As an exercise in PR, these are probably good recommendations.  As a matter of business sense, some are probably not so good.  If you have good executives that will leave if you do not give them bonuses, then it’s likely a bad decision to withhold them.  If you have a CEO that effectively makes several thousand dollars per hour, do you really want him or her standing around for several of those hours getting frisked by a TSA lunkhead while his overbooked flight is delayed and cancelled?

Ditto, Jeffersonian. Also, at least we know, money being fungible, where at least $1.2M of the first tranche of the $350B in federal bailout money went and, distasteful as the use might be considered, it was certainly stimulative. The $1.2M Merrill redecorating expense put money at work in the economy to employ people and purchase goods. And given the very precarious financial state of the federal budget, any on-budget redecoration expense incurred by the Obama’s in spiffing up their new digs should be treated with the same praise or condemnation as the Merrill redecorating epense. They are indistinguishable effect on the economy.

Partial financial accountability having been established, that leaves only $349.9988 Billion left for which we need to see proper accountability for the initial tranche of the bailout bonanza. Progress to date is about par for a hasty government solution delivering unknown results.

Why is it a bad decision to withhold bonuses from CEOs of companies that are in or near bankruptcy?  Obviously, they have not added value to the companies in question.  If they are such lunkheads that they can’t run the companies profitably…let them go, with predjudice.

If you have a CEO that effectively makes several thousand dollars per hour, why is he traveling rather than using video conferencing?  If he/she must travel, why can’t they charter a flight on one of the many airlines that specialize in corporate transportation rather than own or lease their own aircraft? 

Dilbertnomore, with your reasoning, that the wasteful “$1.2M Merrill redecorating expense put money at work in the economy to employ people and purchase goods”, we should just have helicopters hover over major population centers and dump out cash, because, gosh…that would put money to work in the economy and employ people and purchase goods.

I like you and I very often agree with you, but I think you need to re-think that line of reasoning.  I do not believe that the taxpayer should be footing the bill for extravagant spending by companies in or near bankruptcy. 

I still think that it would have been better to just pay off every home mortgage in the U.S.  Think of all the former mortgage payments that would then be pumped into purchasing consumer goods and services!  Talk about injecting money into the economy!  It would also free millions from being wage slaves to their mortgages.

Freedom.  What a beautiful thing.

Instead, we continue to fund at taxpayer expense those who enslave us with debt.

My company makes corporate jets.  A friend of mine is laid off from a company that makes office furniture.  Yes, the bonuses should not be paid to under-performing bankers, but stopping purchases of durable goods costs jobs.

Why is it a bad decision to withhold bonuses from CEOs of companies that are in or near bankruptcy?  Obviously, they have not added value to the companies in question.  If they are such lunkheads that they can’t run the companies profitably…let them go, with predjudice.

I understand that, and it makes some sense.  But what if the executives have been performing valiantly, rescuing the company from certain liquidation and into a position where it could enter Chapter 11 and emerge as a profitable entity?  Would you not want to retain those people?

If you have a CEO that effectively makes several thousand dollars per hour, why is he traveling rather than using video conferencing?  If he/she must travel, why can’t they charter a flight on one of the many airlines that specialize in corporate transportation rather than own or lease their own aircraft? 

I would suppose it depends on how much such a resource is used and whether it makes financial sense to have a craft of one’s own as opposed to paying higher per-use or per-hour rates that are part and parcel of outsourcing such a service.

There is much blame to be spread in the run up to our problem:
1. House and Senate oversight committee leadership as recently as this past summer were loudly denying there was anything wrong at Freddie & Fannie and robustly resisting any effective regulation of them - Pin roses on Sen. Dodd and Rep. Frank.
2. Bush Administration seems never until the very end to have been able to find more spending it couldn’t swallow and was ineffective in gaining regulatory control of bad banking behavior - Pin rose on #43 - GWB.
3. After decades of keeping investment banking and commercial banking separate the Clinton Administration integrated them creating the a major pillar in the foundation of the ‘perfect storm’ we now are dealing with - Pin rose on #42 - WJC.
4. The Fed has made a string of wrong decisions that lead to an even greater and more fragile bubble than we might have feared. The history of problems go back at least to Paul Volcker who provided Wall Street the tools to monetize debt leading to the rise of derivatives and other financially engineered investment arrangements. Pin roses on all Fed Chairmen from Volcker to present (at least).
5. The SEC continues to require bad debt to be ‘marked to market’, even while the debt continues to be held, this roiling balance sheets with the market’s gyrations. Pin rose on Chris Cox and his successor.

