Greed, Capitalism, Bonuses and the Big Banks . . . .

Bird of Prey · Jul 31, 2009

Big Banks Paid Billions in Bonuses Amid Wall St. Crisis
E STORY and ERIC DASH
Published: July 30, 2009

Thousands of top traders and bankers on Wall Street were awarded huge bonuses and pay packages last year, even as their employers were battered by the financial crisis.
Nine of the financial firms that were among the largest recipients of federal bailout money paid about 5,000 of their traders and bankers bonuses of more than $1 million apiece for 2008, according to a report released Thursday by Andrew M. Cuomo, the New York attorney general.
At Goldman Sachs, for example, bonuses of more than $1 million went to 953 traders and bankers, and Morgan Stanley awarded seven-figure bonuses to 428 employees. Even at weaker banks like Citigroup and Bank of America, million-dollar awards were distributed to hundreds of workers.
The report is certain to intensify the growing debate over how, and how much, Wall Street bankers should be paid. . . . .http://www.nytimes.com/2009/07/31/business/31pay.html?_r=1&partner=rss&emc=rss&src=ig

In order for financial institutions to take the taxpayers' money - most who will never see a million dollars in their lifetimes - and reward failure by paying their executive members outrageous bonuses is almost unbelievable. The financial industry in this country needs to be strictly regulated. . . very strictly. And yes, I am all for capping pay through a federal mandate. These greedy people are disgusting by any measure.

Without moral restraint, capitalism simply cannot work. Obviously, that's the case, so we're going to need to regulate, regulate, regulate. . . .

Fran · Jul 31, 2009

Royal Bank of Scotland said they paid their executives enormous amounts because 'Talent costs money.' Do they mean the talent that drove them to near bankruptcy, or the talent of the taxpayers who now own 60% of their bank?

In my opinion, self-regulation doesn't work because of greed. Nobody goes into banking to save the world and protect fluffy kittens. They go into it for as much cash as they can possibly trouser, and I think it's idiocy to assume people who are motivated solely by money will self-limit the amount of money they can make.

Romantic Heretic · Jul 31, 2009

I don't think it's greed so that is so much the problem as delusion. And these people suffer two delusions.

The first delusion is that they are capitalists and the second is that all capitalists are rich. Delusional people perform actions on their delusional beliefs.

The problem is most of us share that delusion.

Bird of Prey · Jul 31, 2009

Romantic Heretic said:
I don't think it's greed so that is so much the problem as delusion. And these people suffer two delusions.

The first delusion is that they are capitalists and the second is that all capitalists are rich. Delusional people perform actions on their delusional beliefs.

The problem is most of us share that delusion.

If you have the time, I'm hoping you'll elaborate on this. I'm not quite sure I understand. . . .

WendyNYC · Jul 31, 2009

Are you talking about capping everyone, or just the finance industry?

I think if that happened, the people with means would leave. I know so many people who are doing the expat thing right now and loving it, with no plans of returning to the states. Honestly, *I'd* love to move abroad, if just for a few years.

That said, I'm not in favor of rewarding failure. But salary caps? No.

Don · Jul 31, 2009

Romantic Heretic said:
I don't think it's greed so that is so much the problem as delusion. And these people suffer two delusions.

The first delusion is that they are capitalists and the second is that all capitalists are rich. Delusional people perform actions on their delusional beliefs.

The problem is most of us share that delusion.

Nailed it in one, RH. The OP has exactly zero to do with capitalism. Actually the OP describes the squandering of capital by a group of irrational actors, aided and abetted by the "regulators" who took money from the taxpayers and handed it to them.

Everything described in the OP -- EVERYTHING -- would have been impossible without giving some people the power to take money from other people at the point of a gun and hand it over to their pals.

So the solution is to give more power to the "regulators?"

How about instead we take away the special privileges granted by those "regulators" to their buddies?

robeiae · Jul 31, 2009

You filed it, that puts me over the top; you owe me a car. I don't wanna hear any shit, John, and I don't give a shit. Lingk puts me over the top. You filed it, it went downtown, now you owe me the car. You see, because this is how we keep score, bubie.--Ricky Roma, 1992

Shadow_Ferret · Jul 31, 2009

I knew it would be a fun thread when I saw BoP, Greed, and Capitalism together.

Gregg · Jul 31, 2009

Perhaps we shouldn't have given them the money in the first place.

Failure is part of capitalism. A huge percentage of new businesses fail in their first few years. Why should the big guys be exempt?

