(For those who are unaware: AIG the Insurance Giant which went bankupt recently and received billions of dollars in Federal bailout cash - awarded bonuses of 165 million to the same traders who were partly to blame for its financial demise.)
The solution - pass a law retrospective - which stipulates that such awards/golden handshakes/ payouts to all traders/bankers - have to meet the approval of a Federal inspector. They can't be given for no reason either. Obviously they have had to do something profitable to have earned it. If all else fails - subject such bonuses to a 99.99% tax. Yeah, go ahead - make my day.
I think the only way forward for the AIG and the rest of the corporate world - is to issue licenses and score cards to all financial operatives - bankers, accountants, traders, dealers etc.. These licenses and report cards have to show their track record. And it should be listed in a public data base which anyone can access. The Federal Govt should also have the ability to refuse the license of the financial operative if he screws up big time or has committed some crime - like insider trading etc..
6 comments:
they have that right, its commonly a banking license. can be removed by APRA if required, although they are not likely to do so for fear of the financial panic and fallout going through the economy. I'm sure insurance would have similar controls.
Not the institution - the people who run it. The bankers/traders/workers don't give a rats arse about the institution - only their bonuses and cash payouts; then they are off into the sunset. The govt needs to go after the individuals not the organization.
I had a heated argument with a friend over this. His point of view is that, the rich don't give a rat's ass about the poor, they are above the circumstances and they have their reasons for giving out these big bonuses, no matter how ridiculous they may be. And who are we, as citizens of a rapidly developing country with sufficient creature comforts and a far cry from the slums of India and refugee camps of Darfur, to criticize and judge these corporations and top management for their behaviour? According to him, we should not apply our set of morals and principles to these individuals.
As I reflected on his words, the fact that bonuses are given based on performance has slipped out of the picture. The age-old adage that a man shall reap what he sows does not apply anymore. It is sickening to see people who are responsible for the economic crisis to be still reaping the spoils - rather, aids. It's almost as good as saying, look we know you guys screwed up. Here's a little something to help you. Oh, and for those who did screw up, here's a token of appreciation for not screwing up worse.
I've got a better solution. Read the next blog message.
Thats the whole point of a corporation though... The government cannot legally pursue the individuals involved. This makes exploiting these rules easy. The only thing that could fix this (without a change in law, which is never going to happen) is for company leaders to be uncorrupt and set against such action (which to be honest, is almost as imoprobable).
We are what we make it. The rule of law is ever changing. And at issue is the need to target the culture behind the corporations. A long time ago - a man's first job, his first company - was the only job and company he ever had. Now we have a very mobile working culture. It also wasn't so long ago that the idea of executives earning million dollar salaries was unthinkable. The recent phenomenon of multi-million dollar salaries and bonuses (regardless of performance) is quite recent. Its the governments job to target the working culture and curb these excesses.
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