Panel Head Wants Execs Fired from Bailed-out Banks

by Deb Cupples |  The Guardian UK reports:

"Elizabeth Warren, chief watchdog of America's $700bn (£472bn) bank bailout plan, will this week call for the removal of top executives from Citigroup, AIG and other institutions that have received government funds in a damning report that will question the administration's approach to saving the financial system from collapse."

"Warren, a Harvard law professor and chair of the congressional oversight committee monitoring the government's Troubled Asset Relief Program (Tarp), is also set to call for shareholders in those institutions to be 'wiped out.' "It is crucial for these things to happen," she said. "Japan tried to avoid them and just offered subsidy with little or no consequences for management or equity investors, and this is why Japan suffered a lost decade." (Guardian)

I certainly agree that top executives and managers at such firms should be fired.  Correction: they should have been fired before they got billions in bailout dollars.  After all, they were the ones responsible for causing or allowing their companies to be driven into a ditch.

Instead, Washington politicians seem intent on changing accounting rules in a way that would allow financial institutions to pretend that their "toxic assets" are worth more than they really are,  which would make company profits look bigger (or losses look smaller) -- which would, in turn, give execs at firms like AIG and Citigroup grounds to argue for big bonuses.

Yeah, these guys should have been fired months ago (the politicians, too).

Still, and largely because of ripple effects, I'm not sure that I agree with Prof. Warren that all shareholders should be "wiped out." 

A lot of innocent, ordinary folks who own shares in these huge companies, folks whose financial security and retirement depend on their investments -- folks who also had nothing to do with the reckless mismanagement (some say "fraud") perpetrated by executives and managers at firms like AIG and Citigroup.

Memeorandum has commentary.

Other Buck Naked Politics Posts:

* Obama Administration: Creating Loopholes in Bailout Laws?

* New FASB Rules: is Our Government Encouraging Accounting Fraud? 

* 663,000 Jobs Lost in March, Unemployment up to 8.5% 

* Real Executive Bonuses Based on Fake Profits

* More Right Wing False Analogies: this Time re: Executive Pay Caps

* PBGC Recklessly Invested in Pension Insurance Funds in Stocks

* Bank Execs Might Give Back TARP $ if They Can't Keep Bonuses

* Wall Street Execs Got Billions While Driving Economy Toward Cliff

* Executives Skate out of Economic Disaster with Millions

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