Wall Street bonuses

[Guest Raidne]

If [i]this[/i] isn't the year that financial executives don't deserve merit-based bonuses, when, exactly, would that be?

Or are these not merit-based bonuses?

For those that may have missed Obama's smackdown, [url="http://www.nytimes.com/2009/01/30/business/30obama.html?hp"]here[/url] is an article briefly covering the issue.

[DanteGabriel]

Infuriating, but utterly unsurprising. The rich take care of themselves first.

[IheartTesla]

Well, even assuming they are merit based - why should the pay out be around the same as in 2004? I think that is enough to invoke some calculated anger on Obama's part.

[naz]

Listening to the current criticism of Wall Street bonuses, I'm a little torn. I assume that Obama's ire is directed toward the massive bonuses being paid out to top executives. But on Wall Street, bonuses for the lower level personnel are factored into a person's annual income. People actually rely on these bonuses to survive. While I don't necessarily agree with a system that pays out your income in that way (same as with waiters and tips), it is what it is. It's also hurting me specifically because two projects in our office are now on hold because the clients didn't get the bonuses they expected. This week we're seriously in a bind about what to do if we don't get the work... we'll probably have to lay off some staff.

So, yeah... if the bonuses are needed for these people to pay their rents and mortgages, and they were agreed-upon components of their income, then I don't think they should be condemned. But I'm guessing those aren't the ones Obama is criticizing, from the sound of it.

[Doran Doran]

[quote name='Raidne' post='1668262' date='Jan 30 2009, 17.59']For those that may have missed Obama's smackdown, [url="http://www.nytimes.com/2009/01/30/business/30obama.html?hp"]here[/url] is an article briefly covering the issue.[/quote]
So Santa One is disappointed his generous handouts of other people's money encountering sticky fingers? Imagine that. Perhaps he'll solve the issue by funneling more of the "stimulus" to ACORN for services rendered.

[Brude]

My friend is at a hedge fund that is in far better shape than most of these institutions, but still they have been hurt (mainly because a few of their big investors lost mega-bucks in the Madoff scandal hand had to pull out), even so they are not getting bonuses this year. My friend got a $40,000 bonus last year - pretty nice considering she was making about $75,000 at the time. I know that's nothing compared to what they are talking about here, but even the big-wigs at her place are getting no bonuses this year from what I understand.

[TerraPrime]

[quote name='Doran Doran' post='1668277' date='Jan 30 2009, 10.11']So Santa One is disappointed his generous handouts of other people's money encountering sticky fingers? Imagine that. Perhaps he'll solve the issue by funneling more of the "stimulus" to ACORN for services rendered.[/quote]

What services from ACORN has Obama hired for? Since you said "more", how much of the economic stimulus package is ear-marked for ACORN currently?

[Lyanna Stark]

I just think that the people getting these bonuses, or ok:ing them aren't living in the same reality as the rest of us. Bonuses that are merited are one thing, but for the last couple of years, there is no way anyone was worth that much. And now, after the crash, why is anyone getting a bonus? A sales person won't get a commission if he/she doesnt sell anything. Why are these people getting bonuses when the companies are being bailed out by the government?

[Ormond]

In a TV appearance that was linked on the Huffington Post the other day, that John Thain character implied that the people getting bonuses in his organization were those who worked in divisions that were still making a profit.

I'm not sure he was telling the truth, but I guess I can understand an organization that is overall in the red still giving bonuses to those individuals who only work in divisions that did perform well. But I think any organization receiving government help should be required to give lots of proof that any bonuses are only going to such individuals.

[Arlingzen Bill]

This touches on the idea of what is an appropriate bonus? The problem with defining it is that it is difficult to value. A ten percent bonus based on income generated seems reasonable at first glance, but what is the person generated a billion in income that year?

I personally beleive that bonuses and executive pay should be capped at 10 times the average employees wages. But that is just me. I no problem with an inflation indexed earnings ceiling above which the earnings are taxed at 95%.

[Tempra]

I could careless what what companies want to pay their employees (as long as its legal, obviously). Of course, it makes no sense to award merit bonuses when the company has done worse or when the person hasn't done anything...like that AIG(i beleive) CEO who made 12+ million for like 2 months of work. But that is for the officers and the shareholders of the company to decide.

Then again, if we are going to bail them out, it better not go to executive compensation.

[Lightning Lord]

[quote name='Doran Doran' post='1668277' date='Jan 30 2009, 10.11']So Santa One is disappointed his generous handouts of other people's money encountering sticky fingers? Imagine that. Perhaps he'll solve the issue by funneling more of the "stimulus" to ACORN for services rendered.[/quote]

As these bonuses were given out in 2008, when Mr Bush was president, I assume he is "Santa One?" Or are you holding Obama solely responsible for something that went through 535 other people?

I keep seeing people in interviews saying that a lack of bonuses would hinder innovation and the "best and brightest" would seek other jobs. But I thought bonuses were rewards? You do well, you get a bonus. Seems simple. If an executive does poorly, they still get their salary, they just didn't earn a bonus.

