Taking care of business

Good news for taxpayers.  Remember all those giant banks you saved from bankruptcy recently?  The ones that had been paying their incompetent executives billions in bonuses?  It turns out the banks hadn’t actually paid all the bonuses yet.  They still have the cash.  Whew.

A lot of it was deferred compensation, an unsecured liability on banks’ balance sheets.  It would have been worth zero to the executives in bankruptcy proceedings, so that saves taxpayers a ton of money.

Not.  According to the Wall Street Journal.  Although the government sought to prevent golden parachutes and rein in executive pay at banks getting federal money, they overlooked…

…the total size of debts that financial firms… previously incurred to their executives, which at some firms exceed what they owe in pensions to their entire work forces.

I doubt that these billions were overlooked by the executives because, as we know, paying themselves is Job One.  That’s minding the store.  However, it may have been overlooked by the government and the media because…ummmm… the executives try to hide it.  As the WSJ reports

“Few firms report the size of these debts… .  In most cases, the Journal calculated them by extrapolating from figures that the firms do have to disclose.”

The chutzpah of these guys is pretty startling. For example, although J. P. Morgan received $25 billion from the government, it will pay deferred bonuses to its executives AND to Washington Mutual executives.  Washington Mutual you may recall was taken over by the government in the largest bank failure in US history.  The government stripped out the bank assets, sold them to J. P. Morgan, and left the stockholders and anyone holding unsecured debt with nothing.

Everyone, that is, except the executives.


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