If you’re taking bailout money, stay out of Vegas. From the LVRJ:
Wells Fargo & Co. on Tuesday abruptly canceled a pricey Las Vegas casino junket for employees after a torrent of criticism that it was misusing $25 billion in taxpayer bailout money.
The company initially defended the trip after The Associated Press reported it had booked 12 nights beginning Friday at Wynn Las Vegas and Encore. But within hours, investigators and lawmakers on Capitol Hill had scorned the bank, and the company canceled.
The conference is a Wells Fargo tradition. Previous all-expense-paid trips have included helicopter rides, wine tasting, horseback riding in Puerto Rico and a private Jimmy Buffett concert in the Bahamas for more than 1,000 of the company’s top employees and guests.
“In light of the current environment, we have now decided to cancel this event as well,” the company said Tuesday night in a news release that also said the it had never planned to use taxpayer bailout money for the trip.
Corporate retreats have attracted criticism since the bank bailout last fall. Congress scolded insurance giant American International Group Inc. for spending $440,000 on spa treatments for executives just days after the company took $85 billion from taxpayers. AIG has since canceled all such outings.
Because of the bailout and the recession, other banks have canceled employee outings, including Morgan Stanley, which informed employees Monday that an appreciation trip to Monte Carlo was off.
Wells Fargo, however, had not. And initially, the company indicated it had no plans to cancel.
“Recognition events are still part of our culture,” spokeswoman Melissa Murray said Tuesday afternoon. “It’s really important that our team members are still valued and recognized.”
In previous years, top Wells Fargo loan officers were treated to performances by Cher, Jay Leno and Huey Lewis. One year, the company provided fortune tellers and offered camel rides, said Debra Rickard, a former Wells Fargo mortgage employee from Colorado who attended the events regularly until she left the company in 2004.
Every night when employees returned to their rooms, there was a new gift on their pillows, she said.
ReviewJournal.com – Business – Wells Fargo defends, then cancels Las Vegas junket.
There are several issues here. First, is a trip to Las Vegas to reward high performers wasteful? Definitely not, since a Vegas trip is a commodity with a value, and that value can be an incentive that might boost productivity. Of course, if your company had to take $25 billion from the government, it’s not likely that anyone’s doing a bang-up job.
Second, if a Vegas junket is considered frivolous, should we not let companies who’ve gotten bailed out by the government take them? It’s not like they’re using hundred dollar bills to light cigars or something–that money ends up in Las Vegas, where it is sorely needed. So it’s not waste at all–just because the bank folks enjoy themselves while they’re pumping money into the economy doesn’t mean that it’s a bad thing.
What about camel rides and Huey Lewis concerts? I’m sure both of them are pretty cool, but neither is on the top of my list of things that would motivate me. I just thought that those were curious perks to lay on people.
The problem is that the overall corporate paradigm is shifting in ways that won’t help Las Vegas. It used to be make as much money as you can, then celebrate as much as you want without alienating the shareholders too much. Now it’s accept money from the government, then feel guilty if you don’t force your employees to abstain from anything that might be pleasurable. Unless we figure out something else to do with 130,000 hotel rooms, fiscal restraint is going to cast a serious pall over Las Vegas.
On a related topic, I have taken about three minutes to draft my own stimulus proposal. Instead of building bridges or paying for condoms, this proposal will get money right into the hands of consumers, who can then start spending.
Why not a national taxpayer lottery? For every dollar you pay in taxes, you get a metaphorical ticket to a drawing for $10 million. Let’s cap the bill for this proposal at $500 billion. You could create a total of 50,000 new ten millionaires, who’d be required to spend (for example) one-quarter of the money within a calendar year. Let them save and invest the rest to bolster the banking system.
If I had my way, you’d randomly pick these 50,000 winners some time after April 15. Those who wanted a greater chance of winning could choose to let their refunds ride, partially paying for the program. According to a quick web search, there were about 139 million tax returns filed in 2007. That gives each taxpayer odds (an average, since we’re weighting the chances for those who pay more taxes) of about 2780 to 1, which is much better than a usual big lottery jackpot, by several orders of magnitude.
Alternatively, you could just piggyback on existing state lotteries and add an extra $10 million to 50,000 jackpots, but this would not give residents of states without lotteries a share in the largesse. Sure, we in Vegas could drive down to Primm, but I feel sorry for folks in Hawaii.
The great thing about randomly selecting those who get stimulus funds is that you take the politics out of it. If this package really is about jump-starting the economy and not political paybacks, why not do it this way? Granted, the law of averages says you’re going to be giving millions of dollars to some fiscally-irresponsible people (out of the 50,000 winners, not all will be prudent investors), but aren’t we doing that already?