In sports, players often have bonuses worked into their contract. Hit 30 home runs, play in all 82 games, rush for a certain number of yards and you'll get more money. Play in less than the agreed to games, get only your salary.

"Bonus" seems like it needs to be merit-based. Most people don't enjoy tipping waiters for poor service. In this case, it's like filet mignon was ordered Kraft Easy-Mac was served. That doesn't warrant a "bonus."

[palaeologos]

[quote name='Raidne' post='1668262' date='Jan 30 2009, 07.59']If [i]this[/i] isn't the year that financial executives don't deserve merit-based bonuses, when, exactly, would that be?

Or are these not merit-based bonuses?

For those that may have missed Obama's smackdown, [url="http://www.nytimes.com/2009/01/30/business/30obama.html?hp"]here[/url] is an article briefly covering the issue.[/quote]

The problem is that a lot of those execs' bonuses are written into their contracts, and they're not necessarily tied to the performance of the company. If their bonuses aren't paid as specified in the contracts, then lawsuits ensue.

It sickens me to see CEOs who preside over the financial ruin of their companies get rewarded for their avarice and incompetence, but I don't see how it can be prevented without passing a federal law against unearned bonuses--and I don't know how that would work, exactly.

[WhiteQueen]

Aww, the topic dear and near to my heart. My friend Tom, a floor broker, your typical regular unpretentious guy, said it best to me yesterday: "People like that (meaning John Thain) making us all look like assholes." Yeah, and it's kind of sad. I still want to see this $1,200 trash receptacle he bough for his office. On the other hand, for all this outrage about firms being bailed out - not every firm was bailed out, and certainly not every department lost money. Why should those who made a lot of money for their companies be denied bonuses just because the other departments had losses. Retail brokerage these days is hotter than ever - why should the bonuses be taken away from them? As for executives, the decent sort forfeited their bonuses for 2008, the others - well, I won't judge, but if it's merit based - it is much harder to keep together the company at the time of distress than when everyone is happy and rolling in the dough. Their level of pressure is higher than ever, the scrutiny they are under is unimaginable, the pressure is outrageous - do they deserve more for their efforts - probably yes, if they are steering their company out of the mess. As for what's appropriate - in most companies the top $ amount is capped, so bonus is the only way for an executive to be recognized by the company. As for bailout - I was vehemently against it from the time this idiotic idea started floating around, as it's as against the core principles of capitalism as rent controlled apartments and other bullshit, but the foolish congressmen voted for it, so there we are. I blame the congress and the senate more than the execs.

[Frog Eater]

It is rediculous to think that Merrill Lynch can give out 4 Billion in bonuses the night before being taken over by Bank of America, and Bank of America has to ask for a handout from Uncle Sam to stay affloat.

If a bank or investment firm is asking for hand-outs, they should be communicating to staff that lay-offs are immenent, and no bonuses are comming.

I think it looks pathetic for Obama to say that "we are going to have discussions with these people and this activity wont be tollerated". Ha!

Wall Street is laughing in his face. They can do whatever they want, and Congress will give them whatever they want. It has already happened. Wall Street has shown nothing short of contempt for the American Taxpayer, and it is utterly a joke that these banks and investment firms are now openly looting the Federal Treasury.

It makes me infuriated that this continues to happen, and everyone stands aside with their hands up saying "what can we do? They will go under and take the American economy with them if we dont hand them a blank check for Trillions of dollars". They are going down. They are taking the American economy with them. Greed was and is the cause. They are just making sure to stuff their pockets as full of money as possible before they go.

[DanteGabriel]

[quote name='UltimateIceQueen' post='1668324' date='Jan 30 2009, 11.50']I blame the congress and the senate more than the execs.[/quote]
I, too, put more blame on incompetents voting for a bad solution rather than on the venal weasels whose arrogance and greed created the problem they are trying to address.

ETA: NY Attorney General Andrew Cuomo may "demand" the return of the $4 billion in bonuses paid out to Merrill Lynch execs before the BofA acquisition.

[quote name='Bloomberg news']New York Attorney General Andrew Cuomo may demand the return of $4 billion in bonuses paid by Merrill Lynch & Co. just before it was acquired by Bank of America Corp., a person familiar with the matter said.

Cuomo also wants to know what Bank of America Chief Executive Officer Kenneth Lewis, 61, knew about the accelerated bonuses and about Merrill's surprise $15 billion net loss in the fourth quarter, the person said. Lewis fired Merrill's CEO John Thain this month after the losses required more federal aid.

The attorney general's office is looking at whether the companies' shareholders had all necessary information about Merrill's finances and whether federal bail-out loans to Bank of America were used properly, the person said, asking not to be identified because the investigation is confidential.

