Duncan Presses Geithner on Executive Bonuses
“You asked exactly the right question,” Mr. Geithner said after John J. Duncan Jr., Republican of Tennessee, said it had appeared to him that the Federal Reserve was “sowing the seeds of another crisis, another bubble-burst cycle,” and wondered whether executive bonuses should be reined in.
Mr. Geithner said that in any financial crisis, policy makers are faced with a “tragic choice” between doing nothing and allowing innocent people to be hurt, or bailing out financial institutions.
“The moral, fair and just choice is to protect the innocent,” he said, clearly pleased that Mr. Duncan had asked the question. “But by definition, that sets the stage and sows the seeds of a future crisis.” He referred several times to this “tragic choice,” and said A.I.G. was a perfect example of it.
“That was a good answer, but what about the bonuses?” Mr. Duncan asked.
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