Reader Scott Barlow, a financial services manager, writes:
I can't believe I'm typing this but the $18 billion in bonuses paid to Wall Street executives makes the industry almost completely analogous to US automakers. Both are dependent on government largesse to create an artificial microeconomic environment mimicking a previous era - the 1970s for the Big 3 and the decade ending mid-2007 for finance. Moreover, the points of similarity extend to an unconflicted sense of entitlement that this be so.
I write business every day and I doubt that I have ever written anything more difficult and repellent to my (maybe previous) sensibilities than that. God is dead and I hate this.
Wall Street faced two issues with bonuses, one legitimate, one less so. The legitimate issue is that Wall Street bonuses aren't entirely "bonus"--in fact, some of it is deferred compensation, which employees depend on. A sudden interruption in this income could put a lot of employees into very bad straits.
The second is that not everyone lost money--and the people who didn't don't feel like having their bonuses dragged down by the morons in structured finance and the mortgage desk. I am, of course, sympathetic to their plight--but not sympathetic to their belief that the US taxpayer should therefore take over responsibility for their annual jaunt to Gstaad. If you don't want to share the fate of the other departments, you should go out on your own--and accept that when you have a bad year, there won't be other divisions around to smooth your consumption. Or, I don't know, ask your senior management to pay some attention to what the other folks at the firm are doing.
My feeling is that TARP should have made some provision to pay the portion of the bonuses that is simply deferred compensation (though not for very top management, who might just have to dip into their tens of millions of dollars worth of capital). But it should never have let people get away with funneling that kind of bonus money out the door.