The United States of Bailouts

Are we having fun yet?  What a week.  As I wrote earlier this week, take deep breaths.  Alcohol or other mood alternating substances might be in order as well. 

Our good ol’ government is working on aid for businesses impacted by the massive slowdown in the economy.  Hopefully, they learned from the 2008 bailouts.  Here are a few things I’d like to see put in place if company takes government money.

  1. All executives take a 50% cut in salary immediately.  No bonuses or equity grants for any senior management until the taxpayers are paid back.
  2. No repricing of options for any employee of a public company that takes money.
  3. No share buybacks while government loans are in place. 
  4. All loans are secured and senior to any other debt.  If bondholders and existing lenders won’t subordinate, use the bankruptcy process. 

I know we are in unprecedented times.  I also know the last bailouts created a lot of winners and losers.  The government should not be in the business of picking winners and losers.  Crony capitalism is what is destroying the social fabric of our country. 

It is sad how small companies are being decimated by this crisis.  What is even sadder is the vitriol being spewed on Twitter and other social media outlets about “greedy companies that don’t care if their employees get sick.”  I have talked to no fewer than 25 business owners in the last week.  Everyone one of them says the same things:

  1. I want and need my employees to be healthy.  I don’t have a business without them.
  2. How do I pay my employees during this crisis?

Of course, there are bad employers, just as there are bad employees and bad people.  But they are not the majority.  Bad employers make the news.  Bad employees do not.  Most employers provide health insurance which they pay the lion’s share of.  Do you think they want their costs to go up?  Employers know they don’t have businesses without employees. 

I pray our government officials get this right.  If recent history is a guide, we need a miracle. 

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