Wall Street Nears the Bonus Round
As if taxpayers didn't have enough to gripe about, Wall Street bonus season is fast approaching. It appears executives will still be compensated after a government bailout and a dismal 2008.
Although how much -- and how it will compare to last year's windfall -- has yet to be determined, most financial analysts agree that paychecks will indeed be a little heftier during the holiday season.
But wait! There's more! According to a survey of 1300 financial services professionals conducted by eFinancialCareers.com, 36% expect a higher bonus than last year. Experts concede that the compensation wouldn't be nearly so high had the $700 billion rescue package been shot down.
So much for not rewarding poor performance.
Given the public outcry over the bailout, Congress finds itself in the unenviable position of having to keep a close watch on the expenditures of those companies and industries it chose to shore up. American International Group's (AIG) spa weekend, for example, is something they'd rather not have happen again - especially if they want to be reelected.
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This week, New York Attorney General Andrew Cuomo sent a letter to 9 of the financial institutions participating in the bailout package. In it, he demands to know the specific bonus amounts that will be doled out to top brass at the end of the year, even though this information isn't usually made official until the end of November. He also reminds executives that compensation exceeding the amount of work provided could
violate New York state law, although a legal precedent might prove difficult to obtain.
Henry Waxman, Democratic chairman of the House Committee on Oversight, sent a similar letter this week urging banks to forego annual bonuses in December.
Whether the letters were thrown out, recycled or shredded has yet to be determined.
Defenders of the year-end bonuses claim that allocating extra cash prevents the loss of top talent to greener pastures. Some also point out that, while the bailout package limits CEO salaries, there's nothing restricting the payment of regular employees.
Three firms -- Morgan Stanley (MS), Merrill Lynch (MER) and Goldman Sachs (GS) -- will likely lead the pack in the distribution of bonues, having already set aside a combined $20 billion.
Second, with so many firms laying people off, exactly where will top talent go if they don't get a bonus? Can you imagine the job interview?
"How much money did you make for Morgan Stanley in 2008, Ms. Applicant?"
"Well, I lost a combined $127M on sub-prime CDOs and Lehman Brothers CDSs".
"And why do you want to leave MS?"
"They didn't give me a bonus."
This is taxpayer money. If big bonuses get awarded it will display vast hubris. And hubris leads inexorably to retribution. In this Greek tragedy, the part of the avenging pantheon will be played by Obama and the Democratic Congress, who shall cry "Greed!" and let slip the dogs of 'socialism'.
I think it is a bit one-sided to say Obama and the Dems will unleash socialism on us. Clearly, both sides voted for the bailout. Maybe the difference is: Obama wants socialism for everyone whereas the Repubs want it only for the rich when they lose money?
But, I completely agree about the bonuses and it certainly seems to make clear how they got into this mess in the first place...not as smart as they seem or believe themselves to be. I was just saying the same thing to a co-worker...maybe they should let these "brainiacs" go to another company so they can destroy it.
What I meant was that perceived misuse of taxpayer money may result in laws being passed that these banks would not like. They are acting as though they do not have to care about public opinion. That's not a good attitude for any corporation in the long run; for a corporation dependent on government largess for near-term survival it is simply stupid.
We have more billionaires now then we use to have millionaires in the 80's and at the same time we have more people dropping out of the middle income brackets into proverty levels then ever before and yet we continue to give the tax breaks to the wealthy in hopes of some trickle down according to Republicans.
Its not working and the laws against fraud is not working. Sarbaines Oxley is not working. It pays to be a thief a liar, a fraud. Bankruptcy is the biggest money maker of all if its orchestrated right. Now you don't even go to court. You just get the FDIC to mandate it and the Hell with private shareholders.
Wall Street should be shut down. Its a cess pool of thieves, liars, crooks and greedy little piss ants that need nothing more then the heels of the middle class hard working Americans to stomp then out.
You folks have pissed on the working class once to often. Have a wonderful day swimming in your cess pools.
JPM
Oh, you mean the ones that engineered what is turning out to be the largest financial meltdown in modern history. *That* top talent?
That all of the bankrupt firms somehow have $20 billion for bonuses after begging for a bailout tells you where where their priorities are.
The problems, ultimately, are social. There is no amount of legislation that will stop cheating, no argument that will sway the greedy. Until you are truly scorned by your neighbours and loved ones for cheating those around you, instead of being "secretly" envied, this is the way it will be.
My advice: learn to work the system as long as it hasn't completely collapsed and hope for the best. The worst thing about those who would change this into some vision of a "perfect world" is that my vision is different.
Cheers.
