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Bonuses for Wall Street Should Go to Zero, U.S. Taxpayers Say
U.S. taxpayers, who feel they own a stake in Wall Street after funding a $700 billion bailout for the industry, don't want executives' bonuses reduced. They want them eliminated.

``I may not understand everything, but I do understand common sense, and when you lend money to someone, you don't want to see them at a new-car dealer the next day,'' said Ken Karlson, a 61-year-old Vietnam veteran and freelance marketer in Wheaton, Illinois. ``The bailout money shouldn't have been given to them in the first place.''

Compensation at Goldman Sachs Group Inc., Morgan Stanley, Citigroup Inc. and the six other banks that received the first $125 billion of the federal funds is under scrutiny by lawmakers, including Rep. Henry Waxman, a California Democrat, and New York Attorney General Andrew Cuomo, also a Democrat. President-elect Barack Obama cited the program at his first news conference on Nov. 7, saying it will be reviewed to make sure it's ``not unduly rewarding the management of financial firms receiving government assistance.''

While year-end rewards are likely to decline with a drop in revenue this year, industry veterans say that eliminating them risks driving away the firms' most productive workers.

``There are instances where bonuses are justified, deserved, and in the best interests of the investment bank involved,'' said Dan Lufkin, a co-founder of Donaldson Lufkin & Jenrette Inc., the investment bank acquired by Credit Suisse Group AG in 2000. ``Your very best people are people you want to hold, and your very best people will have opportunities even in this environment to transfer allegiance.''

Unfortunately, we are still looking at a coming food crisis. I would be very surprised if WW3 does not break out within 10 years.

Dude, we have to pay farmers not to farm in order to keep commodity prices from falling through the floor. Food is not a problem.

Plus have you seen how effin' *FAT* most Americans are? A famine would do us good.

Another day, another bailout: This time homeowners get to benefit from mortgage-modification programs, designed to stem the tide of foreclosures by making it easier for borrowers to stay current on their loans.

But the latest plans from Fannie Mae and Freddie Mac, joining banks such as J.P. Morgan Chase and Citigroup, hold plenty of risks.

Take investors in mortgage-backed securities. Modifications to mortgage holders' interest rates could leave some MBS holders with reduced interest payments. Forgiveness of principal, meanwhile, could lead to capital losses.

A bigger worry could be that these modification programs are too effective. In that case, "many current borrowers will wave the white flag of surrender and also try to get a modification," Rod Dubitsky, a senior strategist for asset-backed securities at Credit Suisse, wrote in a recent report.

The danger is that loan holders who otherwise could meet their payments would decide to fall behind to get their cut of the bailout. That could unleash a chain reaction that drives default rates even higher.

That means another dose of moral hazard. Federal officials stopped worrying months ago about that for companies, as they piled up bailout upon bailout to keep the financial system from collapsing. Now officials risk injecting warped incentives into the behavior of individuals.

If the programs take pressure off house prices, MBS holders and borrowers could both make out better than if there weren't any modifications.

But the financial crisis has shown time and again that it is tough to anticipate the unintended consequences resulting from attempts to quell the turmoil.