Where Do I Send the Thank-You Note?

Today’s thedeal.com reported: “After weeks of pressure from politicians about using bailout money to pay out year-end bonuses, Wall Street banks are preparing to tell Congress that they won't use the recent $125 billion government cash infusion for compensation, but only for shoring up their balance sheets and acquisitions. That however doesn't mean the estimated $108 billion set aside for bonuses and compensation in 2008 won't be going out though.

“According to a Financial Times report the largest nine U.S. banks - Bank of America, Bank of New York Mellon, Citigroup, Goldman Sachs & Co., JPMorgan Chase & Co., Merrill Lynch & Co., Morgan Stanley, State Street and Wells Fargo will pay bonuses from company earnings and their existing cash resources, as in prior years.”

Silly me. I just pictured money in a big room – okay, a virtual room – where all the money flows through. Kind a commodity like oil. And so when someone in that room full of money looks at one pile that looks exactly like the pile next to it… and says, we’ll call that pile “earnings and cash resources.” We were going to use that earnings pile to shore up our balance sheets (and some acquisitions) and use the “other pile” – the government bailout money – for high rates of compensation, bonuses and some hoarding-shoring-up (note: nothing will trickle down into the local frozen credit markets where you and I tend to borrow).

Shuckins! That’s bad public relations! So we’ll just switch piles, use the earnings for the bonuses and make sure we don’t use the pile of cash we labeled “government bailout” for compensation! Nothing will change. We will shore up our balance sheets and acquire away as planned – exactly. And we will shell out the bonus money and compensation as planned – exactly. After all, we don’t want Teddy and his wife Buffy to default on their third home in the Hamptons and the lovely new 85 foot Italian racing yacht they just bought. Maybe Congress and the people won’t notice.

It’s a shell game, and we are watching. Congress, wanna do your job? Interesting to see what special interest pay-offs and compromises we will see with a flock of dis-elected lame ducks!

I’m Peter Dekom, and I approve this message. Did you vote?!