Panic grips the Street

According to the Washington Post:

The firestorm over bonuses paid by insurance giant American International Group has triggered alarm at other financial firms, threatening federal efforts to draw private investors into economic recovery programs.

A senior executive at one of the nation's largest banks said he had heard from several hedge funds that they would not partner with the government for fear that lawmakers would impose retroactive conditions on their participation, such as limits on compensation or disclosure requirements.

Other firms want to bide their time to see how early participants in the rescue programs are treated before they decide whether to sign up, said the executive, who spoke on condition of anonymity.

Briefly put, it appears that America's rentier capitalists will take the government's money when it comes without strings attached. But they will think twice about taking this money when it comes with these strings. I find their reluctance odd, however. Are we to believe that they and their agents would rather have their firms made bankrupt by the crisis than to bind themselves to rules requiring transparency, personal integrity and fiscal probity? I ask because bankruptcy is a probable alternative for some of these companies. If my conjecture is true, if they prefer firm failure to governmental oversight and regulation, then those rentiers staffing companies facing destruction simply do not care how greedy and vicious they appear to the rest of the country while those who work at firms that can survive the crisis seemingly wish to engage the Obama administration in a game of chicken in order to gain an advantageous position from which to exploit the crisis for their personal advantage. Both possibilities are outrageous and ought to draw a firm response from the Obama administration.

No comments: