News that Lehman Brothers set aside about $2.5 billion for exit executive bonuses for the failed financial corporation isn't setting very well with much of anyone.
I expect that eliminating big bonus packages for executives won't solve the problems associated with the current capital markets meltdown. Still, these provisions for those at the top symbolize the failure of "free market" approaches to providing even handed, equitable community systems and institutions. Regulation is not a bad word.
Here's a taste of one report:
Financial crisis: Lehman Brothers staff’s $2.5 billion bonus bonanza provokes fury
Lehman Brothers’ British staff reacted with fury when told that colleagues at Lehman’s New York office were expected to share in a $2.5 billion bonus bonanza while they would be paid just until the end of the month.
The bonus, described by London staff as a "scandal", has been pledged by Barclays Capital, the British-based bank that last week acquired Lehman’s American operation and took on 10,000 staff, according to reports at the weekend.
A spokesman for the TUC said: "It looks like those that will suffer the most from the Lehman Brothers collapse are those at the bottom of the corporate chain while many of those at the top will be looked after."
[By Myra Butterworth, Personal Finance Correspondent Last Updated: 3:03PM BST 22 Sep 2008]
Read more here.
Clearly, the problems we face today in the financial markets can't be limited to just one or two bad apples, nor to one political party or the other. Plenty of blame and greed to go around here.
And again, those at the bottom will suffer most.
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That is appalling. I have long thought we need to heavily tax corporations for executive salaries that top some multiple of rank-and-file pay. Say your average worker makes $30,000 a year, and you used a multiplier of 100, then every dollar the CEO earns over $3,000,000 should be subject to a heavy tax, like 50%, that the coporation must pay. Instead, corporations get to right off the CEO's $15,0000,000 salary as an expense, just encouraging such gross pay disparities. Boards would have to pay a little more attention if such excessive salaries cost them more money instead of being subsidized.
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