In Too Big to Fail, Andrew Ross Sorkin's tour-de-force on the 2008 meltdown, the Wall Street executives trying to handle the crisis come across as anything but masters of the universe. They're mostly driven by fear, they are usually at least two steps behind in understanding the forces at play, and in the end they are beholden to the government.
Indeed, the only people in the entire drama who have any real ability to shape events are Treasury Secretary Henry Paulson, Federal Reserve chairman Ben Bernanke, and New York Fed chairman (and now Treasury Secretary) Tim Geithner. British regulators, Sheila Bair of the FDIC, and Congressman Barney Frank also make important cameo appearances and shift the dynamics at key times.
The bank executives, with their private planes and white-gloved drivers shuttling them from Connecticut estates to Manhattan offices, spend a couple of weeks of sleepless nights running around doing what Geithner tells them. It was certainly an exhausting and scary time for many of them"”but not one that appeared to require a lot of special talent.
These scenes come to mind as I read that Wall Street is once again preparing to pay out billions in bonuses on the rather comical basis that 2009 was a good year for many of the firms. Sure, it was a good year"”because the stock and bond markets rebounded from crisis levels, and Wall Street firms make most of their money these days by gambling their own capital in the markets.
That doesn't mean that anyone did anything to merit a big bonus. If pay for performance was a real thing, almost everyone on Wall Street would have been on the unemployment line as of about Sept. 20, 2008.
As a small-business owner, I don't consider myself a populist, nor do I have any issue with successful businesspeople making lots of money. But I do find it incredible that a bunch of companies that owe their continued existence to a recent taxpayer bailout would now be paying out billions to the same people who created the problems in the first place.
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