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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)

#121

Post by justincormack »

lmm wrote: post #82
gadders wrote: post #73

Earlier quoted context omitted.

>>Waaat. I think the government should stop bailing out businesses. Either you let the company go bankrupt or you nationalize. What, like General Motors?

Yep. That worked out pretty well, on the whole; government gets to keep the upside rather than just throwing money at the same management that failed and getting nothing to show for it.

Indeed there was no reason not to wipe out the equity holders of the banks as part of the deal, and take that as government upside.

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

#123

Post by MathsOX »

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?

Warren Buffett, one of the few with the liquidity to invest at that time, did just that.

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

#124

Post by bmelton »

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?

> So, money was made?

I don't know the details of when the money was disbursed and when the money was recuperated, but if it were disbursed in 2008, and recouped in, say, 2014, there was a 10% rate of inflation, which devalues the currency to the point that no, money was not made.

If 2013, the rate of inflation was 8.2%, which leaves a .4% "profit", assuming no other costs.

If 2012, the rate of inflation was 6.6%, leaving a 2% profit, etc.

Of course, this assumes the money wouldn't have performed in any way just sitting in the government coffers, and I honestly don't know enough to even begin to evaluate whether it would have.

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

#125

Post by yummyfajitas »

bmelton wrote: post #124
jimktrains2 wrote: post #62

Earlier quoted context omitted.

> 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?

> So, money was made? I don't know the details of when the money was disbursed and when the money was recuperated, but if it were disbursed in 2008, and recouped in, say, 2014, there was a 10% rate of inflation, which devalues the currency to the point that no, money was not made. If 2013, the rate of inflation was 8.2%, which leaves a .4% "profit", assuming no other costs. If 2012, the rate of inflation was 6.6%, le…

Inflation was 1.5-1.6%.

http://research.stlouisfed.org/fred2/data/CPIAUCSL.txt

edit: computation done by comparing Jan 1 2012 to Jan 1 2013, etc.

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

#126

Post by smcquaid »

DennisP wrote: post #65
easytiger wrote: post #51

Earlier quoted context omitted.

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.

That may be, but in Charlotte at least, IT jobs at the banks tend to be on the high end of our local salary range.

If you dont mind me asking, whats the software dev salary range in charlotte?

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

#127

Post by smileysteve »

ThomPete wrote: post #66
jimktrains2 wrote: post #62

Earlier quoted context omitted.

> 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?

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

This ignores the risk of not lending them out, which is difficult to quantify, but is considered significantly greater than 0.

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

#128

Post by woah »

toyg wrote: post #109
jbooth wrote: post #98

Earlier quoted context omitted.

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 e…

Our current civilization would burn in flames? What a load of poppycock.

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

#129

Post by maaku »

maxlybbert wrote: post #100
quaffapint wrote: post #44

Earlier quoted context omitted.

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'.

Not to defend the banks, but this reminds me of when a company declares bankruptcy and pays its executives bonuses. The argument is always that, no matter how flawed the executives' judgment is, it's better to have somebody doing the job than to have the executives jump ship. I'm not sure the argument applies here, since I'm not sure how many companies were hiring executives during the time frame.

No, the real argument is usually that the executive contracts are constructed such that trying to weasel out of "bonuses" for them probably is ill advised.

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

#130

Post by philh »

yummyfajitas wrote: post #125
bmelton wrote: post #124

Earlier quoted context omitted.

> So, money was made? I don't know the details of when the money was disbursed and when the money was recuperated, but if it were disbursed in 2008, and recouped in, say, 2014, there was a 10% rate of inflation, which devalues the currency to the point that no, money was not made. If 2013, the rate of inflation was 8.2%, which leaves a .4% "profit", assuming no other costs. If 2012, the rate of inflation was 6.6%, le…

Inflation was 1.5-1.6%. http://research.stlouisfed.org/fred2/data/CPIAUCSL.txt edit: computation done by comparing Jan 1 2012 to Jan 1 2013, etc.

Between which dates? If I'm reading this correctly, Jan 08 to Jan 14 is 212 to 234, which is about 10%. (This also matches the statistic that I happen to have memorized of 8% inflation between 2010 and 2014.)
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