Wall Street bonuses

[CloudFlare]

[quote name='UltimateIceQueen' post='1668502' date='Jan 30 2009, 15.36']Yeah, and they are tax payers, too. Have you thought about that? They probably contributed more to taxes than you ever will.[/quote]

Possible, and even probable. But no company I've ever worked for has needed billions from the Federal teat. And I haven't cried like a spoiled child when things aren't "fair" and my bonus gets whacked.

[quote]You are uninformed and are very wrong. Retail sector is hotter than ever and people are making a lot of money these days. Volatility is conducive to money making, all you have to do is just to be on the right side of the market. So I won't be so sure making unsubstantiated predictions if I were you.[/quote]

Let the market sort itself out without government intervention then. Citi can give us back the what, 20 billion in cash and null out the 300 billion in loan guarrantees.

[quote]Citi stayed afloat when Lehman, Merrill, and AIG went down, before the bailout, before the billions, it had money because of SB.[/quote]

Citi still went down. Or actually, they went to the government.

[quote]Again, you are so obviously uninformed, it is painful to even address it. The stock needs to be vested to be sold, otherwise, they could not sell it. Greed has nothing to do with it - cash is king, everyone would rather have cash, but the company prefers to give parts of bonuses in the stock, which vests based on the years of service (i.e., you stayed with the company for a full year, you could sell 33% of your last year's bonus. If you leave the firm, you forfeit your money).[/quote]

I'm well aware of the contractual obligations of these places. Hence the reason why I noted they should have asked for cash in their employment contacts.

[quote]Is it clearer now, or do I also need to ship an introduction course in Finance and Economics to you as well? Or a subscription to a good newspaper, or a magazine? Please let me know, that's the least I could do after getting my bonus hitting my bank account today?[/quote]

I've got plenty of finance and econ text books. They generally describe a world that doesn't exit. When it comes down to it, GS is the main beneficiary of this [s]stimulus[/s] system, along with some other Wall Street players.

And not to be a dick, but enjoy your bonus. It's likely it's the last one you're going to see for a while. Things are going to start spiralling out of control rapidly.

[Guest Raidne]

Apparently Senator [url="http://www.cnn.com/2009/POLITICS/01/30/executive.pay/index.html"]Claire McCaskill[/url] is a lot more pissed off than I am.

[quote]An angry U.S. senator introduced legislation Friday to cap compensation for employees of any company that accepts federal bailout money. Under the terms of a bill introduced by Sen. Claire McCaskill, D-Missouri, no employee would be allowed to make more than the president of the United States.

Obama's current annual salary is $400,000.[/quote]

I guess the lesson here was maybe that financial corporate culture is hopelessly, hopelessly bankrupt, and that we should have used the bailout money to set up a temporary national bank-like institution to make up for the shortfall when those banks fail. I guess I didn't realize they so richly deserved to fail at the time. At any rate, that would have readjusted salaries in a pretty pronounced downward direction across the entire market. Yes, employees who make more money for the company they work for should be paid more, but an entire industry shouldn't make more money than it can financially support just because they deal with enormous sums of money.

ETA: OTOH, looking back, I'm still scared to death of all the unknown consequences, so maybe not, but this is a real mess. I guess they thought they count on the uber-capitalists not to act like parasitic fascists.

[CloudFlare]

[quote name='Raidne' post='1668595' date='Jan 30 2009, 17.10']I guess the lesson here was maybe that financial corporate culture is hopelessly, hopelessly bankrupt, and that we should have used the bailout money to set up a temporary national bank-like institution to make up for the shortfall when those banks fail.[/quote]

That's coming up. The Bad Bank of America will collect all the crap off of the books of the other banks. Then BBoA will do something with the crap. Most likely scenario after that is tax payers eat the crap.

Other fun economics newz:

Amex is more or less [url="http://www.nytimes.com/2009/01/31/your-money/credit-and-debit-cards/31money.html"]redlining[/url] people who use their credit at places that data mining indicates you have a higher rate of defaulting at.

