Should We Really Cap Executive Salaries at Bailed-Out Companies?
- The federal government owns part of these banks now as part of the bailout deal. It gets to have some meaningful say in who gets paid what.
This is a myth followed by a lie.
The federal government produces exactly nothing. The money it gives out must be taken from somewhere else.
So far, funding for the credit market bailout has been generated by the sale of treasury securities, purchased by a tiny subset of Americans and some foreign countries. The notion that the federal government should be dictating anything to these banks on that basis is ludicrous on its face.
Furthermore, the initial credit market bailout distribution has so far been completely INEFFECTIVE at freeing up credit. This was obviously, in retrospect, by design: the government wished to get its hooks into as many banks as possible, irrespective of whether or not any given bank would be in a position to lend money after its toxic assets were covered.
The problem is that many (most?) of the banks and credit firms in which the government now claims a “stake” don’t have the deposits on hand necessary to make loans. As well, they are using the bailout funds to essentially shore up their balance sheets. So while billions of $$ was pumped into these institutions, very little of it has actually been released into the economy. That explains why inflation is still nonexistent despite the government printing money (essentially) as fast as it did.
This is yet another in a long list of examples of how “spreading the wealth around” (indiscriminately) DOES NOT WORK. Capping executives’ salaries based on the false premise that it does is the height of mendacity… as well as hypocrisy, coming as it does from an ineffective career politician who’s never held a successful executive position in his entire life.
