We should attach strings to corporate bailouts
It's the end of the world as we know it, and the banks and airlines feel fine because even in the midst of economic collapse, CEOs can sleep soundly at night, secure in the knowledge that the American taxpayer will bail them out. Again.
All they have to do is wait a respectable six to 12 months after the wire transfer clears to start giving themselves raises, renovating executive suites and buying back their stock.
That's exactly what happened during and after the 2008-09 global economic crisis that followed the subprime mortgage meltdown. In 2008 alone, banks that received government bailouts spent $1.6 billion on executive salaries, bonuses and benefits including "cash bonuses, stock options, personal use of company jets and chauffeurs, home security, country club memberships and professional money management," the Associated Press reported.
It has been two weeks since securities markets began a terrifying fall. Again, shamelessly acting under the assumption that we have completely forgotten what they did last time, corporate lobbying groups like Airlines for America are already asking for a $60 billion bailout. Some people in the media are asking the right questions. Steve Inskeep of NPR's "Morning Edition" asked an AFA spokesman about the $10 to $15 billion in profits the airlines have been raking in annually. Didn't they save any of that? According to Bloomberg, the idiots spent 96% of their cash to buy back their stock even as they accumulated a mountain of debt.
As a society, however, Americans ought to be asking a bigger question: Are we going to allow ourselves to be conned by these corporate jerks the way we have been in the past?
Clearly the United States economy cannot recover from the coronavirus shock without a viable transportation system. That includes airlines. Similarly, we can't allow banks to fail. But we should not repeat the mistakes of the administrations of former Presidents George W. Bush and Barack Obama, who bailed out Wall Street at the expense of Main Street.
The federal government handed over $7 trillion interest-free, no strings attached, to the big banks in exchange for increasing liquidity in the credit markets -- which they never did. It's still too hard to get a mortgage or other type of loan. After 9/11, the feds gave $15 billion to the airline industry, which has since treated American Airline passengers like crap.
As with the bank bailout, much of the money was wasted and stolen.
As Bush said, fool me once, shame on -- shame on you. Fool me -- you can't get fooled again. Or something like that.
I have little expectation that they will do this, but the Trump administration should target federal assistance toward ordinary citizens who are losing their jobs rather than corporations. Not only is this the right thing to do; you get twice the bang for your buck. If Obama had helped distressed and unemployed people pay their mortgages and rent, it would have kept them in their homes, propped up the underlying mortgages that tanked derivatives and, therefore, saved the banks indirectly. Reducing the number of evictions would have mitigated the real estate crash caused by the deterioration of vacant houses.