From “Outside The Ivory Tower”, by Dr. Susanne Trimbath
New York State Attorney General Andrew Cuomo released a new report on bonuses paid to the employees of nine recipients of the TARP bailout money. He called it “The ‘Heads I Win, Tails You Lose’ Bank Bonus Culture.” AG Cuomo concluded that even “in these challenging economics times, compensation for bank employees has become unmoored from the banks’ financial performance.” The report is only about banks, of course, since all the investment banks and brokerage firms changed their status to “bank” to become eligible for TARP bailout money.
Despite the hue and cry of the public, these bonuses have continued. In my view they will continue. Although we may think that sticking labels on the banks behavior, or asking Congress to enforce some discipline, will make a difference, it is unlikely to change anything. After the early 2009 bonuses were revealed, the banks claimed that the bonuses were required by contracts and could not be broken without violating the rule of law. They got away with this claim even as contracts with the United Auto Workers were being revised. Therefore, I offer you this modern fable, with a tip of the hat to Joel Chandler Harris. [entire post]