A Clear Non-Dividend
The Providence Journal editorial writers have this one right:
Should the taxpayers now bailing out some big banks let the troubled companies pay dividends to their stockholders? We think not.
A dividend is a distribution of earnings to shareholders. The nine banks don’t have earnings; they have losses. If they had earnings, the banks at issue that have sought federal aid wouldn’t need a $125 billion bailout. The funds that taxpayers are funneling into their vaults should not be confused with earnings.
Keeping companies alive and the credit market on its feet does not require that shareholders not feel the pain of business executives poor decisions. Indeed, the only way the bailout has a hope of not making the investment culture worse is if those involved throughout have reason to avoid similar behavior in the future.