[Arlingzen Bill]

[quote name='Raidne' post='1668595' date='Jan 30 2009, 16.10']ETA: OTOH, looking back, I'm still scared to death of all the unknown consequences, so maybe not, but this is a real mess. I guess they thought they count on the uber-capitalists not to act like parasitic fascists.[/quote]

The ultimate success or failure may come down to how well these banks do under these new conditions. Stockholders may be very pleased to see their bottom lines increased by the lowering or compensation. On the other hand the best talent may go where they aren't pay capped. If talent leaves and the company fails, then it ends as a bad experiment. If the talent leaves and the company still performs or even outperforms, I would think there may come stockholder pressure to meet the new industry standards.

[Frog Eater]

[quote name='KingBread' post='1668620' date='Jan 30 2009, 16.25']Amex is more or less [url="http://www.nytimes.com/2009/01/31/your-money/credit-and-debit-cards/31money.html"]redlining[/url] people who use their credit at places that data mining indicates you have a higher rate of defaulting at.[/quote]

The link states that Amex has been candid about their snooping.... I have an Amex, they have not told me that they are looking where I shop to determine if I may be in line for a credit line reduction.

Thruthfully, I side with Amex on this issue. They should be pro-active in determining when repayment difficulties may be coming. I also believe that Amex is not decreasing credit lines for customers who are paying their bill off every month. If you are revolving a balance, they have every right to decrease your line. Their money is at risk. And the customer may take their business elsewhere, should they be inclined.

[WhiteQueen]

[quote name='Raidne' post='1668595' date='Jan 30 2009, 16.10']ETA: OTOH, looking back, I'm still scared to death of all the unknown consequences, so maybe not, but this is a real mess. I guess they thought they count on the uber-capitalists not to act like parasitic fascists.[/quote]
My sentiment exactly, that's exactly how I feel - scared to death. My company did not get a bailout, we actually posted a profit for the last quarter, imagine that? But we went through the similar scare back in 2007, when we posted huge losses and our CEO forfeited his salary for the first half of 2008, and other execs forfeited their bonuses for 2007 as well. They did announce that there would be a potential merger in our future, however. The reason I point it out is that to me, this is a precedent how the company that deserved to survive, survived, by cutting costs, sacrificing A LOT in 07 and 08 (I would know - we had to cut even on drinks and meals with clients, venues we select for meetings, travel arrangements, etc), but survived without panhandling, and rebounded to make profits when the rest of the industry is in ruins. Government should stop thinking it's omnipotent and let the markets correct themselves. As for the cap in salary, maybe for Obama $400,000 is enough - his housing, utility bills, hired help, landscaper, pool boy, child care, transportation, etc - it's all taken care of. His $400,000 is clean money with no expenses. Now if he had to pay rent in White House using his $400,000 and pay electric bill and security bill, he would have gone bankrupt, too. The senator did not think it through well, when she made her suggestion that no one should make more than the pres.

[Guest Raidne]

Apparently they're talking about reforming the whole thing and buying up the bad assets instead. So I guess we're just kissing the bailout money goodbye and starting over?

ETA: Apparently it would cost $2-4 [i]trillion[/i] dollars.

[Inigima]

Is this the part where those of us who were vocally and angrily opposed to the idea of a no-strings-attached bailout, and who were shouted down, get to say "I told you so"?

[Guest Raidne]

[quote name='Inigima' post='1668721' date='Jan 30 2009, 17.22']Is this the part where those of us who were vocally and angrily opposed to the idea of a no-strings-attached bailout, and who were shouted down, get to say "I told you so"?[/quote]

Yeah, as opposed to thread where we didn't do the bailout and the whole financial sector collapsed and companies couldn't make payroll where everyone else would be saying I told you so.

Apparently the idea of a strings-attached bailout just makes too much sense to hope for. Or maybe not, maybe they'll fix it.

[CloudFlare]

[quote name='Raidne' post='1668743' date='Jan 30 2009, 18.36']Apparently the idea of a strings-attached bailout just makes too much sense to hope for. Or maybe not, maybe they'll fix it.[/quote]

LOL.

