Investment banks pay annual bonuses that seem ridiculous to average people. To the tune of $32.6 Billion in 2008. Four thousand six hundred seventy five people received at least one million dollars each. Read the details here if you want to know more about it.
There is no need for Congress to step in and limit this pay nor to bail out the banks! All that has to happen is for the existing regulators (primarily the Fed) to tell the firms that they will be allowed to fail if they do not immediately raise more capital which can be raised from the bonus-rich employees buying stock in their companies.
Regulators have this power and always have had the power to do this; they just found it easier to go to Congress and scream “crises, the sky is falling and you have to do something.”
Rich bankers can either let the golden goose from which they get their annual eggs die, or they can pony up to keep the firms alive. It is called capitalism and it works. It makes bankers prudent because they realize they are playing with their own money. As it is now, it is heads they win, tails the taxpayers loose.
Taxing ordinary Americans to pay for these bailouts is obscene and immoral. When your congressional representative is home for “recess” in August, I suggest you tell them that if they ever vote for such a thing again you will come to Washington with your pitchfork to chase them out of town.
That is how you make a “representative” actually represent you instead of K Street lobbyists. Believe me when I tell you there will be more attempted bailouts and more bonuses in the future. It may be three months, six months, or a year, but America’s financial problems are far from fixed.