Time and finger cramps limit further roses, but the ranks of the deserving is long and deep. I do put ‘Wall Street’ on the list, but only for doing what they do. Wall Street makes money by whatever means they can within the law. Seem the biggest law working to allow Wall Street to do the things that exacerbate the problem is the Law of Unintended Consequence that is the natural and predictable result of the gaggle of laws and regulations that seem to spawn from fetid swamp political expedience.

So we now have this same (essentially) troop of worthies who are about to spawn a trillion dollar ‘stimulus’ bill that looks to me much more like a pork-festooned Christmas Tree. For Keynesian stimulus to work the elements must be effective immediately and represent true capital (i.e., long-term, durable and of wide use) investment. A very small percent of the ‘stimulus’ bill under consideration will meet these criteria. So we will have served up to us the largest spending bill in world history that will be ineffective for its stated purpose while sowing the seeds for the next bubble along with a huge slug of inflation. Great.

The alternative school is broad tax relief. While I vastly prefer this approach - and I abhor the stimulus idea of give a tax ‘rebate’ to people who don’t pay income taxes. - we won’t have to worry about debating it because there is no way the cast of characters we have bestowed upon ourselves will give serious tax relief any consideration. It isn’t in their DNA. Can’t be considered.

Now, to the $1.2M that put me at odds with S&ToN;, CharlesB said it very well. May be distasteful, but Merrill’s act of corporate engrossment is vastly more stimulative than anything the Ship of Fools in Washington will come up with. Halitosis is better than no breath at all. Please believe me S&ToN;, we are much closer to a common mind on this than you seem to fear.

Hi Charles B.

I was not arguing against “corporate jets”.  What I was saying is that fractional jet ownership or private jet charter programs are a much better way to go.

Hi Jeffersonian,

I would want to retain executives that performed valiantly, rescuing their companies from certain liquidation and into a positions where they could enter Chapter 11 and emerge as profitable entities.

Is that what is happening?  Is it true of AIG?  Merrill Lynch?  (It seems pretty obvious that BAC didn’t think CEO John Thain was worth keeping, so I think we can safely say “no” to Merrill Lynch.) Goldman Sachs? Citi Group? Lehman Brothers? Countrywide? Etc.

I have no problem with affluence or perks or even ostentatious wealth…IF it is actually earned. 

God gives us the power to create wealth.  I do not envy, covet, or feel jealous of those who do so.  God bless them.  I would like to watch and learn.  However, I do not think that it is right for the government to coercively take my money through the power of taxation (or for the Federal Reserve to take my purchasing power through the power to print currency) and give it to those that have failed in their responsibilities to share holders and who continue to squander money in their control.  The amount that has been stolen from the American people in this way is so vast that it places my as yet unborn grandchildren into debt…which Scripture describes as slavery.

BTW, Jeffersonian, you are another of the posters that I almost always agree with and that I like.  Please do not take this as a personal issue. :^)

Hi Dilbertnomore,

Ditto.  I think you are correct.  It just irritates me to no end to see what I would consider frivolous spending with money intended to inject liquidity into the credit markets.

We do have a parade of roses… 
@}——

Oops…I forgot to mention that I own stock and I am hopping mad about the stupid way money is being thrown around by the CEOs.  BAC dividends are now 1 cent pre share, etc.

I would want to retain executives that performed valiantly, rescuing their companies from certain liquidation and into a positions where they could enter Chapter 11 and emerge as profitable entities.

Is that what is happening?  Is it true of AIG?  Merrill Lynch?  (It seems pretty obvious that BAC didn’t think CEO John Thain was worth keeping, so I think we can safely say “no” to Merrill Lynch.) Goldman Sachs? Citi Group? Lehman Brothers? Countrywide? Etc.

I have no problem with affluence or perks or even ostentatious wealth…IF it is actually earned. 

I agree completely, and I have no idea if the bonuses paid were earned or not.  I’m not close enough to the firms you cite to say so one way or another.  If I was a Merrill stockholder, I’d be screaming from the rooftops about the excesses of John Thain.  But I’m not (though I am a customer of ML), so it’s none of my business.

No, I don’t take it personnally.

Paying bonuses to get people to stay in a company that is losing ground and may go under is quite common and often necessary to keep a company going.  What is being paid for is the delay these people are being asked to take in looking for a new job, when their old job is in jeopardy from the potential failure of the company.  The excess of $1.2 million for Thane’s office decoration, while making for good supply-side economic arguments above, is rather excessive for the company in trouble, and rather arrogant in the PR department.

