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Banks Paid $32.6B in Bonuses Amid U.S. Bailout (2009)

bloomberg.com

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Re: Banks Paid $32.6B in Bonuses Amid U.S. Bailout (2009)

#51

Post by easytiger »

quaffapint wrote: post #44
tormeh wrote: post #4

>“When the banks did well, their employees were paid well. When the banks did poorly, their employees were paid well,” Cuomo’s office said in the 22-page report. “When the banks did very poorly, they were bailed out by taxpayers and their employees were still paid well. Bonuses and overall compensation did not vary significantly as profits diminished.” Waaat. I think the government should stop bailing out businesses.…

I work in banking as just another cog. We suffered wage stagnation and no bonuses. The executives on the other hand still got at least a 10% bonus each year, because they had contracts. So, please keep that in mind when it says 'employees'.

Still happening. Especially people working in IT in banks are getting almost nothing in bonus and no pay increase for many years. The number of jobs is significantly reduced also.

Re: Banks Paid $32.6B in Bonuses Amid U.S. Bailout (2009)

#52

Post by easytiger »

javiramos wrote: post #25
tomp wrote: post #21

Earlier quoted context omitted.

I don't mean to detract from your point, but you have to keep in mind the fact that those were loans, and the government actually made money on those loans (AFAIK). Also, if the damage to the economy would be greater than the taxpayer loss of the bail-outs, they still make sense, as long as they are accompanied by legislation that makes hem less likely in the future (which, sadly, hasn't happened yet). > Also I clear…

Yeah, but when the bank needs loans to stay in business it shouldn't be paying out bonuses. Particularly so if the government (i.e. taxpayers/us) went through giant efforts and took a significant amount of risk to hand out these 'loans'. EDIT: I believe that the bailout was needed and it did (IMO) prevent significant negative ripples from flowing through our financial system. What I really despise is the lack of disc…

How do you think banks work? They are see-saws of money on one big balance sheet.

Also the regulatory situation in Europe is still much more stringent than in the US. In US banking there are a load of utter time wasting rules that provide little sanity to the issues suffered

Re: Banks Paid $32.6B in Bonuses Amid U.S. Bailout (2009)

#53

Post by czinck »

randomsearch wrote: post #46
javiramos wrote: post #30

Earlier quoted context omitted.

Are you referring to investment banking/trading/PE or what? This is definitely not true in IB or trading. Your bonus is a direct function of what you make. This is particularly true for even more senior partners in IB/trading firms. The rainmakers make significantly more money than 'operating' or 'non-money-making' partners.

> Your bonus is a direct function of what you make Isn't the point of the article that this is demonstrably untrue?

You're assuming that their performance is directly proportional to the performance of the market as a whole. My understanding is it's tied to how they perform against an index like the S&P 500. The S&P 500 lost something like 50% over 2008, so even if a trader lost 25%, they outperformed the market by a lot and deserve (according to their contract) the bonus.

Re: Banks Paid $32.6B in Bonuses Amid U.S. Bailout (2009)

#54

Post by pdpi »

tgb wrote: post #48
pdpi wrote: post #35

Earlier quoted context omitted.

Notice that you're effectively saying "the bailed out banks should renege on contracts". If nothing else, there's enough money on the table that the affected people are likely to litigate, and there's a fair chance you'll just end up paying the bonuses just the same, but now topped off with the expenses of a lawsuit.

Isn't reneging on contracts a standard part of bankruptcy?

The whole purpose of the bailout is that there is no bankruptcy to begin with.

Re: Banks Paid $32.6B in Bonuses Amid U.S. Bailout (2009)

#55

Post by fnordfnordfnord »

tomp wrote: post #21
tormeh wrote: post #4

>“When the banks did well, their employees were paid well. When the banks did poorly, their employees were paid well,” Cuomo’s office said in the 22-page report. “When the banks did very poorly, they were bailed out by taxpayers and their employees were still paid well. Bonuses and overall compensation did not vary significantly as profits diminished.” Waaat. I think the government should stop bailing out businesses.…

I don't mean to detract from your point, but you have to keep in mind the fact that those were loans, and the government actually made money on those loans (AFAIK). Also, if the damage to the economy would be greater than the taxpayer loss of the bail-outs, they still make sense, as long as they are accompanied by legislation that makes hem less likely in the future (which, sadly, hasn't happened yet). > Also I clear…

>Also, if the damage to the economy would be greater than the taxpayer loss of the bail-outs, they still make sense

This is short-term thinking; it gets you out of the mess you're in today, but it encourages more of the behavior that caused the mess to begin with.

