Wednesday, November 12, 2008

Bailout Plan Shifts

I am caught between anger and grudging acceptance at reports that the Bush administration is already abandoning its plans to buy up bad loans at troubled institutions. Now, it plans to continue targeted investment in banks, and is expanding to invest into non-bank financial services institutions like credit card companies.

http://money.cnn.com/2008/11/12/news/economy/paulson/index.htm

On the one hand, I feel lied to because the very plan put forth as "extreme measures for an extreme situation" is already being abandoned. On the other hand, I am glad that the administration is not waiting on Congress to explicitly authorize each move they want to make.

Overall, I feel that the administration still has no idea how to deal with the economy. They look more and more like a teenager trying furiously to look busy, while watching for the moment they can dash out and make the disaster they caused into someone else's problem.

4 comments:

shadowmom1 said...

When they dole out the money, they MUST make it a condition that none of it can go to bonuses for employees. I feel so ripped off when AIG or others give the execs multi-million bonuses for ruining the company, and it is MY MONEY they are giving them. The government should have some say in where the money is allowed to go.

They also need to stop giving money to banks until the banks start moving it into the economy by giving loans to qualified buyers.

Nomad said...

Maybe it is because I work in a Bank, but I can understand the issue for many. If you are struggling to save a business, is it right to make it impossible to bring in the best people, because you can't pay for them? Do we want only mediocre minds trying to save great American companies?

At the same time, companies need to be smart and realize unless they reign in themselves, soon the Federal Government will simply TAKE what they need to reign them in. Full nationalization of a major bank or insurance company is not impossible... and would make it much easier for incoming Democrats to accomplish universal health care.

shadowmom1 said...

These execs already make high salaries. They can live on that until this mess is over!

Nomad said...

Shadowmom,

Don't think of it for EXISTING execs. Think if you are an experienced, skilled Exec who a troubled bank wants to hire to save them. You can go to Bank A who accepted bailout money, but who then will only pay you $100K, or you can go to Bank B who did not who can pay you $15M (with bonuses) if you succeed. Which bank do you go to work for? Which bank suddenly may be doomed to failure?

That is the argument AGAINST limits on salaries/bonuses. Take it or leave it.

- Nomad