The bailout loan... terms and conditions.

[best12bars]

Posted: 9/25/08 at 11:34am

Okay, the $700B loan seems inevitable. As I said in another thread, if we don't do it, "the entire ship goes down, not just the first class cabins."

I agree that if we don't come up with a $700B plan, we (the people) stand to lose our future. Our 401Ks, our Social Security... and don't try to get a loan for anything for many years to come, because there won't be any money to loan out.

So... since we have to do this one way or another... since congress is working out the details as we speak...

What should the terms be? After all, if we're loaning the money, we get to set the rules for spending it and for paying it back.

I think we should know exactly where every dollar is going to go. And if it lines the pockets of any bankers, they should be brought up on felony charges and should have to pay back every dime, even if it means siezing their personal assets and income to do it. If they don't like these terms of the loan, they can quit their jobs.

Speaking of quitting their jobs...no more Golden Parachutes. Congress needs to make them illegal, beginning right now. Go ahead and quit, but you're on your own then. Just like the rest of us.

Also... this should NOT be an interest-free loan. If the banks need money now, they should borrow with interest, just like the rest of us have to. The government will make money off of them in the long run, instead of vice-versa. That will be a nice change. It might actually help pay off our deficit in a few decades.

What do you think?

Updated On: 9/25/08 at 11:34 AM

[Gothampc]

Posted: 9/25/08 at 11:40am

"Speaking of quitting their jobs...no more Golden Parachutes. Congress needs to make them illegal, beginning right now."

And while they're at it, Congress needs to decree that movie stars will only make union minimum. Seriously do Brad, Angelina, Clooney really need to make as much as they do?

[best12bars]

Posted: 9/25/08 at 11:41am

I'm copy/pasting Namo's post from another thread since it pertains to this one, and he has brought up a good point:

"If even one dime goes into some rich banker's pocket ..."

If a CEO's salary was a million dollars a month before the bailout, it will be a million dollars a month after the bailout. That's not windfall profits, that's salary.

Hooray! I'm so happy the US has her priorities right.


My response:

Then part of the terms of the loan should be a suspension of salary.

If they don't like it they can quit. We (the people) are calling the shots, if we're loaning the money. We get to set the terms for spending it.

And they don't really have a choice.

[best12bars]

Posted: 9/25/08 at 11:43am

If Brad and Angelina come to "me" for a loan, then yes, you're right, Goth.

I will get to set the terms for paying it back.

Until then, I have no say in movie stars' salaries... except to not buy the expensive tickets. When profits aren't as high, salaries come down. Supply and demand.

[The Ghost of Kringas]

Posted: 9/25/08 at 11:45am

Did Angelina Jolie f*ck up the economy? And - the absurdity of mentioning movie star salaries aside - why name one who uses a lot of her wealth to try and do good in the world? Maybe if you asked nicely she'd pay a few months rent on that tiny depressing apartment.

[best12bars]

Posted: 9/25/08 at 11:46am

Goth's parallel was pointless. Brad and Angie aren't asking me for money right now. Neither are the film studios who pay them those high salaries. They don't need me to loan them $700B because a movie tanked.

Not a valid comparison.

[The Ghost of Kringas]

Posted: 9/25/08 at 11:49am

Goth's parallel was pointless.

File that one under "same as it ever was."

Posted: 9/25/08 at 11:53am

Let's just buy Goth a box of straws so he won't need to grasp for them any more.

[Gothampc]

Posted: 9/25/08 at 12:08pm

"Goth's parallel was pointless."

Just because you miss the point doesn't mean that what I said was pointless.

The point is that companies, like producers, have to attract the best talent. Golden parachutes secure they are getting top talent.

[husk_charmer]

Posted: 9/25/08 at 12:18pm

Forgive my ignorance, but what is a golden parachute?

[Roscoe]

Posted: 9/25/08 at 12:20pm

No firm or company receiving bailout money shall pay any kind of bonus or golden parachute to any of its employees until the bailout money is repaid.

The amount of all money currently waiting for distribution as bonuses or golden parachutes shall be subtracted from the amount of bailout money each firm is receiving.

[madbrian]

Posted: 9/25/08 at 12:21pm

"The point is that companies, like producers, have to attract the best talent. Golden parachutes secure they are getting top talent."

All evidence to the contrary (see: Fiorina, Carly).

[JustAGuy]

Posted: 9/25/08 at 12:23pm

"The point is that companies, like producers, have to attract the best talent. Golden parachutes secure they are getting top talent."

And usually the acting talent is paid for their performance, plus a percentage of the profits. When there are no profits...they don't get the percentage...just their fee.

CEO's on the other hand, get a salary...and a bonus, dependent upon the profit. PLUS...a nice little going away gift even if they drive the company into the sewer.

There is no comparison. If finding and hiring the best talent is based on how much the talent gets for screwing up the company and leaving, then perhaps the company needs to re-access it's hiring practices. WHY would or should anyone expect to be rewarded for poor work? Collecting a salary and bonuses should be enough incentive for the job.

Did Brad and Angie...get a nice fat thank you check...when Mr. and Mrs. Smith bombed?

[Roscoe]

Posted: 9/25/08 at 12:24pm

If Brad and Angelina have to get pay cuts, why not the executives at the wildly profitable oil companies?

