Posted on 10/05/2008 6:18:18 AM PDT by Daffynition
Fears are mounting that many Wall Street banks and financial firms will refuse to participate in the US government's $700bn bail-out package, leaving global markets and world economies in a perilous state for months to come.
'There is a growing feeling that banks ... might instead decide to tough it out,' said Thomas Caldwell, chairman and CEO of Caldwell Financial, a $1bn-plus fund manager.
For the past two weeks all eyes in the market have been focused on US Congress and its attempts to pass Treasury Secretary Henry Paulson's bail-out package - a bill to allow the US government to buy up to $700bn of toxic mortgage-related assets from American banks, which would in theory free the credit markets and set the gears of global commerce spinning once more.
Last Monday, after the bill was thrown out by the House of Representatives, more than $1 trillion was wiped off the value of US stocks as the market was gripped by panic. The bill was passed on Friday afternoon, however, after the inclusion of $149bn of tax breaks and strict rules for participating banks.
But Wall Street analysts, believe the addition of so many terms to the bill might deter potential participants.
One of the least attractive elements is a section designed to curb executive pay at banks that participate in the bail-out package. These include limiting stock-related pay and banning 'golden parachutes' for executives.
'I think this hodge-podge of regulations and rules will be enough to put many [chief executives] off participating,' Caldwell said.
[snip]
(Excerpt) Read more at guardian.co.uk ...
Greed all the way to the end. They would rather tank their bank to get their $25 mil severance than take the bailout.
Yes, a given. OTOH, the government running anything, including this bailout, ends up in a disaster. Neither Wall St or Main St need another leviathan.
And John McCain supported this crap!! “Maverick” my @ss
I'll second that!
this makes more sense to me
McCain was hosed either way. If he voted against it, the economy is going to sink either way (it remains to be seen whether the bailout will delay such, or even if we will be able to tell), and the media would have crucified him for opposing the bailout.
"Well chap, keep a stiff upper lip."
The option is McCain or “Obambi”. Not a great choice but a very clear one.
The forward-thinking financial firms need to make major personnel cuts and business realignments to restructure for the future. Not taking the bailout funds will make this easier.
The bailout funds will go to the institutions that are on the verge of going out of business and have nothing to lose with the strings that are attached.
What a surprise. Businesses refusing to participate in this socialist scam.
I’ve got no problem with banks refusing bailouts when they make sense. But CEOs have raked in the pay as their banks went south. They need to look at what matters for their bank and for the larger economy and screw their severance.
I have no clue what reality is with this economic mess but I have been intriged by Newt and others who say that the banks that created this mess should be allowed to fail because capitalism allows for failure as much as for success. Wouldn’t it be hilarious if the sheeple said “enough” and businesses said “enough” -—and Congress got completely sidelined!! That would be just gleeful. Take our government back!!!!
The bit about the parachutes doesn’t surprise me. Remember, when Paulson originally put forth the bill he said that he didn’t think the banks would sign on if limiting execs pay was part of it. The House Republicans stripped it out anyway...and it looks like Paulson knew the ilk of the weasels on Wall Street...maybe because he “are one.”
Sure. Now that this crowd knows the Government can be so easily rolled, why not hold out for 2X, 3X,...., heck 5X the $700B figure? And without strings! As a CEO, the inability to have golden parachutes at the ready is downright offensive.
Its just a matter of time till they are back for more—though they probably have the good sense to wait till after the Election.
Sorry, this doesn’t wash with me.
Economist and professor Donald Boudreaux wrote a delightful comeback to this charge on the Cafe Hayek blog:
Saying that “greed” caused today’s problems is like saying that gravity caused the death of someone pushed from the top floor of the Empire State building. Some things are sufficiently constant in human affairs - and self-interest, even greed, is among them - that they explain nothing.
see:
Two words: Hobson's choice :)
But fortunately those two aren't the only options.
IF some of these guys can steer their banks back to honest (not faked) profitability using free markets instead of govt handouts- then they deserve big compensation.
Its called “capitalism!” Guess they may have finally waked up and realized they can’t remain real capitalists without real capital!
Let's see do I step in horse manure or on a dead skunk. Yep, not a 'great' choice at all.
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