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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)

#141

Post by IndianAstronaut »

marcusgarvey wrote: post #57
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…

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…

$614billion is almost 30 times NASAs annual budget. We could be on our way to Mars right now.

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

#142

Post by mrec »

fnordfnordfnord wrote: post #55
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…

>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.

Exactly. That was a perfect textbook example of moral hazard.

http://en.wikipedia.org/wiki/Moral_hazard

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

#144

Post by vijayr »

kamaal wrote: post #102
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'.

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'…

And it probably wasn't even his idea, some poor underling might've given him the idea. Happens all the time, everywhere.

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

#145

Post by eatbuckyballs »

smcquaid wrote: post #126
DennisP wrote: post #65

Earlier quoted context omitted.

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?

Depends on Skillsets but it's not horrible. It's actually pretty consistent in Charleston, SC. as well. I know many devs over 100k in each field, It's not SF pay, but the cost of living is also not SF prices.

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

#146

Post by TheOtherHobbes »

rayiner wrote: post #115
jbooth wrote: post #108

Earlier quoted context omitted.

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.

Whether we embraced it or not, it was part of the calculus. So was the fact that we'd need continued investment into the economy to work our way out of the financial collapse. That meant that options like nationalizing banks, which might drive investment overseas in the future, could have a direct negative economic impact that needed to be considered.

The total loss in tax revenue over the Great Recession period is measured in trillions.

http://2.bp.blogspot.com/-nkdzCkw8Rr0/U-qiPe1Tf-I/AAAAAAAARS...

I'd suggest that's a much more direct and obvious economic impact than some maybe-perhaps about driving investment overseas. (How, exactly? Do you think money would suddenly stampede out of the US if regulators developed a spine and jailed the delinquent operators who caused the crash?)

Anywway - clearly the decision was political. It was made for the benefit of the banker caste, and not for the general population.

The underlying problem is unearned privilege.

There's no rational reason for these bonuses. But bankers pay themselves these sums because they know they can, irrespective of the incredible damage they cause to the rest of the economy.

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

#147

Post by mkramlich »

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…

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

quickly tabs over to lookup Apple's balance sheet

nope. but give it another few years. ;-)

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

#148

Post by gutnor »

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'.

I work in banking. For trader, M&A and other related positions, the contractual bonus rate is/was(?) often 100%.

A lot were fired, they hired back, then fired again. Not sure what the overall impact had been, but for the ones I know, after the crisis it has been like a continuous Christmas. Lot of cash/cheap money to buy cheap flat/houses all around, kids and early retirement at 32.

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

#149

Post by danielweber »

atmosx wrote: post #137
toyg wrote: post #109

Earlier quoted context omitted.

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…

At the time, I supported letting Lehman die. Take your medicine, screw-ups!

I was wrong. It's largely regarded as a bone-headed move today. It was the start of the meltdown.

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

#150

Post by danielweber »

smoyer wrote: post #22

At the time these banks were claiming that they had to pay the bonuses to retain these employees ... I think this is logically false for two reasons: 1) Why do you want to retain the executive that helped run the business into the ground? 2) What other corporation in their right (collective?) mind would hire one of these executives (given their inflated salaries and poor performance). I still think the right way to f…

1) Why do you want to retain the executive that helped run the business into the ground?

It's not just "executives." Most of the staff gets paid bonuses, essentially as part of their salaries.

And there was a desire to keep these companies as on-going concerns. If you suddenly ax their pay, they quit. You can say "good riddance, they caused the problem!" But you still want to leave these companies as on-going concerns, by definition: they got bailed out.

It's not simply a matter of sweeping out all the old traders and bringing in new traders to decode the books. You need people with direct experience, if for no other reason than to unwind the deals. And you need to pay them market wages. You can point out, correctly, how high those market wages are. That still doesn't mean you can keep the company running by trying to cram down their wages.

This ESPECIALLY goes for a company that is going out of business. No one wants to work at a company that is going bankrupt; they'd rather look for a new job instead. You need to pay people extra money to stick around while the ship is sinking.

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