I don’t believe in coincidence, so as more and more comes to light about the use of TARP monies to pay bonuses to people who failed to do their job properly in the first place, it sure seems as if someone knew what they were doing when they came up with the acronym.
But, like a big, blue, plastic tarp, this one can also be lifted so folks can peer at what’s hidden underneath. And so far, though not really surprisingly, what it’s hiding ain’t a pretty sight.
We’re seeing nonstop, outraged news stories about AIG all over the media and today a televised Senate hearing with Edward Liddy, the CEO of AIG telling a House Financial Services subcommittee what’s being done about these abuses of taxpayer money and trust. The anger of those questioning him is almost believable – except when you remember that most voted for TARP and it included these bonus provisions. And it wasn’t some mysterious surprise to the administration, either. Something I’m sure they’d all very much like to keep under under cover.
The AP is reporting today that Fannie Mae is also paying out retention bonuses with TARP monies, and Freddie Mac isn’t far behind in paying them out, too. The federal regulators think it’s a jolly good idea because this is all about “human assets”; no weasel words as yet from the administration, of course. But lots of other folks are beginning to notice.
In contrast, Hewlett Packard, listed at #14 on the Fortune 500’s 2008 list and reporting first quarter net profits of $1.9 billion, is slashing salaries but apparently not slashing executive bonuses. Hardest hit – with a sum total 15% pay cut coming for U.S. and Puerto Rican employees in the month of April – are the “human assets” of recently acquired Electronic Data Systems (EDS), that quiet innovator in information technology services where people are the company’s primary resource.
Sure, in all cases shareholders deserve a decent return on their investment. But I have to ask, now one voice among a growing chorus, just how much is enough? When it is the employees who sweat and labor (salaried folks working overtime without pay) to manifest and to validate a company’s reputation, aren’t they considered a stakeholder in the company and worth more, really, than someone who simply tosses the appropriate weasel words at analysts and the media? How do executives justify multi-million dollar bonuses when that money comes directly out of the paychecks of the company’s employees or, in the case of AIG and Fanny Mae and Freddy Mac, out of the pockets of tax-paying citizens?
I don’t believe this bonus problem is solved by unions – we don’t need another bloodsucking leach pulling money from our paychecks just so they can use it to romp around looking important – but when most “little people” invest in mutual funds and 401ks, perhaps it would behoove them to choose to invest in companies that are run in some semblance of fairness to all parts of it. Perhaps it is time that the small investor consider how they would feel if their paycheck was being reduced simply in order to give it to the shareholders and executives, even when the company was turning a profit. I’m guessing that the majority of them would consider such a situation unfair and so choose to not invest in that company. If they are given the opportunity, perhaps they should read the voting ballots sent to them for the boards of directors of companies in which they own stock and look at it as if they were the owner of that company (which they are) and don’t let someone cast their vote in proxy when all it’s doing is perpetuating unfairness.
This – not government handouts – is the ground zero change that must take place. A shift in the collective mindset. Not just tossing the Congress critters who demonstrate so aptly the corrupting influence of power, but also tossing out anyone in any business who shows the same greedy stripes. Level the playing field a little bit, so to speak, starting from the ground up both by investing wisely in companies who make their profits by being fair to all and by voting at the ballot box.
Nice writing. You are on my RSS reader now so I can read more from you down the road.
Allen Taylor