Financial powerhouse Bear Stears Cos., the nation's fifth largest investment bank, was rescued from the brink of collapse last Friday by our government, doing business as the Federal Reserve, which together with another wall street concern extended loans to the troubled institution for 28 days. This presumably will allow it to be acquired by or merged with another financial house that is presumed to be stable.
Doesn't it make you feel warm and cozy to see the public treasury bailing out one of the firms that got into trouble by participating as a major player in the subprime mortgage business and earned $233 million in 2007 and $2 billion in 2006 by doing so? Bear Stearns in 2006 compensated the executives that led it into this mess to the tune of more than $38 million to its chairman of the board, more than $35 million to its president and chief executive officer, more than $26 million to its chief financial officer and chief operating officer, and . . . well the list goes on and on. I wasn't able to find the compensation figures for last year, and I wasn't able to determine how much these geniuses are chipping in to rescue the company they led into helping create the company's mess and our current economic debacle.
Contrast the bailout that -- make no mistake about it -- we are supporting with our tax dollars -- with what happens to Joe Sixpack, the ordinary citizen who doesn't sit behind an expensive desk in a fancy Manhattan office, but works hard, plays by the rules, and supports his family, if he makes a few bad decision or has his job shipped overseas. Joe's mortgage holder forecloses on his house. He is forced into bankruptcy, stripped of his assets, and spit out onto the street. And thanks to the bankruptcy "reform" legislation enacted by "our" Congress and signed into law by "our" president, Joe probably doesn't even get to start out anew. His indebtedness to the bankers that brought us the subprime meltdown no longer is certain to be discharged through the bankruptcy process so he still is likely to be saddled with his debts to the institutional lenders for which "our" political leaders always show so much consideration and compassion.
The government of course will do nothing for Joe because doing so would remove the risks of, and encourage irresponsible decision making and poor financial management by Joe and others like him . . . but keep in mind that although others like him probably includes you and me, it definitely doesn't include Bear Stearn or its executives.
We have a wonderful system in which the poor and the middle class have free enterprise but are plundered by government to support socialism for big corporations and the rich.