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

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

#101

Post by ThomPete »

rayiner wrote: post #90
ThomPete wrote: post #81

Earlier quoted context omitted.

Thats irrelevant to how you calculate what the return should be compared to the risk involved.

Why? Loss of tax revenue to the government resulting from a depression is certainly money that the government needs to factor into the calculation.

Sure but so is the danger of going bankrupt for the banks or being completely nationalized.

Also the country would survive a depression if it really came down to that, the bank wouldn't survive a bankruptcy.

So the playing field are fairly even when it comes to having leverage.

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

#102

Post by kamaal »

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'.

People sitting in high places benefit every where, not just banking. It pays to be higher authority, regardless of your performance. Generally because the definition of good performance is fuzzy you can always twist it to your advantage.

I remember an instance in the past where a executive organized a 'hack day'. All he did was drop in email to the company cafeteria to have a tea and biscuits arranged. The dude didn't even show up to the event. At the end of the quarter I remember him getting a neat cash reward for 'thought leadership' regarding that hack day.

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

#103

Post by JoeAltmaier »

Its simple. People in the money chain-of-custody always take some. Corporation board members vote one another stock. Company executives (originally normal positions like secretary and treasurer, paid a normal salary) pay one another exorbitant sums. And bank employees always get paid.

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

#104

Post by ThomPete »

snowwrestler wrote: post #88
ThomPete wrote: post #66

Earlier quoted context omitted.

Money were made but not enough compared to the risk involved with lending them out. Thats the point.

The parent asserted that, but did not actually quantify the risk in any way. I could just as easily say that there was no risk at all since the government was obviously not going to allow those institutions to fail.

The claim that I answered where "Money were made" it didn't quantify it either so I fail to see the point.

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

#105

Post by maxlybbert »

jheriko wrote: post #6
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.…

> Either you let the company go bankrupt or you nationalize. I vaguely agree with that sentiment, but the problem in practice is that government sucks at running things. They introduce layers of infrastructure that business doesn't and turn things into political footballs. Although thinking about that for a moment, its a big problem on its own...

It's not the federal government, but my favorite example was a (legal) brothel went bankrupt in Nevada a few years ago. The state of Nevada took it over until they could find a buyer, and lost money on the deal.

Seriously, Nevada's state government couldn't turn a profit running a brothel.

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

#106

Post by marcusgarvey »

danielweber wrote: post #89
marcusgarvey wrote: post #57

Earlier quoted context omitted.

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 mor…

The risk was incredibly low. The banks were rather profitable, but they had cash flow issues from deleveraging. And credit vanished in 2008. For the government's balance sheet, getting paid back 8.6% is a lot more reliable than your gut instinct of infrastructure or education or (especially!) health care.

Many argue and I, for one, agree the the problem was not illiquidity but insolvency [1].

[1] http://www.washingtonsblog.com/2008/10/the-problem-was-never...

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

#107

Post by marcusgarvey »

jimktrains2 wrote: post #62
marcusgarvey wrote: post #57

Earlier quoted context omitted.

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 mor…

> On the fallacy that the U.S. taxpayers made money on the bailouts > 8.6% is insultingly low compensation to use taxpayer money So, money was made? > 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. Why couldn't it still be used on infrastructure, education, or healthcare?

"Made."

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

#108

Post by jbooth »

rayiner wrote: post #90
ThomPete wrote: post #81

Earlier quoted context omitted.

Thats irrelevant to how you calculate what the return should be compared to the risk involved.

Why? Loss of tax revenue to the government resulting from a depression is certainly money that the government needs to factor into the calculation.

Because it's embracing too big to fail. Unless we want 'too big to fail' to be the rule going forward, and unfortunately it seems that it will be, we should reject the idea that the rest of us are the beneficiary of having to bail out the banks.

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

#109

Post by toyg »

jbooth wrote: post #98
danielweber wrote: post #89

Earlier quoted context omitted.

The risk was incredibly low. The banks were rather profitable, but they had cash flow issues from deleveraging. And credit vanished in 2008. For the government's balance sheet, getting paid back 8.6% is a lot more reliable than your gut instinct of infrastructure or education or (especially!) health care.

If the risk was so low, why couldn't a private entity bail out the banks? Would have been a gangbusters investment, right? 8.6% is a good return for that risk?

How many entities do you know with almost 700bn in the bank ?

The point of the bailout was to throw all the might of the State behind the sector, in a "ye shall not pass" stance that basically stated that either we cut these banks some slack or our current civilization would burn in flames.

It worked, because people got the message and business eventually went back to normal. We can disagree on whether it was "good enough" (I thought the opportunity for deeper changes was ripe, but I'm just an old-school eurosocialist myself), but I don't think any other entity could have done it except Nation-States.

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

#110

Post by marcusgarvey »

snowwrestler wrote: post #88
ThomPete wrote: post #66

Earlier quoted context omitted.

Money were made but not enough compared to the risk involved with lending them out. Thats the point.

The parent asserted that, but did not actually quantify the risk in any way. I could just as easily say that there was no risk at all since the government was obviously not going to allow those institutions to fail.

One way to infer: what's the risk of lending to a company that's facing an existential crisis, that's in such dire straits that no one else would lend to it?
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