I remember how in the laste 1980’s Michael Milken ‘earned’ a $500 million dollar bonus and the following year his employer, old line brokerage house Drexel Burnham went out of business.

With the federal government having to bail out so many firms including most recently AIG, they should cap these obscene bonuses. Though the bonuses may seem small compared to the billions of dollars required to bail these firms out, the taxpayers should demand it.

I would like to see SEC approval of any bonus in excess of 5 million dollars in a single year. Of course this would not have covered Fannie Mae or Freddie Mac since Congress specifically exempted them from SEC oversight in favor of Congressional steering.

Such large bonuses should be required to be paid out over five or ten years and should be subject to recall if the firm falters. Such recipients of such largesse should be held accountable to for the long term performance of the firm, not the recent quarter or the recent year.

The detailed structure of these bailouts is above my pay grade, but I hope the government takes enough control that they can be repaid for their risk with interest over whatever period of time is necessary.

We don’t want to encourage the government to take over mismananged or failing firms. But if it becomes necessary as it has, it should be painful enough to the management and the shareholders that they would want to avoid it at all costs.

Whatever good comes out of this period of severe financial turmoil I hope the age of obscene excecutive bonuses and the focus on short term results comes to an end.

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