Over the last 10 years, investment bankers have become fabulously wealthy from a financial model we now know doesn't work.  The profits generated then were illusory, and were based on flawed assumptions, bad judgement, hubris, and greed.  In 2007, Goldman Sachs set aside $16.9 billion to pay salaries, benefits and bonuses.  Both Morgan and Goldman have already set aside billions for compensation this year.  

At the same time, they are looking for the public (you and me) to bail out their businesses to the tune of hundreds of billions to half a trillion dollars.  We need to buy the  worthless assets from their balance sheets to save their companies.  Assets they put there in the first place.

I understand the need for the government bailout of US banks.  I understand that if the general public didn't bail out these banks with hundreds of billions of dollars it would become harder for homeowners with good credit to buy a home, or for a business to borrow money, or for a consumer to get a new credit card.  I understand the economy will suffer.  I think a goverment bailout is necessary and I really do believe Paulson when he says that the alternative to a government bailout is unpalpatable. 

But I have a real problem bailing out the guys who created the mess in the first place, just so they can go back to earning billions of dollars for themselves.  The people who created this mess should not continue to earn gargantuan salaries, vacation like elites in the Hamptons, jet set the world, etc.  They should be achknowledged for what they are: failures in their business who have lost their shareholders and the general public billions upon billions of dollars. 

Here's what I think should be done.  Companies should be given the option of receiving Federal bailout aid.  Before we agree to buy their toxic assets, they must agree to the following:

• Eliminate all bonus payments scheduled for 2008 and beyond until taxpayer money is paid back with interest.
• Require management to forfeit all shares in their respective companies.
• Require management to agree to a salary (including bonus) that is at maximum 5X the salary of the average wage earner in the United States.

If their bank was managed well and doesn't need to accept the offer, fine.  They deserve to keep their salaries.   If on a personal level they don't like the terms, let them go their own way.  There are plenty of people of people who would be happy to have their jobs, their new salary and even without any experience wouldn't make nearly the mess they did.