Good to know that the outrageous behavior of banking executives isn’t confined to the east coast.
Associated Bank is moving from the welfare line to the conga line.
Just three months ago, the state’s second-largest bank joined scores of other troubled lenders when it cashed a check for $525 million from the federal government to prop up its bottom line.
Today, Associated is preparing to drop tens of thousands of dollars – and maybe more – to send about 100 employees to a posh Puerto Rican resort as a reward for a job well done. – jsonline.com
I have zero problem with performance based pay for private companies. That’s great, and those employees deserve their rewards. What I do have a problem with is this attitude that seems to be prevelant among these executives who think that they deserve the best of both worlds.
They want to be bailed out by the government, they want the free money, the want their mistakes taken care of and cleaned up by the rest of us. And yet they demand that government keeps out of their business, expect to keep the private jets, multi-million dollar salaries and tropical vacations.
You can almost hear the resentment from the CEO of Associated Bank when he defends the trip:
“We took the capital, and let me say this very clearly, we didn’t have to,” Beideman said. “We took it as an abundance of caution in what is a challenging environment… Should we ask you or anybody else each individual thing we do to see if it’s politically correct?”
No you shouldn’t, and there’s one sure fire way to make sure you’ll never have to: don’t take the money from the government next time and spare us all the righteous indignation.
And I say that as someone who’s been a customer of Associated for over 10 years.
I live in the Washington Heights neighborhood of Milwaukee, WI with my wife Jen, our daughter Emerson, and son Carter.
Why WOULDN’T they blow tons of money on whatever they want? If they get into trouble, the very clear message is that the government will not let them fail. They’d be stupid not to take risks and spend, spend, spend.
To take away the inherent punishment for poor business practices and then complain when businesses practice poorly has always struck me as a little odd. Businesses all over the US are looking at their balance sheets differently now. They don’t need as much cash on reserves as they thought before the bailouts started. Maybe they CAN go to $TROPICAL_RESORT for that cushy break away from the hard working life. Maybe they CAN invest in $RISKY_INVESTMENT. Maybe they CAN buy back a ton of their stock. If the shit hits the fan, we know what will happen, and it’s not going to be failure of the company.
Thanks for the heads-up on this one, Dan. Now I know who *not* to bank with. It’s one thing if they earned the money, I have no problem with any company rewarding its employees with money the company earned in the marketplace. But they didn’t earn this money; it’s the corporate equivalent of welfare (and I’ll bet the CEO would be the first to complain about “welfare cadillacs”).
Let’s start talking to Congress about the financial companies that should be required to give the money they took under false pretenses back. (After all, since the money was intended to, as even the JS noted, to prop up failing institutions, and they didn’t need propping up, they have no business getting the money in the first place.) We should demand a return of the funds that were fraudulently acquired by such institutions.
They got some of my money, as a taxpayer. I hope they enjoy it, because that’s the only money of mine (or any and all friends I can influence) they’ll ever see.
Arlen, what are your thoughts on the Treasury’s practice of forcing banks to take the bailout money to avoid signaling which banks were weak, possibly causing a run on those banks?
It’s a messy, messy situation when public money starts supporting private businesses. To me the bottom line question is: if they are a good business, shouldn’t you leave them alone and let them spend the money how they see fit; and if they aren’t a good business, then why are we keeping them from failing?
(The answer to the second is simple: people don’t understand what happens when a company “fails”. They have no understanding of bankruptcy, and they believe that all of those jobs magically disappear. Politicians leverage this misunderstanding to spread fear, quoting ridiculous numbers of potential lost jobs, and suddenly campaign contributors are having their leadership positions — not the companies in any meaningful sense of the word — saved on the taxpayer’s dime.)