Skip to main content

Sign up for our newsletter.

Quality journalism. Progressive values. Direct to your inbox.

This #GivingTuesday, whatever is your first priority, your second priority has to be independent media.

2021 has been one of the most dangerous and difficult years for independent journalism that we’ve ever seen. Our democracy is facing serial existential threats including the climate emergency, vaccine apartheid amid deadly pandemic, a global crisis for biodiversity, reproductive freedoms under assault, rising authoritarianism worldwide, and corporate-funded corruption of democracy that run beneath all of this. Giving Tuesday is a critical opportunity to make sure our journalism remains funded so that we can stay focused on all your priority issues. Please contribute today to keep Common Dreams alive and growing.

Please Help This #GivingTuesday -- Though our content is free to all, less than 1% of our readers give. We’re counting on you. Please help Common Dreams end the year strong.

Demand for airline travel has collapsed. (Photo: Getty Images)

Demand for airline travel has collapsed. (Photo: Getty Images)

Any Corporate Bailouts Should Wipe Out Shareholders First

Companies taking taxpayer money should have to limit CEO pay.

Dean Baker

 by Market Watch

It looks like we are seeing an effort to do a replay of 2008 where we were told that we had to give all the money to the banks or the world would end. Today the story is that we have to bail out the airline, cruise, hotel, and restaurant industries or tens of millions of workers will lose their jobs. Well, the disaster threats were not true in 2008 and they deserve even less credence today.

The story in 2008 was that all our major banks had effectively made themselves insolvent through their own greed and bad judgment. They had made hundreds of billions of dollars worth of mortgage and mortgage-related loans that suddenly went bad when the housing bubble burst.

If we let the market work its magic, they would have all gone bankrupt.

The banks got the government to lend the money they needed to stay in business, at way below market interest rates, by telling everyone that if they went under, we would be looking at a second Great Depression. There was literally no one who could explain why we would be prevented from doing the same thing that got us out of the first Great Depression (spend lots of money) if the banks went under.

Our payment system would have surely been disrupted in the immediate wake of a wave of bankruptcies, but unlike in the 1930s, we have the FDIC to insure most of our deposits and keep the wheels turning.

The initial downturn surely would have been somewhat worse had we gone the no bailout route, but there is no economic reason we could not have quickly lifted the economy out of a downturn with a massive stimulus following a collapse of the major banks. We held the cards and could have dictated the terms of any bailout for the banks.

Unfortunately, this argument was not heard at the time. I remember I wrote a column for the Guardian with the headline “the banks have a gun pointed to their heads and are threatening to pull the trigger.” The paper flipped the headline so that the guns were pointed to our heads.

Anyhow, we can’t let the same mistake happen twice. Congress can dictate terms of any bailout. I would suggest following the auto-industry model — wipe out shareholders first. And, bailout recipients have to commit to keeping workers on the payroll with current pay and benefits.

There also should be strict caps on executive compensation. Let’s make it $2 million in total compensation. (That includes insurance policies, health care, pensions, etc.) And to ensure that there are no silly mistakes, jail time for board members who sign contracts exceeding this figure.

If the airlines, cruise ships etc. don’t like it, let them go elsewhere for money.

This sort of restriction on CEO compensation is important because it can help to counteract the crazy upward trend in CEO pay we have seen in the last four decades. There really is no countervailing downward pressure. CEOs ask their friends on corporate boards for big pay increases year after year, and the board has no reason not to give them more of the company’s money. If major corporations can be effectively run by CEOs getting one tenth the going rate, it would set a valuable precedent.

This is not just a question of envy. More money for those at the top means less for everyone else. And to be clear, it is not just the CEO who is vastly overpaid. If the CEO is getting $20 million, the chief financial officer and other top execs might be getting $10 million, and the third tier could be getting $2 or $3 million. The world would look very different if the CEO were getting $2 million, which would be the case if we had the same ratios of CEO to worker pay as 50 years ago.

One more item; we should also require a full financial disclosure from President Donald Trump and family as a condition of any bailout so we know how much money we are giving him.

Anyhow, we have major corporations desperately in need of government support to stay afloat. Nancy Pelosi is in a position to dictate terms and tell these companies, as well as Trump and the Republican Senate, to take it or leave it.

© 2020 Market Watch

... We've had enough. The 1% own and operate the corporate media. They are doing everything they can to defend the status quo, squash dissent and protect the wealthy and the powerful. The Common Dreams media model is different. We cover the news that matters to the 99%. Our mission? To inform. To inspire. To ignite change for the common good. How? Nonprofit. Independent. Reader-supported. Free to read. Free to republish. Free to share. With no advertising. No paywalls. No selling of your data. Thousands of small donations fund our newsroom and allow us to continue publishing. Can you chip in? We can't do it without you. Thank you.

Number of Covid Boosters Given in US Exceeds Single Shots in 8 African Nations Combined

"Our leaders' failure to help bring the vaccines to everyone, everywhere will keep us on a cruel and never-ending cycle of illness, death, and economic suffering."

Jake Johnson ·

Omar Hangs Up After Boebert Uses Call to Double Down on 'Outright Bigotry and Hate'

"Instead of apologizing for her Islamophobic comments and fabricated lies, Rep. Boebert refused to publicly acknowledge her hurtful and dangerous comments."

Jessica Corbett ·

Win for Alabama Workers as NLRB Orders New Union Vote After Amazon's Alleged Misconduct

A union leader said the decision confirmed that "Amazon's intimidation and interference prevented workers from having a fair say in whether they wanted a union in their workplace."

Jessica Corbett ·

'For the Sake of Peace,' Anti-War Groups Demand Biden Return to Nuclear Deal With Iran

"It's time to put differences aside and return to the Iran nuclear deal," said one advocate.

Julia Conley ·

'That's for Them to Decide': UK Secretary Rebuked for Claiming Vaccine Patent Waiver Won't Be 'Helpful' to Global Poor

One U.K. lawmaker asked when the government would "start putting the need to end this pandemic in front of the financial interests of Big Pharma?"

Andrea Germanos ·

Support our work.

We are independent, non-profit, advertising-free and 100% reader supported.

Subscribe to our newsletter.

Quality journalism. Progressive values.
Direct to your inbox.

Subscribe to our Newsletter.

Common Dreams, Inc. Founded 1997. Registered 501(c3) Non-Profit | Privacy Policy
Common Dreams Logo