This AOL article troubles me greatly. I have questions revolving around this issue for which I have yet heard answers. Perhaps someone can flesh out the details of this for me, or perhaps offer a link that gives more details. But here’s where I stand based on my limited knowledge of this story:

First of all, I don’t like the idea of bailouts anyway. It’s bad enough that, first Bush, and now Obama is doing it in the first place. This is an artificial impediment to the natural course of a free market economy and as such, the results are equally artificial and misleading in judging the effectiveness of either a free market economy, or the policy of bailouts themselves.

As far as daring to impose restrictions on the compensation policies of private enterprises, my first question would be: Are the bonuses or salaries a result of the bailout? In other words, were the execs getting bonuses anyway?

A corporation is an entity unto itself. Though not a person in reality, it is like a person legally in the sense that even the person(s)who founded the corporation is/are empoyees of the corporation as opposed to being self employed. The distinction is a legal one but for reasons of taxation and liability is a great one. Compensation for executives of the corporation is determined by the corps board of directors and shareholders. Generally a contract is approved that spells out the terms of the employment of the exec. Bonuses are generally a result of having met certain pre-determined criteria.

If bailouts are being granted to failing companies, it is the entity known as the corporation that is legally making the request. Or, the execs who petition for the bailout are doing so on behalf of the corporation, and doing so in order to handle its debtload. Salaries and compensations are a part of a corp’s debtload. If an incredibly generous bonus is the result of a contracturally spelled out set of criteria that was met by a given exec, an accomplishment that benefits the corp whether it is failing or not, it seems to me that the bonus is a legitimate debt for which the bailout money can be used to satisfy. The compensation package agreed upon at the start of the exec’s employment, if a legal contract, is an obligation the corp is required to meet. Just because Barack Obama and hordes of covetous and envious liberals don’t like it, doesn’t mean they have the right to impose such restrictions if they are supposedly offering a bailout to help the “little guy”.

Unless there’s something missing in this equation, or unless I’ve got the whole picture horribly wrong, it seems to me that this type of interference is without question, an action without justification. If the bonuses are given BECAUSE of the bailout, that is, “hey we’re gettin’ some dough—here’s some extra for you!”, such restrictions are understandable. But again, the bailout is for the corporate entity, not the employees, including those who run the show.

Can anyone shed more light?