Bus Eth 501

Of Banks and Bonuses

Business Ethics/ETH 501

Trident University International

February 28, 2011

A question is presented, “should top bank executives that received bailout money get big bonuses?” Plain and simple, “no.” Over the past year or two there have been numerous articles about large executive compensation packages and in particular about compensation packages to executives in companies that received bail out money from the government at the taxpayers’ expense. These same companies were laying off a massive amount of their lower level employees all for the sake of their bottom line. The gap between top and lower level employees is huge which causes anger among the ranks. Top executives should not have received any bonuses, big or small. Many bank executives received large salaries and large bonuses for the growth and illusory short-term profits associated with mortgage lending and mortgage securitization that landed us in the current mess. Companies would argue is that their duty is to maximize profits for their shareholders. The problem with this argument is that is leaves out any consideration for future generations. The primacy of profit over ethics may have moderately destructive impacts, as with the banks manipulation of markets to maximize profit on the backs of the citizens.

The word bonus suggests that it is a pay rewarded for good performance. Given the information the rewards were a handout to banks that had poor results from the previous year, which assisted in the economic crisis. Individuals were basically been rewarded for poor performance.

The purpose of Troubled Asset Relief Program (TARP) is to purchase or insure troubled assets to promote financial market stability. I believe that paying Wall Street bonuses was not part of the plan. This was an honest attempt to bring vitality back into the economy.

Aronson (2001) defined ethics as “the study of standards for determining what behavior is good and bad or right and...