
December 22nd, 2008 at 11:40 am
Since I’m kinda hoping for a serious reply, I suppose I should clarify that my “theory” in #31 was, in fact, a joke…
December 22nd, 2008 at 11:41 am
I hope and believe that #32 above isn’t really Matt.
December 22nd, 2008 at 11:41 am
I’ve been asked by CAPAF and CAP management not to discuss internal policies or mention Third Way any further, and I’ve agreed. I’m asking my commenters to respect that too.
Definitely a crap situation for everybody involved, but CAPAF, CAP, and yourself are completely delusional if you whistling past the graveyard is the appropriate way to handle this…
December 22nd, 2008 at 11:42 am
Holy shit! Matt, I feel bad for you today, but you’re gonna have to do something about this, whether through this site or someone else’s blog.
No more comments from me today. But do the right thing, bro.
December 22nd, 2008 at 11:42 am
you could be right, walt, but i doubt it. i don’t think m.y. has much to fear, nor much inclination to be fearful.
as for sailer–yes, i have long wondered about m.y.’s toleration of that cretin. but i wrote it off as just one of m.y.’s quirks. i don’t think it shows that, today, m.y. could not be sincere in his desire to keep discussions roughly on topic.
December 22nd, 2008 at 11:44 am
@37:
FYI, the person posting as “Matthew Yglesias” isn’t actually me.
I hope that’s the truth, and the other one’s the lie… but the only way for us commenters to be sure is a front-page post.
To the real Matt, wherever you are: I understand acceding to your employers’ demands in order to maintain your job - we all gotta do it - but you and they should know that when “internal” policies are editorial policies regarding published work, they are in fact public business.
December 22nd, 2008 at 11:46 am
@34, 37 and 44:
This is the real Matthew Yglesias. CAP policy requires us to post under our full names when comminting on CAP-owned blogs. “Yglesias” @37 is not the real me, and CAP management has not asked me not to comment on the matter.
But my explanation at 32 still stands, and I hope I won’t have to waste a lot of extra time dealing with the matter, when we could all be doing something more constructive.
December 22nd, 2008 at 11:47 am
@40: it took no great powers of remote psychologizing to tell that 26 had a little problem, and was projecting it on m.y.
Fair enough - but “a lot of blog-commenters” is not the appropriate way to introduce a response directed at one particular post.
December 22nd, 2008 at 11:48 am
There’s no big conspiracy or sinister machinations going on here. I had been mistaken about certain of Third Way’s policies and practices, and Jennifer Palmieri dealt with the situation in a timely and appropriate manner while I was away.
Can you tell us something about the mistaken nature of your commentary? Palmieri, after all, didn’t.
Or am I just being dense and you did, in fact, explain your error:
And by the way, the suggestion that Third Way is engaged in any improper behavior vis-a-vis their tax status is just outrageous and borderline defamatory.
December 22nd, 2008 at 11:52 am
Why on earth blog software doesn’t automatically lock out any pseudonym that is any variation on the owner’s name is beyond me.
Cranky
December 22nd, 2008 at 11:53 am
I think we need to double the estimated about of money going to bailed out bank executives etc., or heck, triple it, and take all that out of the evil UAW’s salaries and benefits so as to prove we’re not class envious.
December 22nd, 2008 at 11:57 am
One problem I see with (dare I say this?) a purpose-driven bail-out is that neither Bush nor Obama administrations have anybody to do it with. The ruling elite of both parties today are no more than credentialed buzz-word pushers, lawyers, soothsayers, and what the military calls clever briefers.
So, we do not have French-type bureaucracies with the robust, professional, or even patriotic staff and line officers who can formulate and execute plans, devise or apply accounting and technical standards.
Who can can an Obama or even a Stiglitz find to manage anything but an entourage of personal and household of executive assistants.
So, let’s say we go the “structured bankruptcy” route with the B3/UAW, for example.
Who could come up with an approach to complex engineering, manufacturing, and logistical problems that would render these firms competitive with their domestic competition at comparable marginal wages and rates of international, federal, state, and local government subsidy or protection?
Are these firms and their domestic competitors now to be rigorously optimized for a green economy? Or, will the failed firms just be nursed back into the discriminatory pricing, predatory lending, pornographic advertising, and bi-partisan concession-tending regime we call a “market”?
Who could prise apart the two embedded financial institutions (the UAW pension fund + B3 finance arms) both of which are subject to much the same pervasive Ponzi-type accounting and instruments as the rest of crony capitalism? How can anyone manage any real enterprise, when government, including both of the political parties, clearly prefer connected scams like Enron or Madoff and protect prestigious con artistry like Citibank and Goldman Sachs?
New cronies? More “inclusive” cronies? Better, faster, cheaper cronyism? Is that all the new administration will have on offer?
Folks, “hope is not a plan.” Actually, a “deal” is not a plan either. And, if “change” turns out to be just another round of mushy, complex, unctious deals, between Washington lobbies and policy peddlers, we may get another “cascade failure-mode”.
When we went to the moon, we had a plan, an old 1920’s German plan, the same one the Russians had, actually. We got there using “make or buy” contract negotiation, “march-in” contract provisions, and RDT&E protocol. Actually, the Russians gave up, but made some progress: We still use two important and unique technical break-throughs they made.
We managed risk, but we could not avoid it. In any case, we did not use the term risk to disguise charlatanism, looting, or jingoism. Our version of the constitution and even the Armed Forces Procurement Regulations did not have a “Hold Harmless” clause. We could not disguise failure.
December 22nd, 2008 at 12:06 pm
Matt,
I actually feel for you and understand the situation you’ve been placed in. That said, I really think you should consider union representation. For starters, CAP cant actually stop you for fear of looking illegitimate, and while a union cant stop them from interfering editorially, it would create work rules that could eliminate the use of such heavy handed tactics that cause unnecessary humiliation and undermine a writer’s ability to work properly. Currently, CAP has neutered your credibility by making your posts suspect and seem dependent upon agreement with higher-ups -not necessarily your own making.
Seriously, consider it. It may just save your blog.
December 22nd, 2008 at 12:15 pm
Wait, Im a bit confused about who is the real Yglesias. If it’s the guy who said:
I truly do feel sorry. This person is reveling in the ability to suck at the teet of power. Forget it. I dont think you need a union after all.
December 23rd, 2008 at 1:15 am
Uh, Bush and Paulson don’t really have a free market ideology, or they wouldn’t have done the bailout. They’re into going against the free market to somehow save the free market.
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