Barney Frank and Timmay Geithner still haven't gotten their _big_ payday yet. They'll be working for Goldman Sachs sooner or later. Why would they kill their future earnings potential?

[Altherion]

[quote name='UltimateIceQueen' post='1668678' date='Jan 30 2009, 22.52']Government should stop thinking it's omnipotent and let the markets correct themselves.[/quote]
It is not thinking it's omnipotent, it's trying to preserve its own hide. When markets "correct themselves" a whole lot of people (i.e. a few million at best, more than ten million at worst) lose their jobs. These are not the kind of people who have a few years worth of salary squirreled away for rainy days. In a democracy, it is practically guaranteed that the first people they're going to go after are the government. This is what sealed McCain's coffin in the presidential election and it is currently moving through Europe, slowly, but surely.

For example, [url="http://www.france24.com/en/20090129-sarkozy-faces-black-thursday-france-strikes-transport"]here's what happened yesterday in France[/url]. Now, this is really not that big by French standards, but if the unemployment rate continues to increase, then it is only the beginning and the best ending the government can hope for is what happened in Iceland. Governments need to do something to demonstrate to everyone that they are in fact doing something. In the fall this was the bailout. Who knows what they will do next? Maybe just nationalize the accursed firms and be done with it?

Also, it is worth noting that the Western nations are relatively well off. I suspect the people about to have a [i]really[/i] good time are those living in places like Russia (where the currency has lost something like a third of its value in half a year as all of the investors pull their money out).
[quote]As for the cap in salary, maybe for Obama $400,000 is enough - his housing, utility bills, hired help, landscaper, pool boy, child care, transportation, etc - it's all taken care of. His $400,000 is clean money with no expenses. Now if he had to pay rent in White House using his $400,000 and pay electric bill and security bill, he would have gone bankrupt, too. The senator did not think it through well, when she made her suggestion that no one should make more than the pres.[/quote]
Surely when you travel on business trips your company pays for your airfare and hotel? Besides, I think the idea was that these people don't deserve as much total compensation as Obama does.

[ants]

A couple of things:

1. Lets not restart the UHC idea here, no? Not like I haven't commented on it ad nausem before ;)
2. I was under the impression the US government allowing Lehman to go under was seen in hind sight as one of the bigger economic blunders of the last 50 years? What turned something very bad into something diabolical. So I'm a little surprised at all the resentment of government support.

[quote name='UltimateIceQueen' post='1668421' date='Jan 31 2009, 05.22']I don't know why you think I disagree. I hate the thought that federal money went to the businesses. Government had absolutely no right to interfere with the business - they created more problems - it was like a butterfly effect. If a business fails - then it should not survive, there would be others to come and take it's place. That what happens in a real world - survival of the fittest. In the US the CEO is responsible to the shareholders - the shareholdres elect the board, the board votes on executive compensation. In Germany, a CEO is responsible to the people of Germany - for example Wallmart could not have the stores open for 7 days because Germans won't allow that. In Japan, a CEO is liable to the employees of his company. But we are not in Germany or in Japan. Shareholders voted, the compensation was decided upon. How could it be changed without changing the whole culture, nature of American capitalism, etc? Bailout was a big mistake, and I think we'll see more ill effects of it in the future.[/quote]
Just on a side note, if the Government did that over here, as far as I'm concerned its in the public interest having supermarkets open 7 days a week. I hate it that they're not open after 5.00pm on a Sunday already.

