My biggest question about the economic crisis? What is the government going to do to prevent all of the bail out money (tax payers money) from going to pay for large bonuses and extravagant corporate “conferences”?
While the government can attempt to force companies to not give the huge bonuses if they have received a portion of the cash, they are very limited in what they can actually accomplish. Federal Reserve Chairman Ben Bernake tried to fight against AIG’s $165 million in bonuses to the sector of the business that caused the insurers troubles. If fact, he wanted to sure them to force them to stop the bonuses, but was warned against that by legal council because of a Connecticut State law that would allow those losing the bonuses to get even more in punitive damages than the value of the bonuses. The article on Fox News that this information comes from also mentions a new tax being enforced on these bonuses (up to 90%). Only 15 of the employees who received bonuses agreed to return them in full (this amounted to about $50 million).
President Obama also took a stand on costly “business conferences” that many businesses pay to attend or host. These conferences are held in leisure areas (Sunny Florida anyone? How about a nice party in Vegas?). Although Obama meant exuberant vacation-like trips being taken to these areas and paid for by the corporation, there was an uproar about his comments. Oscar Goodman, the mayor of Las Vegas, is certain that Obama’s nay says on LV conferences will damage the cities economy. I was in Las Vegas recently, it doesn’t seem to be over crowded with suits, mostly tourists looking for a good time. What Obama meant with these statements was that he did not want companies who were receiving bail out money to forget where it came from when they spend it. He doesn’t want the tax payer’s money to be funding someone else’s good time.
The greed of corporate America is irritating to me. There is a huge difference between living comfortably and living extravagantly. Many bankrupt businesses got that way because of the extravagant lifestyles of the employees (how about throwback to Enron… nobody knew how to spend money on things that had nothing to do with the business like they did). For one, no company who is asking for financial help should take transportation that costs $20,000 per flight (CEOs from GM, Chrysler and Ford each took their own private jet to be in attendance at the same senate meeting where they were asking for $25 billion for their companies). It makes me even more angry that the government cannot actually stop this from happening. I fear that the bailout money which is supposed to be used to restructure businesses will continue to be used to feed the greed of corporate America.