Flying shoe-dodger, President George W. Bush, has a track record of rewarding the guilty. After the faked intelligence that gave him the ammunition he needed to invade Iraq in 2004, Bush awarded a Presidential Medal of Freedom to CIA Director George "Slam Dunk" Tenet. And to reward the banks that got us into the current financial catastrophe, Bush rammed through Congress a bill that uses $700 billion of our tax dollars to pay bonuses to the executives who run those banks.
How did he do that? As usual, he did it secretively. The law that created the bailout bill includes provisions that limit executive compensation for banks that get bailout money. Specifically, the bill requires that banks report to the IRS any compensation above $500,000 paid to their top five executives. If that reporting does not occur, the IRS can impose tax penalties. Not only that, but there is no limit to what people below the top five can get paid -- so there never was any way to keep taxpayer money from paying millions to the traders and investment bankers who often get more than the CEO.
The key loophole in Bush's law is that this IRS reporting requirement only applies to banks that sell bad assets to the Troubled Assets Recovery Program (TARP). But that was TARP 1.0 -- the reverse auction program to save us from heavenly retribution. We're now at TARP 4.0 -- buying securities backed by credit card receivables. Since TARP was never used to buy assets from banks, even though that is how Hank Paulson sold it, the IRS reporting provision does not apply.
This means that there is no way to limit how much of your tax dollars go to pay $20 billion worth of Wall Street bonuses. And that's a slam dunk.
Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.
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Reader Comments (Page 1 of 1)
12-15-2008 @ 10:41AM
Jared said...
Each one of these articles you publish is another Bush-bashing article. I'm bored...write something I don't know. You must get your jollies off by writing everything bad about Bush. Fade everything written by Peter Cohen!
12-15-2008 @ 10:42AM
Chris said...
It's not really 700 billion of your tax dollars. It's worse. It's 700 billion of borrowed money adding to the huge and growing debt and deficit.
12-15-2008 @ 12:30PM
lou said...
Jared: If you are so bored with Cohan's articles, why don't you browse some websites that praise Bush. I am sure there are one or two out there. With the title "Bush rewards the guilty with our tax dollars", I don't know why you would have thought it would be something other than what it is. The title was a dead give-away for me.
12-15-2008 @ 1:27PM
phatkrome said...
The problem with Cohen's article(s) is that they are so heavily biased to one side (against Bush) that he creates a disservice to this blog. Sure, every article has a slant, but he's just over-the-top ridiculous. Let's take this current article. First, he has to throw in the Iraq war comment to start us off. Then the CIA comment. Now, lets move to the real article, the $700b bailout, WHICH ACTUALLY RELATES TO THIS BLOG. Ummm, excuse me, but it was Bush AND THE DEMOCRATS that pushed this bill through! Most Republicans were against it. You want to blame Bush, fine, but you better throw in everyone else who supported it, too. Shame on the whole bunch. But no, in Peter's little world, Bush is to blame for 100% of everything!
12-15-2008 @ 4:03PM
Krystal said...
When I hear in the news and on the internet everyday about corporations being bailed out and nothing on what the government is going to do to help the tax payers who are paying to bail out these corps, it sickens me. I have several thousands in student loans and can not seem to make more than $9.00/hr when I am not laid off. Where is the taxpayers bail out? I think they better do more than a $600 stimulus plan next time.
10-14-2009 @ 11:23AM
Claire said...
Bailout...a legal way of taking the hard earned dollars of taxpayers and giving the 'big OLE beautiful kids of high finance' their not-so-well earned bonus/retirement/pension/etc. etc. etc, package. Of course, these are the same people that by comparison have given less, dollar for dollar, into the tax coffers. (You just have to love that they are also given monies to hire financial advisers)
If all the 'little people' worked a 'little slower' and 'borrowed a little more from petty cash' I'm pretty sure a pink slip would have been handed them...not a multi-million dollar payment as incentive to do the jobs they were hired for (at pretty hefty salaries) in the fashion it was suppose to be done.
Is it possible that those that are in charge...and thus in charge of business failing...are not taken to task...held responsible for the loss of jobs by people who with all earnest try to do the best job and take pride in their work (at salaries that don't always keep up with actual cost of living)...what a train wreck this system is!
I am tired of hearing bailout. Tell me that you have first gotten rid of those that 'need' further incentive to do their job...for self-satisfaction and genuine pride is not enough for them. Tell me you have let go of the nonsense bennies. Instead of giving a huge bonus to the guys at the top who have the company hanging by a thread...reach out to the workers and reward them for hanging in there and striving to keep the company, and their jobs alive...
This is just the opinion of one old woman...but you know what...be careful, I might one day hit one of those mega lotteries...and if I take over your company...the first to go will be the 'kids at the top who need their delicate little bottoms cushioned'...
Claire