Robert Toy · Jul 31, 2009

Bird of Prey said:
Big Banks Paid Billions in Bonuses Amid Wall St. Crisis
E STORY and ERIC DASH
Published: July 30, 2009

Thousands of top traders and bankers on Wall Street were awarded huge bonuses and pay packages last year, even as their employers were battered by the financial crisis.
Nine of the financial firms that were among the largest recipients of federal bailout money paid about 5,000 of their traders and bankers bonuses of more than $1 million apiece for 2008, according to a report released Thursday by Andrew M. Cuomo, the New York attorney general.
At Goldman Sachs, for example, bonuses of more than $1 million went to 953 traders and bankers, and Morgan Stanley awarded seven-figure bonuses to 428 employees. Even at weaker banks like Citigroup and Bank of America, million-dollar awards were distributed to hundreds of workers.
The report is certain to intensify the growing debate over how, and how much, Wall Street bankers should be paid. . . . .http://www.nytimes.com/2009/07/31/business/31pay.html?_r=1&partner=rss&emc=rss&src=ig

In order for financial institutions to take the taxpayers' money - most who will never see a million dollars in their lifetimes - and reward failure by paying their executive members outrageous bonuses is almost unbelievable. The financial industry in this country needs to be strictly regulated. . . very strictly. And yes, I am all for capping pay through a federal mandate. These greedy people are disgusting by any measure.

Without moral restraint, capitalism simply cannot work. Obviously, that's the case, so we're going to need to regulate, regulate, regulate. . . .

Hypothetical question

A trader (salesman) has an employment contract and draws a fixed salary of $12,000 per year; in addition he will make $1.00 commission for each trade (the company keeps $9.00).

Over the course of a quarter he brings in $10 million worth of business for his company.

The trader is due $1 million in commissions.

The company makes some really bad business deals and loses $10 Billion of investor’s money.

Why should the trader not be paid his $1 million in commissions?

Why are the traders being vilified, because they made a $1 million?

ETA: Use the same example for Wal-Mart...if Wal-Mart loses money, is it okay not to pay their saleman the commissions?

Diana Hignutt · Jul 31, 2009

Gregg said:
Perhaps we shouldn't have given them the money in the first place.

Failure is part of capitalism. A huge percentage of new businesses fail in their first few years. Why should the big guys be exempt?

Because of the size and frequency of their campaign donations?

Bird of Prey · Jul 31, 2009

Gregg said:
Perhaps we shouldn't have given them the money in the first place.

Failure is part of capitalism. A huge percentage of new businesses fail in their first few years. Why should the big guys be exempt?

Bernanke thinks that we should put measures in place that would make it possible to simply let large institutions fail. I'd like to see a mandatory chunk of cash predicated on gross annual income stored in the Fed Reserve. That way the Fed can let irresponsible institutions fail without impacting the taxpayer. In other words, these irresponsible moneymongers can insure themselves.

Bird of Prey · Jul 31, 2009

Robert Toy said:
Hypothetical question

A trader (salesman) has an employment contract and draws a fixed salary of $12,000 per year; in addition he will make $1.00 commission for each trade (the company keeps $9.00).

Over the course of a quarter he brings in $10 million worth of business for his company.

The trader is due $1 million in commissions.

The company makes some really bad business deals and loses $10 Billion of investor’s money.

Why should the trader not be paid his $1 million in commissions?

Why are the traders being vilified, because they made a $1 million?

ETA: Use the same example for Wal-Mart...if Wal-Mart loses money, is it okay not to pay their saleman the commissions?

The American economy shouldn't be a casino, Robert. I think what you are failing to see is that the "trader" as a member of a corporation drummed up business knowing full well that his company was on a perilous decline. A "trader" with a million dollars in commissions isn't some in-the-dark victim of executive mismanagement. He IS a part of the exact same people that made stupid decisions predicated on greed, and then tried to ignore it, continuing to operate and trade in the guise that everything was hunky-dory.

Roger J Carlson · Jul 31, 2009

Bird of Prey said:
The financial industry in this country needs to be strictly regulated. . . very strictly.

We've seen what very strict regulation does to an economy...the Soviet Union, Communist China, and North Korea. Unfettered capitalism isn't much better as post-communist Russia attests. It's so riddled with corruption, nothing can get done.

I agree that capitalism without morality is a bad thing, but you can't legislate (or regulate) morality. You've got to build the system with checks and balances that make doing the right thing the profitable thing.

Roger J Carlson · Jul 31, 2009

Bird of Prey said:
The American economy shouldn't be a casino, Robert. I think what you are failing to see is that the "trader" as a member of a corporation drummed up business knowing full well that his company was on a perilous decline. A "trader" with a million dollars in commissions isn't some in-the-dark victim of executive mismanagement. He IS a part of the exact same people that made stupid decisions predicated on greed, and then tried to ignore it, continuing to operate and trade in the guise that everything was hunky-dory.

You over-estimate the influence of the 'in the trenches' trader.

Robert Toy · Jul 31, 2009

Bird of Prey said:
The American economy shouldn't be a casino, Robert. I think what you are failing to see is that the "trader" as a member of a corporation drummed up business knowing full well that his company was on a perilous decline. A "trader" with a million dollars in commissions isn't some in-the-dark victim of executive mismanagement. He IS a part of the exact same people that made stupid decisions predicated on greed, and then tried to ignore it, continuing to operate and trade in the guise that everything was hunky-dory.

