Capitalism Has Failed

Our capitalist economic system has failed. Recognizing this, and not willing to be the unthinking arm of tragedy, Cook County sheriff Sheriff Thomas J. Dart is no longer evicting people in foreclosed properties in Chicago.

I would like to meet anyone who says our financial system is working. But in a sense, it is. It's just that the outcome of our current capitalist system is politically unpalatable.

Sheriff Thomas J. Dart's refusal to throw people on the street acknowledges a breakdown of our system of economics and its political implications for the banks. The rhythmic chanting about the marketplace that we've been subjected to for years depends on the enforcement of those mores by society at large.

We, as a society, are no longer willing to adhere to the pure marketplace ideology. The inherent unfairness of allowing bankers and others to make up financial instruments and letting others suffer the consequences is not being tolerated.

This being America, the fancy financial whiz kids can expect to be indicted soon. That will be fun to watch.

So now, following Great Britain's lead, the United States is considering an ownership stake in these wayward banks. NOTE: We are officially Socialists when that happens.

Not that I'm against it. Obviously, we can't let these money guys stray too far from the barn. They can't keep out of trouble. For a group of people who pride themselves on thinking, the financial geniuses need a tutorial on how the world works. They'll find out. All is fine in America until you screw up. And you took capitalism with you this time.

Executive Compensation Under the Bailout Bill

Reclaiming Executive Bonuses

If the executive of a failed financial institution received a bonus based on information later proven to be MATERIALLY INACCURATE, the U.S. Government could go after the bonus money. But not the base salary.

Put another way, if upon valuing a firm's statement of earnings, the federal government decides it is materially inaccurate for 2005 because the value of the mortgage-backed securities was wrong, then the executive bonuses, based on the statement of earnings, can be "recovered."

This bill allows the U.S. Government to go after executive bonus or incentive pay that was based on "materially inaccurate" information. There is no limit on who that applies to. So the executives from two or four years ago who made "materially inaccurate" statements can have their big bonuses taken from them, too, as long as their firm later requires federal rescuing.

So, to get the bonus money back (and not the salary), there would need to be MATERIALLY INACCURATE information from the company, which could be made in a number of ways that Congress has not decided to fully list. And it would not need to be materially inaccurate at the time. It could be "LATER PROVEN TO BE MATERIALLY INACCURATE." The information could be statements of earning, gains, or OTHER CRITERIA. The last item is capitalized because it leaves an open door for interpretation. It could be taken to mean, conceivably, anything a bonus is based on, including media interviews that caused the stock price to move. Yes, it is rather a stretch. But still a possibility.

In short, it is more than I expected in terms of socking it to Wall Street fat cats.

Golden Parachutes

All financial firms that need U.S. Government bailout will not have "golden parachute payments to their executives while the U.S. Government stills holds stock in your firm. The least they could do, I'd say.

See the exact language below.

(B) a provision for the recovery by the financial institution of any bonus or incentive compensation paid to a senior executive officer based on statements of earnings, gains, or other criteria that are later proven to be materially
inaccurate; and
(C) a prohibition on the financial institution making any golden parachute payment to its senior executive officer during the period that the Secretary holds an equity or debt position in the financial institution.

Rep. Cantor on Hardball

Hey Congressman! When you're describing the pain and fears of Americans in this financial crisis, don't smile. It kind of takes away from your practiced visage of conern.

Rep. Cantor couldn't hold his glee back. He grinned throughout his conversation with Chris Matthews.

Further, he wouldn't admit to supporting the Republican President nor allow any responsibility to rest with President Bush or the Republican Congress.

Click on the title to this post to see the video yourself.