If I were a Treasury Official, I would insist on seeing each and every contract with a bonus in it, so I could examine the enforceability of the terms. If I found that the obligations were created after the company was in trouble, I would turn the case over to the Justice Department for prosecution for fraud.
What makes me the maddest about the whole bonus situation is the insistence that the self-dealing contracts the management of the firms crafted for themselves must be enforced at all costs. The proper posture here is to cite changes in circumstances (the unforeseen collapse and taxpayer bailout), refuse to pay, and let the executives sue you. These firms make choices all the time about litigating contracts. Their statements that there’s nothing to be done about these bonuses is simple BS. The leadership of these firms has the ability to put the burden of enforcement onto the managers who “need” these bonuses so badly, rather than on the taxpayers.
Finally, I know the argument is that these are “retention” bonuses. But where the !@# are these bankers who wrecked the economy going to go? Personally, I say good riddance-we need a lot of new skill, new leadership, and new people to get this ship righted.
“First, if I were a Congressperson, I would introduce a bill today that would tax at a rate of 100% any bonus paid by any company receiving federal bailout money.”
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p>That is the best idea I’ve heard since a pocket on a shirt!
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p>Admiringly,
Chuck
Link.