The Financial Bailout and CEO Bonuses essays

The Financial Bailout and CEO Bonuses essays During the mist of a financial crisis in 2008, nine of the top US banks paid out over $32 billion in bonuses to its top executives. While this may seem like a common practice, those same financial institutions received over $175 billion in federal bailout assistance (1). While rewarding top executives is a common practice used to bring extremely talented individuals into the organization, is it right to use the tax payers money? Before we discuss the ethical implications of CEOs lining their pockets with Federal money, lets back it up a bit. Was the 2008 bank bailout really necessary? The Emergency Economic Stabilization Act of 2008 was enacted in order to counter the sub-prime mortgage crisis that almost led to the collapse of the US financial institution. The plan involved injecting $700 billion into US financial institutions (3). According to U.S. Treasury Secretary-designate Timothy Geithner, I think if that had not been done at that time, I think we would be facing, really, a catastrophic failure in our financial system 4. If you take a utilitarianism approach, we can see that even though what may seem as a large price to pay to bailout a few corporations, it is still a lot better than what would happen if we had a repeat of the Great Depression. In essence, the bailout benefited the economy as a whole. So, we can safely say that the government bailout was necessary and moral. However, the moral implications of a federal bailout are not in question. Its the executives from the institutions that are getting bailed out that are receiving large bonuses that raise a moral dilemma. In order to apply the utilitarianism principle here, we must prove that in fact the benefits far out way the consequences. So, the question we must ask is, are these executives worth it? What do they bring to these financial institutions that constitute millions of dollars in compensation? O...