Posted: 9/25/08 at 12:33pm

A "golden Parachute" is a guaranteed severance package. It is given to all executives at a company when they leave in spite of their performance.

Like Carly Fiorina- Mc Cain's chief economic adviser As Wikipedia puts it:


"As HP's performance slowed, the Board of Directors became increasingly concerned. In early January 2005, the HP Board of Directors presented Fiorina with a four-page list of issues the board had with Fiorina's performance. The board proposed a plan to shift her authority to HP division heads, which Fiorina resisted. A week after the meeting, the plan was leaked to the Wall Street Journal.

On 9 February 2005, Carly Fiorina was dismissed as Chairman of the Board and Chief Executive Officer of Hewlett-Packard. Fiorina said in a statement:

"While I regret that the board and I have differences about how to execute HP's strategy, I respect their decision. HP is a great company and I wish all the people of HP much success in the future."

She was replaced by Patricia C. Dunn as Chairman, and then-C.F.O. Robert Wayman as C.E.O. Hewlett-Packard's stock jumped 7% on news of her departure.

Under Hewlett-Packard's severance agreement, Carly Fiorina received US$21 million in cash, which was 2.5 times her base annual salary. On March 8, 2006, two large institutional investors filed suit against Hewlett-Packard for violating its own severance cap when it doled out a multimillion-dollar payment to Fiorina as part of her termination agreement.

After Fiorina's departure from Hewlett-Packard in 2005, the company quickly prospered, overtaking Dell as the top-selling computer maker in the world."

[The Ghost of Kringas]

Posted: 9/25/08 at 12:42pm

Goth is right, y'all. Don't you remember when the government bailed out Miramax with our tax dollars?

[best12bars]

Posted: 9/25/08 at 12:55pm

I heard on the radio that they're talking about paying interest on the loan back to us (aka the government) in stocks.

Um... no. We (the people) want cash on the dollar, not stocks that might be worthless at that point. There's no guarantee of performance here. If the banks aren't smart enough to know that they gave the public "phony money" loans to buy their houses, how can we have confidence in their stocks a decade or so down the line.

(By the way, they WERE smart enough. They issued these phony money loans because greed is blind. "Look how much money we just made on paper!")

[YouWantitWhen????]

Posted: 9/25/08 at 1:02pm

Here are my suggestions:

First, we receive an equity stake in any company that we help out as part of this Loan/restructure. That way, if a turn around is successful, the taxpayers can recoup the costs of the loan.

Second, we look back to the last 6-8 quarters of compensation, and where excessive bonuses were paid, they are recaptured in lieu of a criminal investigation of fraud or a civil action for breach of fiduciary duty by those officers/directors.

Third, all stock options are eliminated, and we start from scratch. People now get options from these companies only when certain milestones are met.

Fourth, all bonuses are contingent on meeting certain milestones for the company. It is true that you need to attract the best and the brightest, but results will drive compensation.

Fifth, every homeowner who put in at least 10% down or $15,000 will have the opportunity to restructure their loan in order to avoid foreclosure. I have no sympathy for those who got loans with no money down, but think those "who have skin in the game" should be given some consideration.

Sixth, government oversight by a bipartisan committee to monitor how the process is working.

Seventh, reinstitute Glass-Steagall.

Eighth, change the way earnings are reported, and put more controls in place for rewarding long-term growth over short-term spikes in stock prices. Only pay dividends when the company can actually afford to do so.

Finally, the money is provided in stages. The $700 Billion figure was just pulled out of the air, without specifics or direction, the actual cost could be much higher or lower.

That is my suggestion.

[best12bars]

Posted: 9/25/08 at 1:06pm

YWIW... any chance we could get you on a plane to Washington, stat?

Brilliant stuff.

This is why you are who you are. Those are excellent suggestions.


EDIT: I have a dumb question... what is "Glass-Steagall?"

Updated On: 9/25/08 at 01:06 PM

[DayDreamer]

Posted: 9/25/08 at 1:06pm

I vote for YWiW.

They need to be held accountable for every penny, and since it's our money, it's our turn to set the terms of the loan.

[best12bars]

Posted: 9/25/08 at 1:08pm

Exactly, DD.

We have to help, I agree. But we get to decide when, where and how we do it.

[DayDreamer]

Posted: 9/25/08 at 1:10pm

For that money, they could pay everyone's debt. But that would be socialism. (tongue firmly planted on cheek)

Write your senators/representatives and let them know how you feel. They are your voice.

[artscallion]

Posted: 9/25/08 at 1:15pm

They say that it'll hurt us if we don't help them. So if the goal is to not hurt us, why don't they take that 700 billion and split it up amongst us, the poor taxpayers they're so worried about. Then we'll be fine and they can hope that it 'trickles up.'

[artscallion]

Posted: 9/25/08 at 1:19pm

EDIT: I have a dumb question... what is "Glass-Steagall?"

I don't know. But I think YWIW just put 18 million cracks in it.

[Gothampc]

Posted: 9/25/08 at 1:21pm

"Sixth, government oversight by a bipartisan committee to monitor how the process is working."

This never works. They televise the proceedings where politicians drag out the process to "look tough" and then nothing good ever comes of it.

Updated On: 9/25/08 at 01:21 PM