Bailouts Gone Wild
That’s the best headline I could come up with for all this nonsense coming across the wires concerning Washington’s handout, I mean, bailout. From the Associated Press’ Frank Bass and Rita Beamish this past weekend:
Banks that are getting taxpayer bailouts awarded their top executives nearly $1.6 billion in salaries, bonuses, and other benefits last year, an Associated Press analysis reveals.
The rewards came even at banks where poor results last year foretold the economic crisis that sent them to Washington for a government rescue. Some trimmed their executive compensation due to lagging bank performance, but still forked over multimillion-dollar executive pay packages.
Benefits included cash bonuses, stock options, personal use of company jets and chauffeurs, home security, country club memberships and professional money management, the AP review of federal securities documents found.
The total amount given to nearly 600 executives would cover bailout costs for many of the 116 banks that have so far accepted tax dollars to boost their bottom lines…
I was curious to find out more about these “benefits.” Bass and Beamish dished out the goods:
Banks that got bailout funds also paid out millions for home security systems, private chauffeured cars, and club dues. Some banks even paid for financial advisers. Wells Fargo of San Francisco, which took $25 billion in taxpayer bailout money, gave its top executives up to $20,000 each to pay personal financial planners.
At Bank of New York Mellon Corp., chief executive Robert P. Kelly’s stipend for financial planning services came to $66,748, on top of his $975,000 salary and $7.5 million bonus. His car and driver cost $178,879. Kelly also received $846,000 in relocation expenses, including help selling his home in Pittsburgh and purchasing one in Manhattan, the company said.
Goldman Sachs’ tab for leased cars and drivers ran as high as $233,000 per executive. The firm told its shareholders this year that financial counseling and chauffeurs are important in giving executives more time to focus on their jobs.
JPMorgan Chase chairman James Dimon ran up a $211,182 private jet travel tab last year when his family lived in Chicago and he was commuting to New York. The company got $25 billion in bailout funds.
Not to be outdone by his AP colleagues, Matt Apuzzo dug up more disturbing material on the Great American Giveaway. He wrote yesterday:
It’s something any bank would demand to know before handing out a loan: Where’s the money going?
But after receiving billions in aid from U.S. taxpayers, the nation’s largest banks say they can’t track exactly how they’re spending the money or they simply refuse to discuss it.
“We’ve lent some of it. We’ve not lent some of it. We’ve not given any accounting of, ‘Here’s how we’re doing it,’” said Thomas Kelly, a spokesman for JPMorgan Chase, which received $25 billion in emergency bailout money. “We have not disclosed that to the public. We’re declining to.”
Apuzzo added:
The Associated Press contacted 21 banks that received at least $1 billion in government money and asked four questions: How much has been spent? What was it spent on? How much is being held in savings, and what’s the plan for the rest?
None of the banks provided specific answers.
Kind of reminds me of that scene from “Monty Python and the Holy Grail” when King Arthur and his men come across a castle with its French guards, and ask to see their grail:
ARTHUR: Well, um, can we come up and have a look?
GUARD: Of course not! You are English types-a!
ARTHUR: Well, what are you then?
GUARD: I’m French! Why do think I have this outrageous accent, you silly king!
GALAHAD: What are you doing in England?
GUARD: Mind your own business!
ARTHUR: If you will not show us the Grail, we shall take your castle by force!
GUARD: You don’t frighten us, English pig-dogs! Go and boil your bottoms, sons of a silly person. I blow my nose at you, so-called Arthur-king, you and all your silly English kaniggets… now go away or I shall taunt you a second time-a!
Best-of-show has to go to AP writer Christopher S. Rugaber for his piece from earlier today. He wrote:
Meanwhile, financial industry groups are pushing to use the bailout fund to help a wider array of companies, including automotive financing companies such as GMAC Financial Services. GMAC is 51 percent owned by Cerberus Capital Management LP, a private equity firm; General Motors owns the rest.
GMAC, which provides financing for GM vehicle and dealer loans along with home mortgages, is having trouble finding adequate support from its bondholders for a debt transaction that would allow it to become a bank holding company and gain eligibility for bailout money.
Commercial real estate developers said Monday they also are petitioning the government for support from the $700 billion rescue fund. The Real Estate Roundtable said an estimated $400 billion of commercial real estate mortgages will come due by the end of 2009 without adequate refinancing options.
Industry officials said thousands of office buildings, hotels, shopping centers and other commercial buildings could be headed into foreclosure or bankruptcy unless the government provides support.
The madness continues…
Sources:
“AP study finds $1.6B went to bailed-out bank execs”
Frank Bass, Rita Beamish
Associated Press, December 21, 2008
“Where’d the bailout money go? Shhhh, it’s a secret”
Matt Apuzzo
Associated Press, December 22, 2008
“More companies lining up for piece of bailout fund”
Christopher S. Rugaber
Associated Press, December 23, 2008
December 24th, 2008 at 1:51 am
So, where were those riots people were predicting? Hm, guess Americans can only expend energy at sporting events. Once again, I refer you to the Clash’s “White Riot” for a portrait of working class inertia and why things never change.
December 24th, 2008 at 8:32 am
Thanks for the comment Days.
“So, where were those riots people were predicting?”
While I hope it doesn’t come to that, my gut feeling tells me it will. That being said, I believe the situation is still in the early innings, if you know what I mean.