The Amazing Wall Street Bailout Trick
By Cartoon: Brian Fairrington, Cagle Cartoons
Project: Cynthia Kirkeby, ClassBrain
Sep 26, 2008, 10:06 PST
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| © Brian Fairrington, Cagle Cartoons 2008 |
The Amazing Wall Street Bailout Trick
A $700 trillion bailout of the financial industry is currently still in question. Treasury Secretary Henry Paulson insists that the bailout is necessary to keep the US economy from plummeting into a Depression. The proposal was dropped in the lap of lawmakers at the beginning of the week, but some of those being asked to approve the deal are requesting control over the executive compensation of the companies involved, stock warrants, and other controls related to the debt being taken on by the American taxpayer.
The suggested cap on compensation is a salary no higher than the highest paid government employee, i.e. The President, who makes $400,000 per year. Average compensation for a top 500 CEO according to BusinessWeek was $12.8 Million in total compensation.
Questions to Ponder
- Should the US government be involved in this record-breaking bailout, or should the markets be allowed to correct naturally?
- What are the consequences of doing the bailout for the American taxpayer and the economy?
- What are the consequences of not doing the bailout for the financial markets and the economy?
- Is it reasonable to require control over executive compensation in the effected firms?
- Stock warrants are contracts which allow someone to buy shares of a company at a specified price until a specified date. Stock warrants in the bailout would potentially allow the government to buy shares in the companies once they are profitable at a discounted rate, thereby potentially making money for the American taxpayer on the deal. Do you think this is a reasonable condition of the bailout?
- Which other conditions do you think should be attached to the bailout, if any?
© Copyright 2008 by Classbrain.com
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