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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)

#161

Post by toyg »

marcusgarvey wrote: post #152
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…

>How many entities do you know with almost 700bn in the bank? None but no single institution needed that much. Private investors, especially when working together, could have certainly stumped up funds for individual institutions. In fact, in the case of AIG such an overture by Chinese investors was rejected: http://www.nakedcapitalism.com/2014/10/aig-bailout-trial-bom...

That's not "private investors", that's the Chinese government. This would have had clear political implication (the Chinese already hold a lot of US debt etc etc), but regardless, it was Nation-States making moves -- basically the only players in the game, on that size of petty cash.

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

#162

Post by toyg »

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…

I'm not saying I agree with that line, I'm saying that this is what the (Bush II) government was signaling at the time. (Which for them was likely true -- losing Lehman, Goldman and AIG in a month would have destroyed a world of wealthy executives.)

Greece is another matter; the problem there was not with the bailout, but with stupid terms imposed by the troika to cover debts. In fact, if the troika had behaved with Greece in the same way the US government did with US banks (putting up cash right away, no questions asked), Greece would not have suffered what it did.

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

#163

Post by arthurcolle »

themartorana wrote: post #159
arthurcolle wrote: post #112

Earlier quoted context omitted.

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

They then also have a working knowledge of the psychological, human, and monetary costs of a never-ending war against our own citizens, the inability to distinguish between crime and addiction and disease, the extremely regressive nature of drug addiction, recidivism rates of minor criminals in to hardened felons, the stifling effect of a felony conviction on upward mobility, and everything else proven to be utterly…

EDIT: My apologies, I didn't realize the comment thread I had posted to was started as a comment about drug laws. I was merely commenting about my general philosophical belief that democracy is not optimal because an uninformed population should not be making decisions it is uninformed about.

Unedited previous comment:

---------------------------------------------------------------

I don't understand your comment, friend. I said nothing about the 'war on drugs'. Uninformed participants in a political or economic system should not be making decisions that affect others in any way. Random citizen John Smith will, out of a sense of righteous indignation, decide against any useful regulation for banks because he is upset that they get recapitalized while his mortgage terms do not get favorably renegotiated, irrespective of the intellectual value of his decision.

Banking and financial activities are fundamental to a healthy and growing economy and everything from home mortgages to credit cards to IPOs are driven by a bank's ability to extend credit and deliver banking services to the citizenry of a country. Bonuses are generally speaking a direct function of a bank's PROFITABILITY, not its ability to cater to every individual's whims and desires to become some rockstar 'rich person' or even the populace's desire to remain middle class. Services are provided, and profits are distributed accordingly.

If affecting political policy is beneficial to shareholders, decisions like Citizens United are logical and the exact type of decisions I'd want my board of directors to make, as an investor, and if that contributes to maximal economic growth then it is optimal for human society, with the exception of environmental concerns which need to be taken more seriously then they have been in our immediate past.

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

#164

Post by ArkyBeagle »

joelwilliamson wrote: post #63
ArkyBeagle wrote: post #27

Earlier quoted context omitted.

Calomiris and Haber ("Fragile By Design") have run the natural experiment between the U.S. and Canada over the 2008 bubble period. The conclusion is the opposite of yours - Canada really just has the one bank, and sailed right through the crisis because they didn't hold as many rotten mortgages. And in a way, the big banks are effectively nationalized in the U.S. We do maintain parallel governance structures because…

> Canada really just has the one bank Is this supposed to be a figure of speech suggesting Canadian banks policies are so similar they are essentially the same bank? The three largest of the Big Five (RBC, TD and Scotia) are so similar in size none of them can even be said to lead the market.

No, it was me misremembering. You are absolutely 100% correct; my bad.

Thank you for the correction, Joel.

The pertinent EconTalk is here: http://www.econtalk.org/archives/2014/02/calomiris_and_h.htm...

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

#165

Post by collyw »

dang wrote: post #156
collyw wrote: post #78

Earlier quoted context omitted.

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

> Ahhhh, cute, you believe what the government tell you. Personal attacks are not allowed on Hacker News.

Where can I read up on the rules Dang? They don't seem to be available anywhere, I have asked before.

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

#166

Post by lucozade »

ScottBurson wrote: post #155
lucozade wrote: post #75

Earlier quoted context omitted.

Not quite. The article is pointing out that the overall level of bonus is not well correlated with the revenue (or profit) of the companies as a whole. The poster is pointing out that that's largely because an individual's bonus, particularly in areas like IB (where most of the bonus pool ends up), is much more of a function of the revenue the individual brings in. Part of the reason for the discrepancy at the time o…

It would make some sense, perhaps, if employees with no responsibility for the catastrophic losses still received some bonuses -- though the company's ability to pay the full bonus ought to be factored in. What doesn't make sense is that anyone involved with the losses or in the management chain of anyone who was should still get any bonus at all. That, obviously, includes the CEO. If the CEOs of these companies stil…

I believe that most, if not all, of the CEOs of the worst affected companies lost their jobs. Having said that, there would have been a fair few golden handshakes so your point is valid.

To my mind the worst of those was Stan O'Neill. He got kicked out when it was just a disaster but not yet a catastrophe (when the mortgage losses were known but before the liquidity crunch) so he walked away with something heinous like $160mm.

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

#167

Post by dang »

collyw wrote: post #165
dang wrote: post #156

Earlier quoted context omitted.

> Ahhhh, cute, you believe what the government tell you. Personal attacks are not allowed on Hacker News.

Where can I read up on the rules Dang? They don't seem to be available anywhere, I have asked before.

These are linked at the bottom of each page:

https://news.ycombinator.com/newsguidelines.html

https://news.ycombinator.com/newsfaq.html

This is displayed to new users, but is worth re-reading:

https://news.ycombinator.com/newswelcome.html

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

#168

Post by smileysteve »

ThomPete wrote: post #132
smileysteve wrote: post #127

Earlier quoted context omitted.

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.

The risk of not lending the banks out is a depression where the currency / global economy may have lost more value.

Example: The gov only made 8.5%, but if the US costs have increased 16% over the same period (because of a depression), the overall return is more like 24.5%, ignoring the additional costs of a depression.

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