Just a Distraction

One of Obama's 'czars', Kenneth Feinberg, is setting salaries for the bailed out companies:

The seven companies under Feinberg's purview are Citigroup, Bank of
America, General Motors, Chrysler, GMAC, Chrysler Financial and American
International Group. These firms have received a total of about $250 billion in
bailout funds from the Troubled Assets Relief Program, adopted last year by
Congress, and benefited from hundreds of billions of dollars more in government
guarantees and other support.

Feinberg, who was named special master on compensation by the
administration in June, has sole discretion to set compensation for the five top
senior executives plus the next 20 highest-paid people at each of the seven
companies.

Eugene Robinson writes:

It's nice to know that there must be some pooh-bah at B of A, Citigroup or
AIG who will have to live without the new $90,000 Porsche Panamera he was
planning to buy. But Feinberg's writ of imperial decree doesn't extend beyond
those seven companies, and the rest of Wall Street gives no indication of
remotely understanding what the big deal is about compensation. Goldman Sachs,
for example, has a bonus pool this year of at least $16 billion and perhaps as
much as $23 billion.

But all this is just a sideshow. The main event is the limited,
far-too-modest attempt by the Obama administration and Congress to curb the
irresponsible Wall Street practices that led to the financial meltdown -- and,
if unaddressed, will lead inexorably to the next crisis.
Deregulation allowed the financial marketplace to devolve from an institution that served the overall economy -- by allocating capital most efficiently to the companies that could put it to best use -- into an institution whose primary mission was to
serve itself.

All this investing and hedging generate huge transaction fees and big
profits, which can be skimmed off the top each year. Everything's fine, until
there's some disruption in the real economy -- a downturn in the housing market,
say. If the disruption is severe enough, the web of make-believe deals starts to
unravel. At which point the government steps in and bails everybody out.

The White House and Treasury Department have proposed reforms that
would ameliorate, but not eliminate, this ridiculous cycle. What the
administration won't do is outlaw some kinds of derivative products or
transactions; officials say that if they went down that road, they would always
be one step behind Wall Street's inventiveness and greed. I think it would be
worth a try.

The administration did propose that derivatives transactions go
through clearinghouses and be conducted on transparent, regulated exchanges. But
as reform legislation begins to work its way through Congress, Wall Street firms
-- including companies that received bailout funds -- have boosted their
spending on lobbying and political donations.

Until we come up with some kind of public financing of political campaigns, our politicians will be 'bought and paid for' by the big corporations, representing their interests and not ours, the people. Under these circumstances, just voting in elections is really irrelevant, when all the politicians already belong to their real masters.