Financial workers at Wall Street’s top banks are to receive pay deals worth more than $70bn (Â£40bn), a substantial proportion of which is expected to be paid in discretionary bonuses, for their work so far this year – despite plunging the global financial system into its worst crisis since the 1929 stock market crash, the Guardian has learned.
Staff at six banks including Goldman Sachs and Citigroup are in line to pick up the payouts despite being the beneficiaries of a $700bn bail-out from the US government that has already prompted criticism. The government’s cash has been poured in on the condition that excessive executive pay would be curbed.
I’m sorry, but you did not need to be a clairvoyant to know this would happen. Continued wasteful pay practices were to be expected and could be seen from the other side of the globe. Businesses that can pay this kind of money do not need bail outs. Or, better put, this bail out should not be directed to financial institutions whose pay packages are unreasonable. Leave it to Congress to not put greater controls on our money. I wonder aloud: would this qualify as a moral hazard, or a symptom of the moral hazard that exists with this bail out?
My feeling, if it isn’t already clear, is that it is irresponsible for businesses to pay such big bonuses, particulalry when those same businesses are at such high risk of collapse and losing gobs of money. It is likewise irresponsible for our government to prop companies up that have such irresponsible pay practices.