Why does the phrase “only the tip of the iceberg” come to mind?

From CNBC, January 22, 2009.
“...When John Thain became Merrill Lynch’s CEO in early 2008, he hired Michael S. Smith Design to revamp his office suite, spending approximately $1.22 million according to documents.
AP——————————————————————————

Additionally, documents showed that Thain signed off on the purchases personally, and that he used over $30,000 to pay the expenses Smith incurred in doing the work.

The following is a list of the items in his suite:
Area Rug $87,784
Mahogany Pedestal Table $25,713
19th Century Credenza $68,179
Pendant Light Furniture $19,751
4 Pairs of Curtains $28,091
Pair of Guest Chairs $87,784
George IV Chair $18,468
6 Wall Sconces $2,741
Parchment Waste Can $1,405
Roman Shade Fabric $10,967
Roman Shades $7,315
Coffee Table $5,852
Commode on Legs $35,115

Thain also hired Smith, whose celebrity client list include Steven Spielberg, Michelle Pfeiffer, Cindy Crawford and Sir Evelyn de Rothschild, to design his Manhattan apartment at 740 Park Avenue, and his 14 bedroom home in Rye, NY.

Smith is also Michelle Obama’s interior designer and the White House paid him $100,000 for his services.

Thain also paid his driver $230,000 for one years work, which included the driver’s $85,000 salary and bonus of $18,000, and another $128,000 in over-time pay, documents show. Drivers of top executives are often paid about half that amount.”
- - - - - - - - - -
And back to the $1.22MM. As late as Jan 23, there was a URL to a pdf of a ML accounting of the $1.22MM..as of now, the link no longer works.

Other resports indicate only about $399,000 of the $1.22MM was for materials…the lion’s share (about $837,000) was the “consulting fee” to the Michael Smith agency. It appears Mrs. Obama is a better negotiator in that for $100,000, she was able to get “decorating advice” from the same Smith firm for the entire White House.

I hope Mr. Thane did not get a bonus for resiging.

signed,
A “recent” former client of ML wealth management.

I understand that the corporate jet had been ordered 3 or 4 years ago.  If they don’t take delivery of it, the producer of the jet looses money.  That translates into lost jobs on the jet production line.
Seems that taking delivery on the jet and then selling it off would be wiser.  E-bay anyone?

Corporate jets are difficult to quantify in a large corporate settings.  The tax write-offs, depreciation. resale, and travel savings in time and convenience may far outweight charter situations or scheduled airlines.  It was interesting that for GWB’s inauguration in 2005, there were 300 corporate jets at Dulles.  For BHO’s inauguration in 2009, there were over 500 at Dulles.  Some supporters of BHO’s “change” seem to be talking the talk but may not be walking the walk.

500 private jets at Dulles, but I’m sure they were all equipped with the corporate jet equivalent of the Toyota Prius power plant. So it’s cool.

Mr. Thain has earned all the opprobrium he has received, but for his tone-deafness and inept sense of timing.

Mr. Thain’s real purpose in this escapade is to provide cover for the panoply of political hacks of both parties who have lead us down this primrose path. I’m still waiting for Chris Dodd to explain the sweetheart loan deal he got from Countrywide. We still know essentially nothing about how the first tranche of bailout money has been disbursed and how/if it has been applied to advancing a solution to the problem as then defined. Tag the Bush Treasury Secretary for that one. Of course the new Treasury Secretary is a tax cheat so….

Don’t forget the first rule of politics. The politician is never wrong unless there are photos, audio and video tape. And even then the suckers back home are unlikely to throw the honorable worthy out.

There is plenty of blame to be shared in this matter. The problem is the solutions open to real consideration are unlikely to provide real relief and are likely to be highly inflationary. Of course, if the legislation currently being considered by Congress is passed and signed into law the real winners will be the pork producers on Capital Hill who will feed it back to the rubes back home at very high but thoroughly not understood prices. BOHICA!

If CEOs must fly on business, it makes more sense for their companies to own shares in bizjet partnerships; you schedule time when you need to fly, and you only pay for that time…..and the aircrew’s salaries.  Very flexible!

Although I think corporate execs should be able to do what they want, what is absolutely true is that they feel absolutely entitled to it.  They are the types who shout at waiters and servants “do you know who I am?” and rely on public deference to their whims.