2. Bailed-out corporations must be managed in the long-term interests of customers and employees. The hyper-financialization of corporate leadership, driven by perverse incentive packages driven off short-term share price, has led to aggressive management styles that shortchange employees, customers, and the public. This system must be replaced in every bailed-out corporation with incentives and directives that demand responsible management. Otherwise, the public will only be enabling the continuation of past irresponsibility.
3. Shareholders, employees, and customers must understand that the corporation needs rescuing because the corporation's leaders failed at their jobs. CEOs and key executives didn't handle risk properly. A pandemic outbreak is an unusual event, but not an unpredictable one. We've been warned of the possibility for many years, and responsible business leaders would have planned for it. Boeing's profits, for example, depend largely on an industry that was always at high risk during an epidemic: travel.
You and I knew that. Its multi-millionaire executives knew it, too. They just didn't care. That means:
4. Senior executives must be replaced, and their past compensation must be reviewed for signs of malfeasance, stock manipulation, expense account padding, or any other signs of over-payment. Claw-backs of excess compensation should be considered, where appropriate.
Furthermore:
5. There must be legal and financial consequences for socially irresponsible or criminal behavior. That includes financial accountability and, where appropriate, criminal penalties for illegal behavior. Executives at bailed-out corporations should expect thorough investigations. They may dread them. But these investigations should be welcomed by customers, employees, most shareholders, and the public at large.
These senior executives didn't just fail. They did much worse than that. The extent of criminal malfeasance in a corporation like Boeing isn't known, because it hasn't been investigated. It should be. Boeing's role in the recent MAX crashes isn't in dispute. While we don't know how high the culpability goes -- and we should -- we do know that corporate leadership failed to act decisively and that people died as a result.
To those who say it will be impossible to replace fired senior executives from the current talent pool of top management, the right answer is: good. They all got it wrong. There will be publicly-minded managers -- some retired, some at a second-tier management level -- to step forward and lead these companies in a time of crisis.
6. All major bailouts should come with a full management audit. In Boeing's case, that means a thorough internal review of all corporate emails, accompanied by interviews with all relevant actors in all levels of the organization. Management should change, but the corporate culture must change, too.
Airline executives have behaved with shocking financial irresponsibility. Theirs is an industry plagued by failures, bankruptcies, and setbacks, even in the best of times. And it is a statistical and managerial reality that the best of times never last. Despite that, executives and shareholders used their cash flow to enrich themselves with a series of share buybacks, leaving no reserves for a crisis. They spent it on themselves and want to be rescued now.
And corporate handouts aren't likely to end with a few industries. Regulators broke the rules to rescue GE Capital, and GE is once again standing on the handout line. So is the oil industry, which may get its wishes granted despite its record of knowingly destroying the planet. Health insurers, too, are winning concessions.
That reflects a broken relationship between politicians and corporations. Therefore:
7. A rescued company and its executives may never again make political contributions, directly or indirectly -- ever. This ban must be permanent and inflexible. While it's a start, Sen. Warren's proposal doesn't do enough to end this legalized corruption, especially given shareholder self-interest and the politics of many corporate boards. Political contributions created the absurdity of a government asking aircraft manufacturers to "self-inspect," and hundreds died. It created the absurdity of asking major banks to self-regulate, and trillions were lost.
The message is simple. If you want to be rescued, your influence-peddling days are over.
Could this kind of bailout ever take place? CNN writes that Warren's conditions "should probably be read more as a wish list." If by "wish list" it means they're aspirational, that's undoubtedly true. A look at the Senate deal confirms that they're not becoming law anytime soon.
But we need to remember that it is corporate CEOs, not Sen. Warren, who have their hands out now. This bailout is their "wish list." The cynical hucksters who comprise this sad parade undoubtedly agree with CNN's less-than-neutral characterization of Warren's ideas as "extreme interventions into how businesses are run." Once it's clear how these CEOs have operated, however, it becomes clear that Warren's ideas aren't "extreme" enough.
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