- Strong quake hits Japan, triggering tsunami
- Sniper heaven: Pentagon’s self-guided bullets leave enemies nowhere to hide
- Violent gang taking advantage of immigration crisis, using border as recruiting hub
- Medicaid enrollment continues to soar under Obamacare, administration says
- Michelle Obama to Latinos: ‘We cannot afford to wait on Congress’ for immigration
- White House urges GOP to act ‘urgently’ on $3.7 billion request for illegal immigrants
- Politicians, criminals using ‘right-to-be-forgotten’ law EU courts forced upon Google
- Combat fatigue: elite special forces troops are ‘fraying,’ Gen. Joseph Votel warns
- German foreign minister to meet Kerry to discuss spying claims
- Florida police spokesman tells citizens: ‘Get yourself some firearms’
WILLIAMS: Eye of the financial storm
Question of the Day
The persistence and magnitude of the ongoing financial crisis has spared no one. It has wrecked havoc on our nation and sent ripple effects throughout the global economy.
This has been a particularly unkind crisis -– one that has not discriminated among the individual consumer, international corporations and venerable firms on Wall Street, to name a few. Most recently, the eye of the storm has circled around the Big Three automakers that have absorbed the ire that had been focused on banks and other financial institutions just a short time ago. This is without question a fast- moving storm that does not leave much time for reflection on the day’s or week’s events. But it is time to give pause, for history has shown our memories are short, and we are often doomed to repeat our past. This is not a past we can afford to relive.
In many ways, the actions and antics of Wall Street through the years have precipitated the unraveling of our economy and the financial well-being of millions of Americans. Deliberating, they call it. Nice name, but it doesn’t soften the blow. Wall Street has always been at the heart of the financial or asset bubbles that inevitably pop. Wall Street has served as the enabler that pushes toxic financial instruments into the hands of the unknowing, those in awe of the Wall Street institution. This phenomenon is much like the drug lords who bring illegal substances to market but don’t use the drugs themselves. The motivation is always the same –- money.
The only constant in this paradigm is that Wall Street was able to walk away fat and happy or at worst slightly bruised. Wall Street has finally been forced to open its kimono, and we got a disheartening view that there is not much to impress us and there probably never was. The reality is Wall Street is home to one of the largest – if not the largest - concentrations of the best and brightest financial minds. But the problem is that they are not as smart as they think they are, which is evidenced by collapse after collapse of the most venerable financial institutions and the near failure of our financial system. When did it become okay for the titans of industry to walk away with tens of millions or hundreds of millions of dollars in compensation when our investments get anemic returns? It doesn’t matter how smart you are if your moral compass fails you and your value system makes you succumb to greed.
With executives from the Big Three now in the spotlight, we are finding that greed, in the form of excessive compensation, plagues corporate America as well. They too have avoided the pay-for-performance model. It is hard to ignore the astronomical financial incentives and wealth creation that exist on Wall Street and in executive suites across the country. It is even more challenging to realize that such rich compensation is not necessarily tied to performance or accountability. In many ways, Wall Street and business executives could literally afford to ignore the risks, inevitable ripple effects and fallout that would ensue by throwing caution to the wind because they would still make their millions and go home.
Wall Street and the Big Three have failed the American public. They do what they do best - make money off of unsustainable and broken business models and reap the rewards from convincing their boards, regulators and the American public they have earned such extravagant and baseless compensation packages. Who can’t leverage their company up and run it into the ground while getting paid tens of millions of dollars? It is insulting - not impressive - that a number of executives are willing to work for a salary of $1 for the next year.
Merrill Lynch, recently sold to Bank of America, posted a $20 billion loss and announced it was cutting bonuses by 50 percent. Why is anyone getting a bonus? We all agree that the system is broken. But no one has the courage to say that neither Wall Street nor corporate America needs to make millions or tens of millions of dollars for the services they provide. Congress and corporate boards need to stand up for the American public and their shareholders and demand reforms. It could be one of the best investments they make.
As with any problem, if we put our heads in the sand the issues will only haunt us and come back to bite us elsewhere later. Congress has an unprecedented opportunity to prevent a meltdown of our financial system and seize this chance to demonstrate that it learned from its mistakes – unless it too succumbs to pride. Otherwise, it will be a matter of time before Wall Street and corporate America misbehave again and Uncle Sam - the American taxpayer - will again have to step in to save Wall Street and corporate executives from themselves.
Armstrong Williams’ column for The Washington Times appears on Mondays.
About the Author
By Robert N. Tracci
Congress must use its appropriations power to secure the border
- Violent gang MS-13 taking advantage of immigration crisis, using border as recruiting hub
- Pentagon's self-guided bullets leave enemies nowhere to hide
- Michelle Obama to Latinos: 'We cannot afford to wait on Congress' for immigration
- A 'new Cold War': China's top paper warns of 'slippery slope' towards conflict with U.S.
- Armed militia sets up Texas command center to 'fight for national sovereignty'
- DOJ investigates Norfolk parade float critical of Obama
- PRUDEN: 'Dirty Harry' Reids increasing eccentricity
- 'Be a leader' Perry tells Obama to confront border crisis
- Eric Holder on Palin: 'She wasn't a particularly good vice presidential candidate'
- Hometown paper to Harry Reid: 'Quit the race-baiting already'
Obama's biggest White House 'fails'
Celebrities turned politicians
Athletes turned actors
20 gadgets that changed the world
Fighting in Iraq
World Cup's sexiest WAGs