Bailout or handout?

As reported in the New York Post, Peter Kraus, formerly of Merrill Lynch, received a $25M payout when the company was sold to Bank of America to avoid a bankruptcy filing. The sale occurred only days after Mr. Kraus started working so it wasn't a bad deal to earn $25m after a few days work. I'm sure we all wish we could do that. Mr Krause, perhaps while on the job hunt, continued to work at Merrill through December at which time he became the CEO of another money management company.

So what does one do with a $25M bonus? Buy a $37M Park Avenue apartment, of course! Clearly the real estate market in NYC isn't in a slump if an apartment can be sold for 2x as much as it went for only two years earlier. I suppose we could simply consider this part of the bailout for the previous owners who I'm sure couldn't make their mortgage payment.

As much as we might detest the fact that this guy got a $25M payout after a few days at work, we have to recognize that he is nothing more than a shrewd negotiator. Surely the then CEO of Merrill knew of the company's financial troubles and yet they negotiated a deal like this knowing the financial "health" of the company. I'd really like to know what Mr. Kraus contributed to the company in the short time he was there. Apparently bonuses are no longer based on performance, but only on negotiation skills. I wonder if they were EVER based on performance.

And our wonderful "representatives" in Washington? We can only hope that they will learn from their mistakes, but I realize this is only a dream. We the taxpayers, thanks to our representatives, will continue to spend our hard earned dollars to support the purchase of apartments like this. Perhaps we should all move in.

Bailout or handout?