[quote name='UltimateIceQueen' post='1668462' date='Jan 31 2009, 06.08']I actually have a perfect example: Smith Barney is a part of Citi. Citi lost gazzilions of dollars, while Smith Barney and its formidable retail made a lot of money and is a highly profitable business. So, should Smith Barney people get penalized by seeing nothing, even though they worked their asses of all year, just because the bank lost the money. Broker/dealer employees have no interaction with the bank side, if anything they get screwed twice - (1) Vikram Pundit, Citi's CEO, is selling them to Morgan (they should call the new company Citi Morgue, very appropriate) with Morgan Stanley calling all the shots, (2) they carried the bank through the crisis; (3) they get screwed on Citi stock devaluing to almost nothing, and they had all previous years' bonuses paid in the god damned thing; (4) now they are going to get nothing because the bank lost money and they, although, made a lot, are not going to see it as it went to the bank's rescue.
My point being - it's not even a different department - it's a different business, entirely different, but still under the umbrella of a behemoth corp.[/quote]
This is actually very close to my own circumstances.

I work for the insurance arm of RBS, which is now approximately 70% owned by the UK government. However, the insurance arm is fine - and is its own set of individual companies. Its total losses from its £9 billion asset pool to bad debts/Lehman/Maloof/sub prime is minimal, because they had a "conservative" investment plan. The insurance arm has been fundamentally unaffected either in its sales, earnings, or claims experience from the credit crunch (although we're starting to see an increase in theft claims....).

Now personally, I got rated sufficiently that [i][b]if[/b][/i] bonuses are paid, I'll get some. I can honestly say I've had a pretty damn big impact on my unit this year, and have changed an awful lot of processes and stayed back working pretty hard to get things done - often playing well above my league as my unit manager was seconded to the sale process (they've been negotiating a sale of the insurance arm all year).

Now, I've performed well, the unit has done well, and the business has done well. Before passing our profits onto the company that owns us, that happens to be 70% owned by the UK Government, should we spend some of that rewarding the employees that have helped create that result? If we were directly owned by the public, and we theoretically reported a good profit, would anyone complain that bonuses were paid? Personally, I think I should. THIS business has been run profitably, and who our shareholders are (whether its individuals, a bank or a government) shouldn't matter.

As it is a profit share component that has been paid for 10 years at exactly the same rate (to the extent that when new employees joined they were told that, and sometimes it was implied that it was guaranteed) will almost certainly not be paid as its decided at a total group level. I've got no problem with that. But I know a lot of employees who after 5 or 6 years considered that part of their compensation, and assumed they'd get it. Its obviously hit them quite hard, although nobody is complaining. And remember, a lot of these guys put money into shares that are now near worthless.

Just to clarify, this group is not bankers/stock brokers. The units average salary is probably £40,000 to £50,000, and bonuses for the entire unit (I'm guessing as I wasn't at the company for the last bonus season) would probably be in the range of £10,000 to £20,000 [i]across the whole unit[/i]. So its not like we're talking big bikkies, but very significant to the individuals.

[ants]

In Australia, or senior pay must be announced at the AGM, and I believe (don't really follow it closely) that they can actually block the contract increases in some circumstances. Given a large chunk of Australian shares are owned/controlled by big retail investers (due to our retirement fund system), they DO have quite a bit of voting power, so you'd hope they'd keep some kind of check.

[Bronn Stone]

[quote name='ants' post='1668822' date='Jan 30 2009, 16.00']In Australia, or senior pay must be announced at the AGM, and I believe (don't really follow it closely) that they can actually block the contract increases in some circumstances. Given a large chunk of Australian shares are owned/controlled by big retail investers (due to our retirement fund system), they DO have quite a bit of voting power, so you'd hope they'd keep some kind of check.[/quote]

Large institutional investors in the US have not been anywhere near as aggressive about Executive Compensation as they should. CalPERS (California Public Employee Retirement System) has the potential to be a 900-lb. gorilla but is instead willing to settle for being an occasionally cheeky monkey.

[palaeologos]

[quote name='Bronn Stone' post='1668848' date='Jan 30 2009, 16.39']Large institutional investors in the US have not been anywhere near as aggressive about Executive Compensation as they should. CalPERS (California Public Employee Retirement System) has the potential to be a 900-lb. gorilla but is instead willing to settle for being an occasionally cheeky monkey.[/quote]

And as a result, Chief Executive positions in the US are seats in a gigantic version of Musical Chairs. CEO A is out of Company X, and CEO B takes his place. CEO C gets CEO B's, old job at Company Y, and who gets CEO C's job? Why, our old friend CEO A! And just to make things even more jolly, they all get hired on at somewhat more than their predecessor's salary!

