But the government is unclear what, if anything, they can do to cut the bonuses since the contracts seem legally binding. Contracts? Was there a contract with the people of the United States that said "We will bail you out if you fail?" No, there was not! The standard, but unwritten contract that exists between the people, or the government, and any "for profit" business, is: "If you fail, you go under. Tough noogies! You didn't share your profits with us, dont expect us to share your losses."
Can anybody tell me of one time in history when financial failure was rewarded with public money? The difference between today's bailout of numerous organizations, and the Chrysler bailout of 1980, is that the Chrysler bailout of 1980 was a government loan which, under Lee Iacocca's leadership, was repaid in 1983.
Is this current bailout a loan? I have yet to hear the word "loan" used in any sentence containing the word "bailout" thusfar. Let's assume it is a loan ... has anybody ever seen a lender that doesn't set the conditions of the loan being made? Is our government so incompetent, that with the legal minds of the entire Department Of Justice at their disposal, they failed to set those conditions? Conditions such as: "No company funded vacations or retreats for so long as the loan is in force and carries an outstanding balance."; "No expenditures for transportation beyond the cost of a business class seat, on a regularly scheduled commercial airline flight to the destination, or beyond the cost of an economy rental car while at the destination."; "Per diem will be reimbursed at the prevailing military rate of $70 for lodging and $39 for meals and incidentals and accommodations at the destination city will not exceed those rated as 3-star."; "Any and all contractual references to bonuses, scheduled pay increases, and severance pay (Golden Parachutes) are, effective this date, null and void, and without continuing effect."; "Effective immediately and throughout the active life of this loan agreement, the salaries of the CEO and CFO are to be no more than 1% of the net profit shown by the company. Other executive salaries are not to exceed $75,000 per annum, and all union employees will take an immediate 25% cut in pay. Non-union employees will be paid no more than 90% of the new union wage for similar jobs and years of service.", and so on! Where does it say that recipients of a public bailout must be allowed to continue amassing business, operating, and labor expenses as usual? That's what got them into financial distress in the first place! Where is it written that once they receive bailout funds, they can spend them in any manner they desire? It is only "written" when reasonable conditions are unwritten! Our government, by failing to specify conditions for use of the bailout money, thereby failed to protect our investment in the future of these - now (technically) "publicly owned" - corporate entities.
When did it become incumbent upon the taxpayers to reward corporate mismanagement and fiscal irresponsibility?
I must have not seen that memo ... did you?