Man, I'm getting tired of this.
Once again we're bailing out another too-big-to-fail company -- now it's Citigroup -- and again we're acting like we've got these guys by their you-know-whats because we're imposing some limits on how much cash top execs get to pocket during the whole ugly ordeal.
On top of that, the Treasury Department and Federal Reserve said Tuesday that they would be pumping $200 billion into the consumer credit market by guaranteeing securities backed by credit card debt and other loans, apparently with no strings attached. The idea is that this will encourage banks to make more money available to consumers.
Enough already. All along, I've reluctantly accepted the need to prop up many of these hopelessly mismanaged companies because of the importance of protecting the overall economy. You have to put out the fire at the local crack house if that'll keep the rest of the neighborhood from being immolated.
But we're letting these jokers get off too easy. These bailouts are an opportunity for some long-overdue housecleaning, and we can do a whole lot better than just making CEOs pay for their own darn country club memberships.
"If they're coming to us for money, we'd be crazy not to get something out of it," said Dean Baker, co-director of the Center for Economic and Policy Research, a liberal-leaning Washington think tank. "We should be saying, 'You take our money, this is how it's going to be.' "
Most of the talk around the heavy-duty bailouts so far -- mortgage giants Fannie Mae and Freddie Mac, and insurance behemoth American International Group -- has focused on how much of an ownership stake Uncle Sam would take, and what kind of return taxpayers could expect.
The Citigroup bailout unveiled this week is no different. It involves a $20-billion infusion of taxpayer money, following an earlier $25-billion allotment, plus guaranteeing about $306 billion in loans.
In return, Citi has agreed to halt dividend payments for three years and to take a closer look at how much it pays the fine folk in its executive suite.
Many people will say Citi deserves to go under for making such a hash of things. That's true. Unfortunately, if a company of Citi's size and scope went down the drain, it would likely take much of the financial-services industry with it.
"If we allowed Citibank to go under, there would be massive consequences," said Lawrence Harris, an economics professor at USC and former chief economist for the Securities and Exchange Commission. "It would bring us into another Great Depression."
