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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)

#131

Post by tveita »

pdpi wrote: post #35
javiramos wrote: post #25

Earlier quoted context omitted.

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…

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.

Jailing the people responsible for committing criminal misconduct and confiscating their gains seems like a nice solution to this dilemma.

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

#132

Post by ThomPete »

smileysteve wrote: post #127
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.

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

Not sure I understand. The difficulty of lending them out should just increases the risk of lending them out and therefore the need to recoup that risk by a proper margin.

Thats not what happened when the banks regardless of contracts still gave out large bonuses many times more than the return to the taxpayers.

That simply doesn't add up.

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

#133

Post by rayiner »

justincormack wrote: post #121
lmm wrote: post #82

Earlier quoted context omitted.

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.

When financial services is a huge part of your GDP, and your country depends on a steady flow of investor dollars to keep the economic engine running, yes, there's a lot of reason not to wipe out equity as part of the deal.

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

#134

Post by ashark »

dougk16 wrote: post #45
matthewmacleod wrote: post #15

Earlier quoted context omitted.

They introduce layers of infrastructure that business doesn't and turn things into political footballs. Have you ever had any interaction with any large business? They are bureaucratically indistinguishable from governments.

Actually they are distinguishable - many of my interactions with banks and insurance companies make the government look like a well-oiled machine.

I've never had any interaction with the government that was even 1/4 as screwed up as the health insurance/hospital pairing. It's astonishingly bad.

I can only conclude that the people saying things like "think healthcare sucks now, wait 'till the government's in charge!" have never actually had to personally deal with the healthcare system.

Actually, the only thing that's hit the "1/4 as bad" mark is the health care exchange, and my problems with it are chiefly attributable to 1) no standard Internet-Age-friendly national ID card or similar, so identity/citizenship issues are still ad-hoc "send us a fax and mail us a copy of your drivers license, social security card, and birth certificate" nonsense, which is a problem with far more than just interactions with government, and 2) private health insurance is still a major part of the picture.

It's like a machine to generate stress and take your money, with treating illness as a side effect. I'd gladly take single-payer over the dubious and mostly not practically available "freedoms" our current system affords me.

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

#135

Post by digikata »

freehunter wrote: post #74
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.

Ever since I've started working in IT, the rule has always been if you want a pay raise or a promotion, you go to a different company. Out of the four companies I've worked for in three different Midwest states, I've never worked at a place where the highest raise of anyone on my team has ever exceeded 1.5% per year. 2-3 years then get out and get your raise somewhere else.

I wonder if there's a correlation between the higher turnover of motivated professionals and the rate at which large companies get hit with security breaches. The people who are most able to move employment are the ones who often are the most competent. Even setting that aside, it takes time, familiarity with company systems, as well as competence - and security is unforgiving.

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

#136

Post by harmonicon »

I don't think the bonuses is a problem per se. Companies should be allowed to pay their employee however they want, being true to the contract the employee signed, of course.

The bailout is the problem. If there was no bailout, these banks would have totally reduced the payout. They would feel the hit and have to adjust accordingly to keep the company afloat. Bailout gave them the go ahead to disregard all the losses.

It is extremely cynical for the same players to be crying for free enterprise, woe is regulation and the market always work its magic. But hey it's not their problem. We just had to be the sucker, pony up and bail them out.

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

#137

Post by atmosx »

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…

> or our current civilization would burn in flames.

Wait a minute, just a minute. The way I see it, the US government didn't disarm a nuclear bomb, it just saved Goldman Sachs (and it's creditors AIG) and let Lehman Brothers die. Smart choice by Henry Paulson, I'd expect no less by a former senior GS manager.

It used tax-payer money and I'd be angry if I were an American. I'm angry at the Greek government who did the same thing (among many other things), but then again. I live in Greece, I get a choice (More than 30 parties run in the elections last time I checked...). In the US I get the feeling that you can vote Democrats or Republicans. Largely disputable policies like this, are never going to change.

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

#138

Post by sliverstorm »

sjcsjc wrote: post #2

OP here. Given the current story re HSBC's misbehaviour, I thought it worth reminding everyone of the scale of the theft that took place during the bank bailout.

If it was all paid back though, what was the magnitude of the theft? If we say 8% return was too low given the risk, the value that was stolen from the public is the marginal interest the public missed out on.

So what was the right rate of return? If it was 10%, that's 2% marginal rate not captured. How long was the term of the loans? 5 years? That works out to roughly $70B over 5 years.

I'm not claiming that's a small number (!) but if we are calling it theft, we should qualify the theft more concretely.

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

#139

Post by maxxxxx »

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.

If the risk was that low you would have thought that a lot of rich guys would have stood in line to buy up the banks' assets.
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