1 Reason to Hate Wall Street

[nopasties]

Who is with me?

Anyone know where I could find a Fight Club?

[Hiero of Syracuse]

Theres a MMA fight lab right where I live.
But I'm not exactly happy about Wall Street either...

[nopasties]

Theres a MMA fight lab right where I live.
But I'm not exactly happy about Wall Street either...

Fight Club as in the movie

Spoiler Alert, click show to read: 

[The Devil's Sergeant]

And what is wrong with a comapny that is in dire straights to say to its employees, "Times are tough, but if we can pull this company back from the brink, we are going to show you the money!"

[nopasties]

And what is wrong with a comapny that is in dire straights to say to its employees, "Times are tough, but if we can pull this company back from the brink, we are going to show you the money!"

I can understand the use of some people being necessary to stay but paying out bonuses to those when there is record losses. Losses so bad and pivotal putting the entire worlds economy in jeapordy. That is not a sign your people are the best people.

Goes to show where your standards are. CEO's who only shuffle paperwork around in a business that shuffles money around should be forgiven but everyone else should have a different standard of responsibility.

[Каие]

And what is wrong with a comapny that is in dire straights to say to its employees, "Times are tough, but if we can pull this company back from the brink, we are going to show you the money!"

Because the amount of money exceeds their profits. For a normal business, that wouldn't matter as they can flop if they want to, but these businesses bring down the economy with them. They know that.

[Mangalore]

And what is wrong with a comapny that is in dire straights to say to its employees, "Times are tough, but if we can pull this company back from the brink, we are going to show you the money!"

Because
a) They actually don't have the money
b) wouldn't be capable to turn around without the bailout money which is like an investor who sees that the first thing a company he buys into does is waste his money on bonus payments.
c) The money was not given to the banks to waste on such payments but on kickstarting the financial system again.

At the very least this undefensible to the low-> middle income taxpayers who get screwed by loans and paying taxes (supposedly used to improve their debt situation). Honestly, banks sound all about captialism but what's going on there is not capitalism if they gloat over their winnings in good times snarling at any attempt by the state to regulate things but come running when times are bad. It doesn't look very good.

[Watchman]

Eh, it just proves what everyone with half a brain already knew well enough - that they're greedy, opportunistic, hypocritical bastards just like everyone else.
Why someone thought it a good idea to let them run off without any meaningful supervision is something that has always baffled me.

[Phier]

The problem is the term 'bonus'.

When most people think of a bonus its like a tip, extra money for a job well done.

Many/most of the bonuses are contracted in, they get paid if you complete a job or just stick around for the year. They were contractually OBLIGATED to pay these 'bonuses'.

[Watchman]

Well, that *does* make sense. One also suspects it tends to make quite a few people in the firm itself grit their teeth if their bottom line is already looking ghastly though...

[nopasties]

The problem is the term 'bonus'.

When most people think of a bonus its like a tip, extra money for a job well done.

Many/most of the bonuses are contracted in, they get paid if you complete a job or just stick around for the year. They were contractually OBLIGATED to pay these 'bonuses'.

At the same time other worker contracts are broken. It may cost a penny in legal costs but this still does not make me happier.

People should get paid well for a good product. The lack of accountability for one of the biggest oops moments in history still pisses me off.

[Phier]

At the same time other worker contracts are broken. It may cost a penny in legal costs but this still does not make me happier.

People should get paid well for a good product. The lack of accountability for one of the biggest oops moments in history still pisses me off.

There was accountability.

The government removed it.

Don't be mad at the companies be mad at the government for saving them with our money.

[Watchman]

The kind of accountability that would have been needed was working oversight to leep the crisis from arising in the first place, which the Bush adminstration kind of failed to provide (the potential problems began surfacing during their watch). The current one is just trying to keep firms deemed to be sufficiantly vital nodes in the economic system ("too big to fail") from collapsing and causing further fallout damage.

[nopasties]

There was accountability.

The government removed it.

Don't be mad at the companies be mad at the government for saving them with our money.

Probably lobbyed to do so of course.
http://online.wsj.com/article/SB124896891815094085.html

Bank Bonus Tab: $33 Billion

Nine Lenders That Got U.S. Aid Paid at Least $1 Million Each to 5,000 Employees

Nine banks that received government aid money paid out bonuses of nearly $33 billion last year -- including more than $1 million apiece to nearly 5,000 employees -- despite huge losses that plunged the U.S. into economic turmoil.
Andrew Cuomo