(I know you're going to ask who gets left seatless at the end of the round--you should have guessed by now that it's the American Taxpayer...)

[Angalin]

[quote name='Triskele' post='1668814' date='Jan 30 2009, 17.45']Part of the problem with our current system is that it appears that the top dogs at some of these firms aren't necessarily motivated to do great for their company or its stockholders in the long-term. Their first goal is to get to the top position and show some good short term progress for a year or 18 months or so. Golden parachute is then secured and said person has won the game of life.

It's like that admission by Greenspan that he'd mistakenly assumed that companies would do what was in their shareholder's interest. I think I would have assumed that too. But if that's not the case what the fuck does that say about our entire system as it is? How would you like to invest in a company that isn't going after shareholder interest as a top priority?[/quote]
But - and I'm sure someone will correct me if I'm wrong :) - my understanding of the situation is that CEOs are motivated in the short term by their shareholders' interest, which explains your mention of "a year or 18 months". Most investors are looking at quarterly results, no? The problems begin when someone proposes an idea causing short-term pain with the rationale that it's for the long-term good of the company, and everybody else freaks out about what that might do to the quarterly results and refuses to buy into the idea.

[quote name='Bronn Stone' post='1668848' date='Jan 30 2009, 18.39']CalPERS (California Public Employee Retirement System) has the potential to be a 900-lb. gorilla but is instead willing to settle for being an occasionally cheeky monkey.[/quote]
:lol: - if only it didn't have such disastrous consequences!

[Commodore]

This is why the state shouldn't be investing in the private sector, because that investment inevitably leads to a desire for state control. If you are gonna criticize CEO pay, where does it end, why not just take over the decision making for the companies entirely. Tell them what hours their workers can work, what their wages should be, who they can and can't sell to, stuff like that.

Hey let's loan money to private interests with no strings and then complain about how they decide to use it. What did you think was gonna happen?

[ants]

[quote name='Angalin' post='1668978' date='Jan 31 2009, 14.04']But - and I'm sure someone will correct me if I'm wrong :) - my understanding of the situation is that CEOs are motivated in the short term by their shareholders' interest, which explains your mention of "a year or 18 months". Most investors are looking at quarterly results, no? The problems begin when someone proposes an idea causing short-term pain with the rationale that it's for the long-term good of the company, and everybody else freaks out about what that might do to the quarterly results and refuses to buy into the idea.[/quote]
Part of the problem may also be that only a small % of the shares get traded, so only a small % effectively controls the share price. If that small % is predominantly short-term, active traders, while the longer term investors have to sit back and watch, then there is a fundamental diconnect between the aims of those who are mostly affecting the share price (active traders with short term goals) and the bulk of the shareholders (not active, longer term goals). In my view it also creates a disconnect between a company's real and perceived values.

[Swordfish]

[quote name='Raidne' post='1668595' date='Jan 30 2009, 13.10']Apparently Senator [url="http://www.cnn.com/2009/POLITICS/01/30/executive.pay/index.html"]Claire McCaskill[/url] is a lot more pissed off than I am.



I guess the lesson here was maybe that financial corporate culture is hopelessly, hopelessly bankrupt, and that we should have used the bailout money to set up a temporary national bank-like institution to make up for the shortfall when those banks fail.[/quote]

Actually, we should have stuck with the original bailout plan. But our legislatures are just as bankrupt as our financial corporate culture, so instead they did the only thing worse than doing nothing, and are now scrambling to make things even worse.

[Commodore]

McCaskill is outraged that people who make bad decisions continue to make them even after being bailed out. I'm outraged that she blew our money on these idiots. If I wanted to bail out a company I would buy stock in it.

Don't need financial dynamos like Claire McCaskill allocating investment. Obviously she doesn't have a clue where it should go if she gave it to these idiots.