Wednesday, February 4, 2009

Who Knew Bankers Were This Stupid?

Who Knew Bankers Were This Stupid?

By Eugene Robinson

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Earth to Wall Street: It’s over, people. You had a terrific run, better than you deserved, but now you’d be wise to pay attention to those citizens outside, the ones with the pitchforks and the torches.

Sen. Claire McCaskill’s righteous verdict on shameless, clueless, bonus-grubbing executives should be carved on the tombstone of the whole “Masters of the Universe” ethos that brought us to this moment of dire economic peril: “These people are idiots.”

The Democrat from Missouri was ranting for the nation last week when she took to the floor of the Senate to denounce the reported $18.4 billion in year-end bonuses that Wall Street awarded itself—a pat on the back for such total, abject failure that taxpayers have had to shell out nearly a trillion dollars in emergency bailout funds. So far.

On the subject of Merrill Lynch, which traditionally pays its bonuses in January, McCaskill was white-hot: “You know what these sneaky guys did? They decided to give their bonuses in December, before the Bank of America took over. [They] paid out three to four billion dollars in bonuses in December, and that quarter Merrill Lynch lost $21 billion. What planet are these people on? What could they be thinking about?”

Themselves, would be my guess.

McCaskill introduced a bill to limit compensation at any company receiving bailout money to $400,000—the salary of the president of the United States. It’s hard to improve on her words: “We should have done it in the first place. But I don’t think any of us thought these guys were this stupid. I don’t think any of us believed that they would take billions of dollars in bonuses while their institutions were literally days from being wiped out. But they did. And we’ve learned our lesson.”

To the weasels, I mean executives: “Those who expect to reap the blessings of freedom, must, like men, undergo the fatigues of supporting it.” No, wait, that’s from Thomas Paine, not Claire McCaskill.

Republican Sen. Charles Grassley of Iowa called on President Obama to “pull back” the bonuses paid by firms that received bailout money. I can’t help but imagine a fleet of government tow trucks “pulling back” a bunch of brand-new BMWs to an impoundment lot.

The offending bonus payments suggest that Wall Street utterly fails to comprehend how its standing in the nation and the world has changed. As long as the Masters of the Universe kept producing wealth with their mumbo jumbo about collateralized debt obligations and credit-default swaps, we mortals were willing to tolerate their preening excesses. But it turned out that they were generating only the illusion of wealth—and that the mumbo jumbo was as nonsensical as it sounded. Ordinary Americans are now paying with their jobs, their homes, their mental and physical health. Respected economists are talking about the worst crisis since the Great Depression. And Wall Street has the gall to break out the champagne?

Things have changed. No longer does it seem reasonable—if it ever did—that the average CEO makes 344 times as much as the average worker, as estimated last August by the Institute for Policy Studies and the nonprofit group United for a Fair Economy. No longer does it seem acceptable that John Thain, the since-ousted Merrill Lynch chief who ordered those accelerated bonuses that so irked McCaskill, would spend $1.2 million of his fast-sinking firm’s money to redecorate his office—and then, with Merrill’s losses being revealed as even greater than feared, request a bonus of up to $10 million for himself.

No longer does it make any sense to reward those who work in the financial industry so lavishly, compared to the way we compensate those who, say, build tractors or write software or teach our children. Salaries should be reasonable, and bonuses—much more modest ones—should be reserved for those who actually, you know, make money. If some of Wall Street’s vaunted “talent” balks and flees, terrific. It was “talent” that got us here.

Maybe some in the industry feel fully entitled to their customary wheelbarrow of cash in a year when the stock market lost about 40 percent of its value. The people with the pitchforks and the torches beg to differ. Idiots is among the milder epithets being tossed around these days. It would be in Wall Street’s interest to get with the new program before the villagers come any closer to the castle.

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