The data, released Thursday by New York Attorney General Andrew Cuomo, provide a rare window into the pay culture of Wall Street, where top employees typically make 90% or more of their compensation in year-end bonuses.
The $32.6 billion in bonuses is one-third larger than California's budget deficit. Six of the nine banks paid out more in bonuses than they received in profit. One in every 270 employees at the banks received more than $1 million.
Overall compensation and benefits at the nine banks fell 11%, to $133.5 billion in 2008 from $149.3 billion in 2007, the Cuomo report said. But with net revenues falling, the percentage of the firms' revenues dedicated to compensation rose to 45% last year from 41% in 2007.
The report reignites long-simmering anger, on Capitol Hill and beyond, over big Wall Street payouts. The nine firms in the report had combined 2008 losses of nearly $100 billion. That helped push the financial system to the brink, leading the government to inject $175 billion into the firms through its Troubled Asset Relief Program.
The chairman of the U.S. House investigative panel, New York Democrat Edolphus Towns, called the pay figures "shocking and appalling" and announced a hearing into compensation practices at banks.
The White House was more muted. "The president continues to believe that the American people don't begrudge people making money for what they do as long as...we're not basically incentivizing wild risk-taking that somebody else picks up the tab for," said White House Spokesman Robert Gibbs.
More

• Read the full report from the New York Attorney General's office.

Deal Journal

• What Are Your Chances of Being a Millionaire?
• Bonus Breakdown From Cuomo's Report

Those on Wall Street argue they have to pay to keep talent. Often, bankers say, only a small group is responsible for losses and it is not fair to punish employees in other areas of the business. They say the compensation system will be difficult to change.
"These pay packages are pretty outrageous," said Michael Baldock, a partner at Stamford, Conn.-based boutique bank Ondra LLP, who has worked at a number of big investment banks. "But if you generate $10 million in revenue a year, another firm will always want that revenue and be willing to pay for it."
In releasing the report now, New York Attorney General Cuomo is vaulting ahead of federal efforts to assess and curb excessive pay. The office has been among the first to investigate and bring charges on several Wall Street abuses this decade.
The House of Representatives is preparing to vote as early as this week on a bill that would give shareholders nonbinding say on pay packages and give regulators more tools to prohibit risky pay practices at banks and other regulated financial firms. The Senate isn't expected to vote on the legislation until the fall.
The Obama administration, meanwhile, is preparing to vet pay at firms receiving "exceptional assistance" from the government. Institutions have until Aug. 13 to submit proposed compensation details for the 100 highest-paid employees at each. The Treasury Department's pay czar, Kenneth Feinberg, could push banks to renegotiate deals he sees as rewarding risky behavior or that are out of line with compensation at similar institutions.
Andrew Williams, a Treasury spokesman, said Mr. Cuomo's report "focuses on strengthening the link between pay and performance -- a goal that we share."
Mr. Cuomo said Thursday he hopes his report will prompt the financial firms themselves to significantly overhaul their pay system to reward long-term performance rather than short-term gains. His report didn't release names of individual bonus recipients because of privacy concerns.
"The banks say they pay for performance," Mr. Cuomo said of the data. "Yet in 2008 there was no performance and they still continued to pay out huge sums of money."
Wall Street has shown little sign of slowing down the pay train this year. Goldman Sachs Group Inc. and Morgan Stanley recently disclosed that they have set aside $11 billion and $6 billion in compensation and benefits, respectively, for their employees so far this year. Goldman's second quarter was among its best ever. Morgan Stanley lost money for its third straight quarter.
Goldman and Morgan Stanley declined to comment on the report.
Meanwhile, some big banks that received government bailouts, including Citigroup Inc. and Bank of America Corp., are offering handsome pay packages to lure stars. Citigroup -- which received about 25% of the aid going to the nine banks -- has the No. 1 pay recipient. Andrew Hall, who heads Citigroup's energy-trading unit Phibro LLC, received $98.9 million in 2008, according to a government official. Citigroup CEO Vikram Pandit, by comparison, received more than $38 million last year.
An early test for Mr. Feinberg will be the pay of Mr. Hall, whose profit-sharing contract with the bank could again entitle him to as much as $100 million, say people familiar with the matter.
James Forese, Citigroup co-head of global markets, cited Phibro's "consistent track record of profitability" and said its contracts directly align compensation with performance. "That said, we are sensitive to the need for a full review of compensation practices in our industry," he said. "We are evaluating the best way forward for stakeholders."
The group of nine's No. 2 bonus for last year, according to a government official, was the $39.4 million that went to Bank of America's Thomas Montag. In 2008, Mr. Montag was sales and trading chief at Merrill Lynch, which got crushed by billions of dollars in mortgage-related losses and was sold to Bank of America. Mr. Montag's pay package included stock grants, which since have fallen in value.
Bank of America said bonuses for Merrill Lynch were shared among 30,000 employees and Bank of America's figures cover more than 200,000 employees.
The study found that pay at the banks remained near previous levels despite revenue declines. Merrill's net revenue fell by $23 billion in 2008, leading to a huge net loss. The firm's pay and benefits dropped by $1.1 billion, or 7%, according to the study. At Citigroup, revenue fell by $28 billion, or 34%. Pay and benefits dropped $2 billion, or 6%.
Similarly, at Goldman and J.P. Morgan Chase & Co., pay fell less sharply than revenue in 2008. Both firms have paid back the government loans they received under TARP. J.P. Morgan declined to comment on the report.
Goldman, Morgan Stanley and Merrill, Wall Street's three largest securities firms in 2008, paid nearly $13 billion in bonuses last year, the report says. That was roughly one-third of their total pay and benefits of $38 billion, according to securities filings.
J.P. Morgan topped other banks in the number of employees receiving $1 million or more -- 1,626 out of its 224,961 employees. This figure includes bonus, salary and options; the numbers of other banks in the study includes bonuses only.
J.P. Morgan's top earner collected $29 million, more than James Dimon, the firm's chief executive, who got $19.7 million in total compensation last year.
Goldman paid the most per employee, about $160,000 each for more than 30,067 staffers. Some 212 Goldman bankers made $3 million or more. Goldman, which weathered the credit crisis better than most rivals and made $2.3 billion in 2008, produced the most revenue per employee, $77,228.
Goldman has said that no partner got a bonus of more than $222,500 in cash. The rest was paid in deferred stock, with an extra year of service required for any of it to vest.
Morgan Stanley had 428 employees who received bonuses of $1 million or more. In addition, 10 people received bonuses of $10 million or more, for a combined $146.8 million.
Wells Fargo & Co., Bank of New York Mellon Corp. and State Street Corp. round out the nine banks. Each declined to comment.

