Bailout Ethics
Americans are outraged. Billions of taxpayer dollars were committed last year to rescuing firms such as Citigroup and the American International Group (AIG). Earlier this year, several companies who received Troubled Asset Relief Program (TARP) assistance were awarding top executives with extravagant bonuses. According to the Wall Street Journal, the U.S. government lent $238 billion in TARP taxpayer funds to almost 700 banks; 44 of these banks have repaid a $71 billion (Johnston, para 6). There remains $167 billion invested in banks. Some critics argue that a “mere” $167 billion is not significant to warrant public indignation against bonuses. However, the issue is not about specific bonus amounts but the principle of …show more content…

Therefore, it was moral for the government to bail out the troubled banks because it was for the greater good of its citizens, markets, and the global economy. However, how do executive bonuses contribute to the greater good of all stakeholders? On the one hand, proponents of bonuses would argue that by giving further compensation to crucial personnel, it would help secure their commitment to the failing firms. That would in turn help these banks survive, which would be for the better good. On the other hand, critics would contest that these crucial employees should stay with their failing banks because it would be in the best interest of the economy.
Top level executives should stay and repair their implied damage because it would be in their own self-interest to act ethically. In order for a society to function, there must be an expectation of ethical behavior. Without it, the very fabric of society would unravel due to the high cost of doing business under the assumption that everyone is only interested in their own self interest and consequently trying to “pull a fast one.” Executive bonuses under TARP assistance are unethical because these funds (until they are repaid) do not belong to the banks or executives; they belong to the American people. By accepting these bonuses, executives are taking away a resource that is meant for the greater good of the United States.
Common Good Approach: Examples In one example of applying the Common