Monday, January 11, 2010

Want to know where your TARP $$'s go?

Simon Johnson at Baseline Scenario, says one of the reasons banks claim they should be able to pay huge bonuses is:
Big banks made these profits fair-and-square, so the bonuses belong to the workforce.  
Simon rebuts that by writing:
This is wrong at two levels (a) the profits in 2009 (and 2008) were solely the result of massive government intervention, designed at saving and recapitalizing big banks, and (b) the recapitalization part of that strategy only works if the profits generated are retained - not if they are paid out.
That TARP money was supposed to go to banks to make sure they didn't fail. That money was supposed to be added to their capital reserves, so that they could continue lending to businesses.

What are they doing with it instead? Paying their executives multi-million dollar bonuses. Because you have to have some real talent to make money when it's being given to you.

I hope this angers you as much as it does me. Read the rest here.

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