Re: Banks Paid $32.6B in Bonuses Amid U.S. Bailout (2009)

#56

Post by zv- »

javiramos wrote: post #25
tomp wrote: post #21

Earlier quoted context omitted.

I don't mean to detract from your point, but you have to keep in mind the fact that those were loans, and the government actually made money on those loans (AFAIK). Also, if the damage to the economy would be greater than the taxpayer loss of the bail-outs, they still make sense, as long as they are accompanied by legislation that makes hem less likely in the future (which, sadly, hasn't happened yet). > Also I clear…

Yeah, but when the bank needs loans to stay in business it shouldn't be paying out bonuses. Particularly so if the government (i.e. taxpayers/us) went through giant efforts and took a significant amount of risk to hand out these 'loans'. EDIT: I believe that the bailout was needed and it did (IMO) prevent significant negative ripples from flowing through our financial system. What I really despise is the lack of disc…

Those banks had contracts with the executives, saying they would get the bonuses if X metrics were met (likely what it was, maybe it was just a straight bonus every year, and the assumption is that they would be fired if they didn't preform). Those contracts don't go away because of a bailout.

I would be interested in legislation that changes this. If a private bank (I don't think there are many truly private banks anymore) wants to give whatever bonuses it wants, I really don't care.

But once public money is involved, I agree we need some strict controls.

Re: Banks Paid $32.6B in Bonuses Amid U.S. Bailout (2009)

#57

Post by marcusgarvey »

tomp wrote: post #21
tormeh wrote: post #4

>“When the banks did well, their employees were paid well. When the banks did poorly, their employees were paid well,” Cuomo’s office said in the 22-page report. “When the banks did very poorly, they were bailed out by taxpayers and their employees were still paid well. Bonuses and overall compensation did not vary significantly as profits diminished.” Waaat. I think the government should stop bailing out businesses.…

I don't mean to detract from your point, but you have to keep in mind the fact that those were loans, and the government actually made money on those loans (AFAIK). Also, if the damage to the economy would be greater than the taxpayer loss of the bail-outs, they still make sense, as long as they are accompanied by legislation that makes hem less likely in the future (which, sadly, hasn't happened yet). > Also I clear…

On the fallacy that the U.S. taxpayers made money on the bailouts, note that in finance deals get judged by how much money they make given the risk that had to be assumed to make it. In the case of the bailouts:

$614 billion was disbursed

$667 billion was recouped

For a difference of $53.1 billion, i.e. 8.6%. [1]

8.6% is insultingly low compensation to use taxpayer money that, by the way, could have been spent on more beneficial investments (infrastructure, education, healthcare) to bail out private companies who were the victims of their own greed and poor governance. FWIW the average junk bond yield in 2009 was above 20% [2].

[1] http://projects.propublica.org/bailout/ [2] http://money.cnn.com/2011/02/18/markets/bondcenter/junk_bond...

Re: Banks Paid $32.6B in Bonuses Amid U.S. Bailout (2009)

#58

Post by neonhomer »

jheriko wrote: post #5

an industry driven by greed is greedy... why am i not surprised. that stuff needs some regulating. its all well and good making everyone richer and deregulating to encourage it, but if the gap widens, because of how the economy works, the poor get poorer in real terms :( also we have big explosive crashes...

It was properly regulated before, see https://en.wikipedia.org/wiki/Glass%E2%80%93Steagall_Legisla.... Until people go to jail for the crimes (see Iceland) nothing will get fixed.

Re: Banks Paid $32.6B in Bonuses Amid U.S. Bailout (2009)

#59

Post by uptown »

While the data is accurate - the messenger, in this case, is Andrew Cuomo - a politician who aspires to run for President in the near-term. He had very little problem accepting campaign contributions from the financial services industry - they were his second-largest contributor by-sector.

http://influenceexplorer.com/politician/andrew-cuomo/d83c545...

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