Neil Schemenauer's Web Log


March 16, 2009

BBC: Obama wants to block AIG bonuses

It's progress that Obama thinks it's a problem but he should focus on the real issue instead of chasing after secondary effects. First, the US Treasury should have gotten voting shares instead of preferred shares for their cash infusion (despite the cries from risk-loving bank owners that "nationalization" is evil and un-American).

The second and much deeper issue is that corporations have to be made accountable to investors. The current corporate model just does not work. I don't have statistics but I would guess that the majority of the general public who own stock do not exercise their votes. That allows the board and the management to pay each other huge salaries and generally screw everyone else.

The third issue is that regulation of the financial industry is needed, despite what some conservatives might say. Businesses that are "too big to fail" are obviously either too big to exist or they must to heavily regulated to ensure they don't blow up. As someone who does not like big government, I would vote for the "split them up" strategy rather than for regulation.