Senior members of the Administration were out in force on the Sunday TV talk shows to criticize the multi-million bonuses that many Wall St. bankers will get this year. Executives at companies that still owe the government money under the TARP program will have their compensation restricted by the Treasury. The rest of the largest banks and investment houses will be able to pay their best people as they choose.
The primary problem the Administration has with bankers is not that they are well paid, but that they take high compensation without helping the economy. David Axelrod, a senior White House advisor said, “The most offensive thing is, we haven’t seen the kind of increase in lending that … we should. There are a lot of small businesses, creditworthy businesses around this country who still can’t get the capital they need to grow, which is important for our economy.”
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Of course, Congress and the Administration are not going to help the banks with loan losses so that they will take lending risks that they feel are imprudent as part of an effort to help the economy recover. And, that would have to be the quid pro quo. The government pays off bank losses and in exchange has some say over banker pay.
The government does not have the tens of billions of dollars to make enough difference by making loans to consumers and small businesses through the banks. The deficit is too high.
Bankers will get their bonuses this year and year after year into the future. They are making money for their companies and their shareholders. Fixing the economy is not a part of their charters.
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Executive Producer: Philip MacDonald
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