"No longer will this country stand for wasteful spending of tax dollars on bonuses for executives whose companies have taken huge losses and required taxpayer bailouts," Cuomo said today in a statement about bonuses paid at Wall Street firms that received funds from the Troubled Asset Relief Program or TARP.[/quote]
[url="http://www.bloomberg.com/apps/news?pid=20601087&sid=aiCmAzh98Z70&refer=home"]http://www.bloomberg.com/apps/news?pid=206...&refer=home[/url]

I wonder how Cuomo can "demand" money taken back, but I guess we'll see how this develops.

[palaeologos]

[quote name='Frog Eater' post='1668327' date='Jan 30 2009, 08.55']It is rediculous to think that Merrill Lynch can give out 4 Billion in bonuses the night before being taken over by Bank of America, and Bank of America has to ask for a handout from Uncle Sam to stay affloat.

If a bank or investment firm is asking for hand-outs, they should be communicating to staff that lay-offs are immenent, and no bonuses are comming.

I think it looks pathetic for Obama to say that "we are going to have discussions with these people and this activity wont be tollerated". Ha!

Wall Street is laughing in his face. They can do whatever they want, and Congress will give them whatever they want. It has already happened. Wall Street has shown nothing short of contempt for the American Taxpayer, and it is utterly a joke that these banks and investment firms are now openly looting the Federal Treasury.

It makes me infuriated that this continues to happen, and everyone stands aside with their hands up saying "what can we do? They will go under and take the American economy with them if we dont hand them a blank check for Trillions of dollars". They are going down. They are taking the American economy with them. Greed was and is the cause. They are just making sure to stuff their pockets as full of money as possible before they go.[/quote]

The thing is, we needn't have handed them a blank check. Accountability could have been written into the appropriation, but it wasn't; seems like somebody was in an awful hurry to get it rushed through Congress as quickly as possible, for some reason.

I wouldn't be surprised to find that certain elected officials were in on the take, either.

I think my motto for the next few years is going to be "Fuck the usurers".

[Frog Eater]

[quote name='palaeologos' post='1668335' date='Jan 30 2009, 12.02']The thing is, we needn't have handed them a blank check. Accountability could have been written into the appropriation, but it wasn't; seems like somebody was in an awful hurry to get it rushed through Congress as quickly as possible, for some reason.

I wouldn't be surprised to find that certain elected officials were in on the take, either.

I think my motto for the next few years is going to be "Fuck the usurers".[/quote]

You are absolutely right, accountability SHOULD have been written into the legislation! I wrote both my congressman and my senator and told them that I would not vote them EVER again if they voted for the bill. Both did. I expected no less.

Congress stopped listening to their consituents long ago.

It wasn't so long ago, (October?) Congress was running around screaming that the sky was falling, that emergency funding had to funneled immediately to the greed machine or people wouldn't received their paychecks, every mom and pop store would close and the darkest days of darkest days would be cast upon us. Ha! The Washington lobby at it's finest. Bank of America, Chase and Citigroup have a fine lobby working for them and representing their interests. My children, who will be footing this bill, have none.

[WhiteQueen]

[quote name='DanteGabriel' post='1668332' date='Jan 30 2009, 11.58']I, too, put more blame on incompetents voting for a bad solution rather than on the venal weasels whose arrogance and greed created the problem they are trying to address.....

I wonder how Cuomo can "demand" money taken back, but I guess we'll see how this develops.[/quote]
Well, Cuomo could bring them to court and waste even more taxpayers money (flashback - 2004 Dick Grasso compensation case brought against him by Spitzer, to the effect of the case being dismissed, Grasso got all his money, the taxpayers were the ones taking a hit, and of course that lowlife Spitzer, but that's that.
As for arrogance and greed, I agree, there is that, but not as overwhelming as you think. Sometimes, I am baffled just reading about how the execs get a plane (was it Citi?), when they are under such surveillance that they should think twice before buying a friggin' stapler for the office. They are not stupid, so you are right - it is arrogance and the false sense of entitlement. Which I just frankly don't get. But the bailout decision was a bad one and I did not see anyone, ANYONE AT ALL - admitting to that - saying, yeah, we screwed up by involving government into business. If the business is failing, it does not deserve to stay afloat - it's simple as that - eco 101. Someone else would come and take its place, there is no reason to play a savior game. If a shop weren't bailed out - it would have been out of business, ergo no exec's bonuses - problem solved. Simple.

[Dinsdale!]

It's not all that nefarious.
These are companies were the top management has great relationships with their employees. Nobody wants to give pay cuts to people they like. It's easier to fire people than to give them pay cuts. And that's the pressure they are responding to, and it's way bigger than any pressure politicians could put on them by looking at them cross-eyed.

There are only two ways to prevent these kinds of shenanigans.
1) Let them go bankrupt
2) Gov't takeover of top management.

Neither of which I like particularly much.

We're going with
3) Yell at them a lot.
Which causes them to duck, I suppose.

Once they get their pay down to reasonable levels, I suppose the NYC Housing market will finally collapse.