The UAW is pushing for the incoming Obama administration to release them from the requirement that their members receive reduced salaries comparable to what non-union transplants building in the US pay their workers. "The bankers didn't have to agree to such onerous terms" is one of the arguments for relief.
There's a better way to fix the unfairness than agreeing to above-market salaries for Detroit car makers: make the terms of the bankers much larger bailout similarly strict (and constructive).
Now I know that a Republican administration somehow convinced a Democratic congress to be much easier on banks than either congress or the administration was prepared to be in the case of car makers. Hopefully a Democratic administration, which won office with heavy union backing, will tighten the terms for banks rather than loosening them for cars.
So banks which have already received huge dollops of our money without meaningful restrictions should be required to either repay all of our money with interest within a year or agree to much tougher terms which would include:
- Bailed-out bankers may be paid no more than 200% of what the average country banker (in Vermont, for example) makes in the comparable position including CEO.
- Bailed-out banks can't have corporate planes (or rent jets for their executives).
- Bailed-out banks need to show a plan for resuming lending (similar to the green requirements for car makers).
- Bailed-out banks need to show a plan to return to profitability and repay us or they will be forced to repay immediately.
- I can't bring myself to say there should be government banking czar (nor do I think there should be a car czar).
Investment banks like Morgan Stanley will lobby, of course, that they are different from mere consumer banks. But they have voluntarily switched to regulated bank status in return for all the help and guarantees available to regulated banks. They're no longer taking the risks of failure that we thought they were taking before we found out they were "too big to fail".
My guess is that so many banks will repay rather than accept these terms that the second tranche of TARP funds'll clearly be unnecessary. Solvent banks will say "no thanks" just as Ford is staying out of the car bailouts for now because they can afford to. The UAW is right that the bank bailouts shouldn't be any more cushy than the Detroit bailout. Right now financial industry bailouts are so condition-free that everyone wants one.