Moral hazard? Nah.
Up to 10,000 staff at the New York office of the bankrupt investment bank Lehman Brothers will share a bonus pool set aside for them that is worth $2.5bn (£1.4bn), Barclays Bank, which is buying the business, confirmed last night.
The revelation sparked fury among the workers' former colleagues, Lehman's 5,000 staff based in London, who currently have no idea how long they will go on receiving even their basic salaries, let alone any bonus payments. It also prompted a renewed backlash over the compensation culture in global finance, with critics claiming that many bankers receive pay and rewards that bore no relation to the job they had done.
A spokesman for Barclays said the $2.5bn bonus pool in New York had been set aside before Lehman Brothers filed for chapter 11 bankruptcy in the United States a week ago. Barclays has agreed that the fund should continue to be ring-fenced now it has taken control of Lehman's US business, a deal agreed by American bankruptcy courts over the weekend.
Barclays is paying $1.75bn for the US operation of Lehman and is keen to retain its best staff. It said it had made no promises to individual staff members about how much they will receive but that the bonus fund would be paid out. In addition to the $2.5bn cash pool, Barclays is also in negotiations with about 30 executives it considers to be Lehman's best assets and plans to offer them contracts worth tens of millions of dollars.
I keep hearing about how those stupid home buyers should have known they were taking a risk they couldn't afford and need to be held accountable or the system falls apart. And then you see this.
I'm listening to John Harwood right now on MSNBC express shock that Obama is refusing to drop all plans to reform the health care system or invest in the future in light of this crisis. Isn't that special? The new consensus is that after the hideously expensive Bush era fuck-ups, the only "responsible" thing to do is devote the country to paying back their debt. Again.
Bush has been the most successful president for the aristocracy in American history. He opened up the federal treasury to his rich friends, and they looted it like a Bagdad museum for nearly eight long years. Now that it's been stripped bare to the point that its going to cost trillions to even stabilize the thing, the Village has decided it's time to sober up and stop all this profligate spending. How convenient.
This is very similar to the arguments that were made 16 years ago when once again the establishment decided that the bill for Republican malfeasance would come due during a Democratic administration, thus foreclosing the possibility of solving many of the long term systemic problems that plague ordinary Americans. Heads they win, tails you lose. It's quite a racket.
But, at the very least, can we hear no more from Republicans about fiscal responsibility? Is it too much to ask that every time they say such a thing, that every opponent gets right in their face and starts yelling about Bush and Cheney and the catastrophic failure of Republican governance? I suppose it is. But until they do that, over and over again, the Republicans will be allowed to spend the country into oblivion, reward their rich friends with all your hard earned money and then morph into fiscal scolds the minute the Democrats take power, thus denying the people any sort of normal first world safety net. That's the pattern and it looks to me as if it's highly likely to replay itself once again unless the Democrats learn how to play this game.