Thursday, October 30, 2008

Have Bonus, Will Bailout; No Bonus, Go Boozing

I hate to say I told ya so, and I don't like being right about these things. Tom Wolfe's "Masters of the Universe" think that they're genetically superior to the rest of us, which is why they will never give up their bonuses:

Wall Street's chief executives will hunker down and pay bonuses this year in the face of the worst financial crisis since the Great Depression, a taxpayer bailout and mounting political outcry, industry veterans say.

The threat of Congressional subpoenas doesn't deter these people. They contribute money to Congressional campaigns to forestall just such an outcome. Even though the share prices and earnings of their firms have tanked, they feel the need to be incentivized not to leave Wall Street for greener pastures . . . where? Hedge funds? That sector will be sliced in half within three months. Private equity? M&A deal flow has dried up. Regional banks? TARP money will force larger banks to gobble them up and throw their employees out with the trash. That leaves your local credit union. Ah, yes, picture a bunch of Harvard MBAs disgruntled with Congressional caps on their seven-figure bonuses muscling their way into doing loan approvals down at the corner of 5th and Main. Ain't gonna happen, sports fans.

These people see themselves as indispensible, and their self-importance grows with every new neat idea for bailouts to be covered by the TARP, like this one for mortgage workouts:

The FDIC and Treasury program would provide incentives to mortgage lenders and loan-servicing companies to change their loans, ``along with a framework for modifying them systematically into long-term and sustainable, affordable mortgages,'' Bair said.

The plan would apply to banks, savings and loans, hedge funds and other mortgage holders, the people said. While it would provide guarantees for about $500 billion in mortgages, it would cost about $50 billion that would be covered by the bailout package.

Not every Wall Streeter is lucky enough to be raised with a sense of multimilliondollar entitlement. The ones unlucky enough to have no pedigreed connections to bail them out after layoffs are falling back on Plan B for Bartending:

A growing number of out-of-work New Yorkers are turning to bartending, according to school directors. Enrollment in the American Bartending School in Manhattan climbed 53 percent from last October to 84 pupils, the most for the month in five years, director Joe Bruno said in an interview.

Maybe one way to survive Great Depression 2.0 is to cozy up to a pedigreed Wall Streeter and offer to be their footstool. These people are always in need of nannies, personal shoppers, and other peons they can push around. They have plenty of practice pushing around elected officials.