20 March 2009
Prohibition of Bonuses Jeopardizes Financial System Reform
New York Congresswoman Nita Lowey's support of the bill prohibiting the payment of bonuses to "executives" of financial firms receiving over $5 billion in government aid in the U.S. recovery program panders to the nedia and to certain vocal constituents who do not really understand how Wall Street works. Most of these "executives" are traders and middle management experts who are responsible for fulfilling objectives set by their top management. In fact, without their skills, these financial institutions would have collapsed much earlier, before the current world financial crisis.
Yes, the current crisis was caused by mistakes in the judgment of the top management of many U.S. financial firms, including AIG. Similar mistakes, unfortunately, were made by the agencies that were responsible for regulating these financial firms, and ultimately by the Congress itself, which did not anticipate the problem.
Congresswoman Lowey and her colleagues in Congress may wish to go after the top managers of the financial firms the Federal Government has decided to rescue. However, it will not help to penalize the very people whose skills and contacts are needed to restructure the world's financial system in a way that will not jeopardize our economy's health in the future.
New York Congresswoman Nita Lowey's support of the bill prohibiting the payment of bonuses to "executives" of financial firms receiving over $5 billion in government aid in the U.S. recovery program panders to the nedia and to certain vocal constituents who do not really understand how Wall Street works. Most of these "executives" are traders and middle management experts who are responsible for fulfilling objectives set by their top management. In fact, without their skills, these financial institutions would have collapsed much earlier, before the current world financial crisis.
Yes, the current crisis was caused by mistakes in the judgment of the top management of many U.S. financial firms, including AIG. Similar mistakes, unfortunately, were made by the agencies that were responsible for regulating these financial firms, and ultimately by the Congress itself, which did not anticipate the problem.
Congresswoman Lowey and her colleagues in Congress may wish to go after the top managers of the financial firms the Federal Government has decided to rescue. However, it will not help to penalize the very people whose skills and contacts are needed to restructure the world's financial system in a way that will not jeopardize our economy's health in the future.
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