Bank executives still in power after meltdown
What’s wrong with corporate America? This article discusses the exact reason why America’s corporations are and continue to be both problematic and emblematic of serious fundamental problems with free enterprise.
On the surface, this phrase embodies entrepreneur-ism, freedom to go into business and freedom to make money in the way you choose. But, to each silver lining, there is also a dark cloud. The dark cloud of free enterprise, then, is what’s rarely discussed but is always present in any business once it reaches a certain income level. This black cloud tends to overreach any good that a company may do and, in many cases, stifles the business into oblivion through stupid decisions, inaction and through senior executive selfish actions.
We all know the story. Banks doled out risky loans to individuals without checking credit histories and the whole banking industry nearly self-imploded. But, what’s not widely known about this event is what happened to the bank’s senior executives. The Associated Press did some research and found that the majority of the banks that doled out these risky loans, and nearly single-handedly killed the banking system, have the SAME senior exectives still in power today. These are the same executives who presided over and actually ALLOWED their banks to issue (and continue to issue) risky loans until the meltdown.
As the banks continue to lay off thousands workers and, in some cases, shutter branches… incidentally, the layoffs likely include workers not responsible for the meltdown, the senior bank executives (CEO, CFO, CTO, etc) remain safely and comfortably employed (and likely making the same salary pre-meltdown).
Car vs Bank Bailout
With the automotive industry bailout, very stringent conditions were placed on when and how these car companies could get and use the money. Some of the conditions discussed even included ousting executives who couldn’t manage their businesses properly. Not so with the banks. There were no such executive conditions placed onto the bailout monies for the banks. This leaves, in most cases, the same executives who presided over issuing of risky loans and the economic meltdown the task of trying to clean up this mess. Can they? Do we trust them?
Do we trust these executives to do the right thing? That dark cloud I was speaking of, what is it? That dark cloud includes executive compensation, bonuses and other executive cash shuttling programs. Once large companies get into the position of billions in revenue, the executives in power do not want to give up that cash cow no matter what. Yet, here we are. The banks (and their executives) have failed us and our economy and yet they remain in power? Do we continue to trust that they know what they are doing? Can they properly get not only their company, but our economy jump started? Where is the accountability here?
Let’s hope that Congress wakes up to this issue and ultimately takes these bank executives to task for their inaction and inability to police their own companies during the meltdown times. Surely, they can’t say, “We had no idea it would get that bad!”. Sha-right. The handwriting was on the wall when the risky loans began over 2 years ago. Anyone in their right mind would know that handing out a loan to someone who hasn’t had their credit checked is a tremendous risk. For executives to make that claim ensures they do not deserve to stay employed.
Shareholders: The other dark cloud
Once a company goes public, the shareholders become the ownership and power of the company… or so we are told. So, whenever executives make decisions, it’s easy for them to claim it was ‘for the shareholders’. That’s a catchall phrase to allow the executives to do things they ordinarily could not or should not do. But, when is it good for the shareholders? Who makes that decision? Apparently, this decision is supposed to be the board of directors. However, in many cases, the CEO is also the Board Chairman. But, again, part of that same dark cloud. The board of directors are supposed to steer the company into the right direction. Again, when large sums of income become involved, people’s eyes get glazed over by $ signs.
When something is done for the good of the shareholders, you can pretty well guarantee they mean there is money involved (either obtaining, but usually spending it). When and how that money is used is anyone’s guess. The accounting books are supposed to tell the tale, but we know how that goes with all of the recent accounting scandals.
Why is it then ok for these corporate executives to preside over and allow detrimental business practices, yet they continue to remain employed? Why do they get reprieve from the unemployment line? When are we supposed to hold executives accountable for their actions (or inactions) that lead to dire negative consequences? These are questions that must be answered.
Does this imply more governmental regulation over corporations? Perhaps. It does imply that free enterprise is broken at a fundamental level. It also implies that something must be done to fix it. Whether that’s more regulation over businesses or more accountability, I don’t know. Perhaps we just need stiffer laws that define corporate practices so that executives can be brought up on charges when these situations occur. If there are legal statutes that prevent such problematic operations, then perhaps executives will think twice about their roles within large dollar companies. After all, high dollar salaries shouldn’t come with little oversight and no strings attached.