America's Bailout Barons: Alive and Well

If you want to make yourself a little nuts, read about America's Bailout Barons. The Institute of Policy Studies released its annual report on compensation and the results are staggering. Here's one of the more disturbing sentences: "From 2006 through 2008, the top five executives at the 20 banks that have accepted the most federal bailout dollars since the meltdown averaged $32 million each in personal compensation." Yes, that was through 2008.


I never expected that the government could really address this issue, even with the appointment of Kenneth Feinberg as "Pay Czar". Despite the clamor earlier in the year after the AIG bonuses were awarded, there were too many other issues for the Obama administration to tackle. Wall Street banks soon realized that the easiest way to escape the Pay Czar would be to repay TARP funds and a bunch have done so. For the rest, I have a sneaking suspicion that financial innovation will be alive and well.

But as we digest the enormous numbers, there's another issue to consider: just as the recession didn't treat everyone equally, nor will the recovery. It's one thing to be relieved that the stock market has bounced off the lows, but that won't give you a raise. The recession put the squeeze on American workers not just by inflicting damage to balance sheets in the form of lower house prices and declining retirement accounts, but by forcing millions to take lower paying jobs (if they're lucky) with limited upside wage expansion.

I expect that the divergence between the Bailout Barons and vast numbers of struggling Americans will continue to breed contempt until more people participate fully in the recovery. Sadly, that's unlikely to happen for a while.