To all you "Main Streeters" who protested the federal bailout plan for its lack of accountability and socialization of losses, I have a message for you. I feel your pain, I share your pain, but things are only going to get worse if Americans don’t come together and tell their members of Congress to vote for it.
Every hard-working American has a right to be furious about CEO golden parachutes in which corporate titans strip companies of all their value and walk away with large fortunes for their great (uh, that is, horrendous) work. Clearly Congress and the White House must rein in, even ban huge payouts for self-promoting profiteers who buy Lear jets and McMansions while the rest of us see our life savings dwindle to nothing.
The list of profiteers is disgusting. According to the New York Daily News, the plan the U.S. House turned down on Monday would have allowed, "Washington Mutual Chief Executive Alan Fishman, who had been on the job for just three weeks when the bank went bust…walk away with more than $18 million in salary, bonuses and severance. Robert Willumstad, former chief executive officer of insurance giant AIG, could have gotten a $22 million exit package — after just three months at his post. Willumstad turned down the package." (As well he should. At least one of them has a conscience!)
The list continues: "If failed CEO Richard Fuld were to leave Lehman Brothers as it struggles to sell off its assets, he could rake in about $65 million in salary and bonuses, a top Wall Street analyst said. That’s on top of the estimated $446 million he was paid between 1993 and 2007."
The consequences of not passing the bailout plan — or as some in Congress and the financial world have renamed it the "recovery" plan — are pervasive, painful and possibly devastating. If small businesses can’t borrow money to keep going, many will fail. They are the economic engines that keep job growth steaming along. Right now there is no job growth, only job decline. We can hardly stand by and watch record unemployment rates go up and up and up. Second, a new wave of bank failures will not only harm consumers, but drive Wall Street losses higher and higher.
Third, it’ll become much tougher to take out mortgages, student loans, and to keep the flow of credit helping average Americans stay afloat. Lastly, if Congress doesn’t do something, and fast, a crash in the personal credit industry comes next. People won’t be able to pay off their credit card balances and no one knows where that will take us.
Meanwhile, the Senate version of the bailout/recovery bill had some much-needed goodies for consumers to entice the protesters of last week into the, "Yes, we now support the bill" category. Among the goodies is an increase in FDIC limits to $250,000 of protection for savings, up from an outmoded $100,000 amount. The 450-page proposal also includes tax breaks for business and the middle class.
Barrons writer Bob O’Brien notes: "(This, coming on a day when the national deficit is expected to eclipse the $10 trillion mark.) Other trinkets, such as an extension of jobless benefits and a homeownership tax break, might also get stapled on before a vote is taken. The expectation is that the added features would afford the legislation some momentum that would allow it to hit the Senate chamber running. (Though if significant additions of heft actually make something faster, your average business journalist ought to be able to out-run that Usain Bolt fellow.)"
There’s hope the stock market’s response and passage by the Senate of its plan will prompt House members to reconsider their "no" votes of Monday. Last week public opinion was about equally split on the bailout plan. There’s been a reversal since the stock market plunged 777 points on Monday.
Congressional staffers are telling media outlets calls from constituents more often than not urge them to pass, not defeat, the plan. And opinion polls are showing and increase in support for it by more Americans.
So if you’re angry, adamant and against, please understand the person on whom you’re venting your fury is yourself.
(Bonnie Erbe is a TV host and columnist. E-mail bonnieerbe(at)CompuServe.com.)