What a load of crap!

ETA: Your example is akin to blaming the waiter for bringing the food to a fat person.

clintl · Jul 31, 2009

Long ago, I took my business away from for-profit banks, and gave it to credit unions. I've never regretted it. I don't know why anyone deals with banks if they don't have to - credit unions provide better service at a lower price.

Bird of Prey · Jul 31, 2009

Roger J Carlson said:
You over-estimate the influence of the 'in the trenches' trader.

Nope. Sorry, Roger, I don't. They don't pull in that kind of money as junior players. Believe me, I know. And the taxpayer doesn't owe them jack if the corporation goes belly up or is teetering. It's up to the company to negotiate with its employees as in: "Folks we can't afford your commissions. Here's an IOU until we're back on our feet," not "Heh, the taxpayer chumps of America just bailed us out. Line up, folks. Big bucks for you. . . ."

Frankly, I consider the latter darn close to treason. At the very least, it's theft.

Andrew · Jul 31, 2009

Gregg said:
Perhaps we shouldn't have given them the money in the first place.

Failure is part of capitalism. A huge percentage of new businesses fail in their first few years. Why should the big guys be exempt?

No, we shouldn't have. Good statement.

Robert Toy · Jul 31, 2009

why does everyone hate other people who make money? *sigh*

Don · Jul 31, 2009

I don't hate people who make money. The production of excess wealth is central to improving the standard of living, and those who actually earn it are prone to reinvesting rather than squandering what they have earned.

I do, however, hate people who get their political buddies to steal money for them, and then let their buddies claim the problem is "capitalism," or "free markets," or "lack of regulation."

I'm also not too hot on people who are well aware of the difference and still conflate government-sponsored theft and honest production.

Robert Toy · Jul 31, 2009

Don said:
I don't hate people who make money. The production of excess wealth is central to improving the standard of living, and those who actually earn it are prone to reinvesting rather than squandering what they have earned.

I do, however, hate people who get their political buddies to steal money for them, and then let their buddies claim the problem is "capitalism," or "free markets," or "lack of regulation."

I'm also not too hot on people who are well aware of the difference and still conflate government-sponsored theft and honest production.

don't you talk about my congressman/senator that way!

Gretad08 · Jul 31, 2009

Accepting large bonuses or salaries doesn't make a person greedy...being miserly with the money does.

Maybe some of these people donated a boatload of cash to charity. Who knows?

dclary · Jul 31, 2009

Bird of Prey said:
Big Banks Paid Billions in Bonuses Amid Wall St. Crisis
E STORY and ERIC DASH
Published: July 30, 2009

Thousands of top traders and bankers on Wall Street were awarded huge bonuses and pay packages last year, even as their employers were battered by the financial crisis.
Nine of the financial firms that were among the largest recipients of federal bailout money paid about 5,000 of their traders and bankers bonuses of more than $1 million apiece for 2008, according to a report released Thursday by Andrew M. Cuomo, the New York attorney general.
At Goldman Sachs, for example, bonuses of more than $1 million went to 953 traders and bankers, and Morgan Stanley awarded seven-figure bonuses to 428 employees. Even at weaker banks like Citigroup and Bank of America, million-dollar awards were distributed to hundreds of workers.
The report is certain to intensify the growing debate over how, and how much, Wall Street bankers should be paid. . . . .http://www.nytimes.com/2009/07/31/business/31pay.html?_r=1&partner=rss&emc=rss&src=ig

In order for financial institutions to take the taxpayers' money - most who will never see a million dollars in their lifetimes - and reward failure by paying their executive members outrageous bonuses is almost unbelievable. The financial industry in this country needs to be strictly regulated. . . very strictly. And yes, I am all for capping pay through a federal mandate. These greedy people are disgusting by any measure.

Without moral restraint, capitalism simply cannot work. Obviously, that's the case, so we're going to need to regulate, regulate, regulate. . . .

The error was in giving these companies federal money, not in rewarding hard workers for their efforts.

Fran · Jul 31, 2009

We have the Financial Services Authority over here, and they're useless. They're too friendly with the banks, and don't have enough power. The Tories have said they're going to abolish it and have everything controlled by the Bank of England because there's an outside chance someone there knows what they're doing. But they too could hardly be classed as independent.

The problem for me is that financial workings are so complicated few understand them properly. The only people who DO seem to understand them are the ones that screw with them for their own benefit, and it could be argued that few of the general public are that fussed as long as they can pay their rent or mortgage and have a pint on a Friday night. So inevitably regulators ARE going to have to come from the industry itself and it's virtually impossible to achieve impartiality. But it doesn't mean the government shouldn't try.

Greed, Capitalism, Bonuses and the Big Banks . . . .

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