EC Virus-Bailouts: "No More Buybacks. Not Now, Not A Year From Now. Not Ever"

Mark Cuban appeared on CNBC this morning to talk about the idea of the Fed and the Treasury collectively bailing out the entire economy. Ostensibly still disgusted from The Great Recession, where zero executives were held accountable and most of the Fed's TARP money went to line the pockets of executives and widen the inequality gap, Cuban had some choice words - and some good ideas - for what life should be like post-bailouts and after the coronavirus crisis ends.

Speaking to Andrew Ross Sorkin, Cuban lamented bailouts in the past that have ignored the middle class and sought to place accountability on the executives that have put their companies in such precarious positions, mostly through buybacks, that they can't weather the storm of an economic slowdown on their own.

"We already know what's going to happen," Cuban said.

"A year after this plays out, and it will, we'll look back and say why didn't we consider the workers? The everyday hourly worker. The people making minimum wage. Why didn't we reward them as well?" 

He continued:

"And so let's get ahead of it and whatever we do in a bailout, make sure that every worker gets compensated and is treated equally and that the executives don't get rewarded extra to stick around, because they have nowhere else to go."

"The government has taken their risk out of their equation, so let's treat all workers equally," Cuban said.

"How do we do that?" Sorkin asked.

Cuban responded:

"Two different things. Getting money into the system is a function of the Fed. And they're obviously taking those steps right now. Two, when there is a bailout, when a government comes in and offers assistance to an organization or a public company - whether its an airline or whatever it may be. There are most likely going to be steps taken by the company, and historically this is what has taken place, where they reward the executives. They reprice their options, they give them more stock, they give them warrants." 

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Gary Anderson 5 months ago Contributor's comment

Stocks are very speculative. Dividends are not. Stock buybacks are irresponsible while dividends are the way to get money to shareholders. Great article!