Since the government-approved $700 billion bailout of institutions like the one that employs me as CEO, there has been a debate about whether such institutions can be trusted to use this capital in a responsible way. More specifically, some members of Congress are calling for an investigation into what portion of that $700 billion will go to pay executive bonuses. I understand your concern. It was your money, after all.
I can see how paying large bonuses at this time of financial crisis may be construed by some as irresponsible. These same executives did oversee our economy’s plunge into the abyss, so why should ordinary, tax-paying Americans be forced to provide their safety net? And how is it in the taxpayers’ interest to provide a multi-million dollar bonus to someone who is already well-situated in life while that taxpayer may be struggling to make ends meet? Where is the return on that investment? On the surface the idea of giving away billions of dollars to irresponsible executives, who’s greed led to the calculated plundering of the American – and world – economy, for a job atrociously done seems almost, well, ludicrous. But every coin has two sides and, in this case, I ask you to consider the other.
By investing a large portion of the government bailout in executive bonuses we are, in turn, investing in the infrastructure of the American economy. Suppose you are CEO of a major financial institution like me and you’ve just been given a multi-million dollar check for your loyal service over the last year. Now, what will you do with that money? You’ll buy Manhattan real estate, that’s what. So now you own a very nice 3BR, 3 1/2 Bath condo in TriBeCa with a private terrace and brand new Viking range and you’ve paid top dollar for it. The surrounding property values will rise as a result of your purchase and attract new buyers to the neighborhood. The mortgages issued to pay for these condos will help support needy banks and the stores in the neighborhood will have a new customer base. Maybe one of those stores does so well that the owners open a second location uptown or in Boston? I suppose they’ll need to hire a staff to run the place, don’t you? Job creation. And maybe one of those employees in that store in Boston eventually saves up enough money to make a small investment. What then? Then he can come talk to my friends and I, the ones whose selfless actions led directly to his prosperous position.
So you see, spending a large – very large, in fact – portion of the government bailout on executive bonuses is a practical, patriotic plan for our economy. By doing so, we will directly stimulate the real estate and luxury goods markets while creating jobs, thus stimulating the economy at large. I can’t explain it any better than that. If you still cannot fathom how this could be good for you, the taxpayer, you will just have to trust our decisions. After all, we are the experts.
The CEO of a major financial institution"