Friday, March 21, 2008


Yes, class warfare -- nice to see the editorial page of The New York Times engaging in some:

The ongoing bailout of the financial system by the Federal Reserve underscores the extent to which financial barons socialize the costs of private bets gone bad. Not a week goes by that the Fed doesn't inaugurate a new way to provide liquidity -- meaning money -- to the financial system. Bear Stearns isn't enormous. It doesn't take deposits from the public. Yet the Fed believed that letting it implode could unleash a domino effect among other banks, and the Fed provided a $30 billion guarantee for JPMorgan to snap it up.

Compared to the cold shoulder given to struggling homeowners, the cash and attention lavished by the government on the nation's financial titans provides telling insight into the priorities of the Bush administration.... if the objective is to encourage prudent banking and keep Wall Street's wizards from periodically driving financial markets over the cliff, it is imperative to devise a remuneration system for bankers that puts more of their skin in the game.

You know those angry white working-class folks we've been talking about so much this week? I just want to point out that if their forebears -- and I mean that literally in many cases, their grandparents and great-grandparents -- were around today, this is one of the main things they'd be angry about.

More from the editorial:

Financiers, of course, dispute that they are being insufficiently penalized. "I received no bonus for 2007, no severance pay, no golden parachute,” E. Stanley O'Neal, the former chief executive of Merrill Lynch, told a House committee recently. That doesn't seem like much of a blow to Mr. O'Neal, who was removed earlier this year following gargantuan subprime-related losses.

True, though, alas, we're not told that while O'Neal technically didn't receive a bonus, severance, or golden parachute, he was allowed to "retire" rather than resign, which meant he could leave Merrill with $161.5 million in securities and retirement funds that he might otherwise have had to give up.

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