Money: still fungible

I don't have a huge amount of sympathy for complaints about how much bankers get paid. It is nonetheless annoying to see bankers make extremely silly arguments in defense of how much they are getting paid. And this article in the New York Times contains much silliness. The story about how "a senior Morgan Stanley executive admonished his employees to call the payments 'retention awards'" and not bonuses is distasteful, but only in the sense that Bill Clinton's testimony about Monica Lewinsky was distasteful. This second argument in defense of bonuses is, however, crazy:

James Wiggins, a Morgan Stanley spokesman, said that such payments were necessary and would come out of operating revenue, not government bailout funds.

Some of the CEOs testifying before Congress yesterday tried this one too: "Sure, we took the bailout and we awarded bonuses, but the two pots of money are distinct." And the problem with this argument is that money is fungible: A dollar of bailout funding is a perfect substitute for a dollar of operating revenue. The two pots of money are in no sense distinct.