NEW YORK - The top executives of General Motors, Ford and Chrysler appeared in front of Congress for the second day in a row Tuesday, to make their case for an emergency government loan.
The three CEOs have said they don't have the cash to operate next year without help and warned that the failure of the industry would have dire consequences for the U.S. economy.
And yet GM CEO Rick Wagoner, Ford CEO Alan Mulally and Chrysler chief Bob Nardelli arrived for these historic hearings on private jets! That's right: The men at the helm of an industry so crippled that it has to ask for taxpayer money to survive flew on private jets. And they wonder why the American public is so angry about these bailouts.
Their choice of transportation dominated Wednesday's hearing. Representative Gary Ackerman, a Democrat from New York said: " ... there is a message here - couldn't you all have downgraded to first class or jet-pooled to get here? It would have at least sent a message that you do get it.
"If you're gonna streamline your companies, where does it start? And it would seem to me as the chief executive officer of those companies you can't set the standard of what that future is going to look like, that you are really going to be competitive, that you are going to trim the fat, that you don't need all the luxuries and bells and whistles ... it causes us to wonder."
CNN contacted each company who said in various ways that the use of private jets had to do with security and safety requirements. The spokespeople claimed that the companies had already made major cutbacks in travel and corporate spending.
The director of GM news relations added: "We are only doing travel that is absolutely critical to the future of the business. We think testifying in front of the Senate and House to try to secure the future of the U.S. auto industry falls into that category."
At best this can be chalked up to a public relations mistake. But I think many will also see this as a symbol of what is wrong with corporate America.
What do you think? Is this a legitimate issue - or are we in the media making too much of it? Should government aid come with requirements that the current management step down? Or should these companies sink or survive on their own?
LONDON, England - In the movie Wall Street, Michael Douglas preaches "greed is good." Well, we know what can happen when greed goes amok.
We're living in the aftermath of the worst financial meltdown since the Great Depression. And it's not over yet, there's more pain to come.
A lot of blame is being pointed at CEOs and bankers who helped sink us into this rat hole, and rightfully so. Now in an act of contrition, the fat cats who have made enough money to last a thousand lifetimes, are foregoing bonuses, saying it's the right thing to do.
Who are they kidding? Of course it's the right thing to do, but to call it an act of altruism would be disingenuous.
They are doing it because they know there is plenty of anger at the mess they have gotten us into and it's their way of trying to placate the public and politicians who have their sights on them. They know more oversight is coming, and they are sensitive to the political winds howling at their backs.
What is clear is the investment banking model as we know it is dead and profits will be harder to come by. Bonuses will be smaller in the future if one is still lucky enough to have a job. And most importantly, the criteria for the bonus model is changing.
UBS, one of the banks hardest hit by the credit crisis, is making important changes to how its top management gets paid. The idea is to put more emphasis on long term performance.
"As of 2009, UBS will introduce a new compensation model. Top management may receive variable cash compensation and variable equity compensation in addition to their fixed pay. A large portion of this variable compensation will be held in reserve and paid out only if the results of UBS warrant it. Otherwise, there will be neither variable cash nor equity compensation. This should bring about a cultural shift in the company. Those who are rewarded will be those who deliver good results over several years without assuming unnecessarily high risk."
In explaining why they adopted a new compensation model, UBS stated that they felt the old model was too aligned with short-term results, without consideration for the quality or sustainability of the bank's performance, and that it did not sufficiently take into account the risks assumed.
UBS predicts their bonus plan will be followed by other banks. "I'm convinced this is essential, and the entire financial services industry will have to adjust its compensation models to the new realities," UBS's chairman was quoted as saying.
It's too late to make those responsible for this current financial mess give back their bonuses. But if the UBS model becomes the industry standard, then there might be more sobriety in banks' risk taking in the future. At the same time, shareholders have to be less focused on short-term profits which also added to the casino mentality.
The acid test will come when times get better again. We can hope lessons will have been learned, making bankers more accountable, with bonuses tied to long-term performance not just illusory short-term gains.
Tell me what you think. How should bonuses be determined?
About Business 360
CNN International's business anchors and correspondents get to grips with the issues affecting world business, and they want your questions and feedback.