Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

bloomberg.com

Post reply on HN
Print view View original

111–120 of 168 posts

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

#111

Post by aidos »

snowwrestler wrote: post #95
aidos wrote: post #39

Earlier quoted context omitted.

Are the bonuses often contractual and not discretionary? If so, they're not really bonuses.

They are bonuses, but the word "bonus" means slightly different things in different industries. In the banking industry, think of it more like a sales commission than a totally optional check for doing a really good job. It's paid out according to a pre-determined formula, not the whim of a manager.

Which makes sense. In the cases of financial institutions needing a bailout while simultaneously paying huge bonuses something must be seriously miscalibrated in their calculations.

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

#112

Post by arthurcolle »

foobarian wrote: post #70
rayiner wrote: post #41

Earlier quoted context omitted.

California's three-strikes law was supported by a 72-28 vote in a public referendum. At the time of the vote, nation-wide, the public supported keeping marijuana illegal by an over 70-30 margin: http://www.people-press.org/2013/04/04/majority-now-supports... . Our drug and sentencing laws are the result of democracy, not oligarchy.

That doesn't follow. All the oligarchs have to do is carefully pick the referendum topics to achieve their agenda. You sure didn't see any referendum on whether to bail out the banks.

I'm sure the average citizen has enough working knowledge of monetary policy to make an informed decision about bank recapitalization.

Please.

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

#113

Post by rhino369 »

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) Bank bonuses aren't just paid to executives. These losses were from one department of the bank and that one department could have losses so large that it destroyed the whole bank. Even if you got rid of the people who fucked up, you'd have a lot of people left who didn't.

Also, the banks that failed were typically sold off to banks who healthy. The government was strong arming banks into buying weaker banks with gov loans. Goldman, Chase, BoA all didn't get trapped in the subprime mess.

2) Talent will flee to the money. I've seen this in law firms. Firms that don't properly pay their "rainmakers" lose them to firms who will.

The banks laid off tons of people.

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

#114

Post by rayiner »

collyw wrote: post #87
orbifold wrote: post #29

Earlier quoted context omitted.

Unless I'm mistaken it is not like the people handing out bonuses and the people who screwed up are completely separate. Also it is safe to assume that any organization of a sufficiently large size will have a fixed amount of incompetent people at any level, simply as a matter of statistics. Maybe the percentage will be less where the people come from field with a (different/harder) selection process like the natural…

Are banking jobs given out based on meritocratic ideals, or who your dad knows?

Most people are there because they got excellent grades at excellent colleges. These criteria objectively select for people who are sharp, though not necessarily geniuses, and have a demonstrated track record of working very hard and paying a lot of attention to detail and deadlines.

In many ways, banking hiring is more "meritocratic" than tech hiring. There is less emphasis on "fit" and "culture" and because new hires are viewed as tabula rasa there is less emphasis on criteria that might be gender-biased (e.g. high-school extra-curricular activities).

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

#115

Post by rayiner »

jbooth wrote: post #108
rayiner wrote: post #90

Earlier quoted context omitted.

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.

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.

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

#117

Post by hnnewguy »

neonhomer wrote: post #58
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.

>Until people go to jail for the crimes (see Iceland) nothing will get fixed.

This is such a bizarre argument. You don't think there were/are oodles of prosecutors frothing at the mouth to throw some bankers in jail? Look around the internet! They'd be heroes! The public would rejoice, yet it hasn't happened, because proving that some of the perceived corruption and missteps are actual crimes is, apparently, more difficult than you think. And I don't want to live in a country when the government can decide, willy-nilly, to throw corporate executives in the slammer.

Second, tthrowing here are far more effective means of "punishment" than some low-ranking employee in white-collar prison (which costs us MORE money). Fines have been used, which punish earnings, executive pay, and shareholders.

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

#118

Post by jbooth »

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.

Sure, I agree that we had no choice at that point but to bail the banks out.

But when reviewing the decision afterwards, I think we need to reject lines of argument that the government did really great on the deal so it's not that bad what happened. We don't want it to happen again, we don't want to be in a no-other-options situation.

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

#119

Post by JetSetWilly »

collyw wrote: post #78
JetSetWilly wrote: post #14

Earlier quoted context omitted.

The UK government nationalised RBS and thus far RBS does not seem to be particularly badly run or more bureaucratic when compared to other banks, so I'm not sure there's any real evidence for this statement. In fact the UK government is expected to make a tidy profit when it privatises RBS again.

Ahhhh, cute, you believe what the government tell you.

The government hasn't told me anything about RBS. I am very familiar with it as a customer (before and after nationalisation) and know several people who work for it though, so your ideologically-driven snark doesn't really hit its target.

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

#120

Post by justincormack »

cm2187 wrote: post #68
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…

If the state got its money back, it means that money wasn't paid away in bonuses.

No, the state might have got a better return without bonuses (although I cant remember how the deal was structured). Mind you you could argue that getting a sweet deal like that deserves a bonus...

It is certainly a better deal than the Irish bailout, which will never be paid back and amounted to 100% of GDP.

Post reply on HN