[nopasties]

Full Report on this
http://online.wsj.com/public/resourc...al07302009.pdf

Wall Street Compensation–’No Clear Rhyme or Reason’

By Stephen Grocer

Andrew Cuomo, New York’s Attorney General, just released a report breaking down compensation at the nine original TARP recipients.
Associated PressThe report is part of Cuomo’s investigation into the causes of the financial crisis. Not surprisingly, that investigation led to Cuomo’s office examining the compensation practices in the U.S. banking system. And the investigation comes to a scathing conclusion:

“There is no clear rhyme or reason to the way banks compensate and reward their employees. In many ways, the past three years have provided a virtual laboratory in which to test the hypothesis that compensation in the financial industry was performance-based. But even a cursory examination of the data suggests that in these challenging economic times, compensation for bank employees has become unmoored from the banks’ financial performance.”

Below is a table of how many employees at each of the nine firms received bonus payments in excess of $3 million, $2 million and $1 million. Click here to see the full report. And click on the following names to see the compensation summaries for the individual banks: Bank of America, Bank of New York Mellon, Citigroup, Goldman Sachs Group, J.P. Morgan Chase, Merrill Lynch, Morgan Stanley, State Street, and Wells Fargo.

Bank Greater Than $3 Million Greater Than $2 Million Greater Than $1 Million Bank of America 28 65 172 Bank of New York Mellon 12 22 74 Citigroup 124 176 738 Goldman Sachs 212 391 953 J.P. Morgan Chase 200* - 1626 Merrill Lynch 149 - 696 Morgan Stanley 101 189 428 State Street 3 8 44 Wells Fargo 7 22 62 *Over 200 employees at J.P. Morgan Chase received bonuses of $3 million or more.
Click on the following names to see the compensation summaries for the individual banks:
Bank of America
Bank of New York Mellon
Citigroup
Goldman Sachs Group
J.P. Morgan Chase
Merrill Lynch
Morgan Stanley
State Street
Wells Fargo

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  Wells Fargo: The Cuomo Report’s Bonus Breakdown
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  Wall Street Bonuses: What Are Your Chances of Being a Millionaire?

The 'Crisis' of last year does not seem so dire when these a-oles are making record profits already and the rest of the econmy is still shrinking. I'd be glad to see the people responsible get bodily harm.

[The spartan]

There was accountability.

The government removed it.

Don't be mad at the companies be mad at the government for saving them with our money.

Then people would be pissed at the government for not saving jobs or their money.

Bonuses aren't obligated to pay in the same way salaries are obligated to be payed. I think it is just greedy people trying to gouge the system again.

[Erik]

The problem is the term 'bonus'.

When most people think of a bonus its like a tip, extra money for a job well done.

Because that's exactly what it is.
At least officially.

Many/most of the bonuses are contracted in, they get paid if you complete a job or just stick around for the year. They were contractually OBLIGATED to pay these 'bonuses'.

Of course they are contracted in.

The whole idea is that if you give employees a contract where they will make more money if they do a better job, they will be more motivated and thus do a better job.

The issue is: when they are doing a bad job, they STILL receive their "good job" bonus.
Which completely destroys the purpose.
So instead of bonuses being a motivational tool, it's now just an easy way to gulp up huge amounts of money (for no extra work) at the expense of the share holders (tax payers).

----

Wall street isn't to blame here.
In fact: Wall street is the only place where they can stop this practice.
If shareholders have a say in the bonus structure, it will certainly become performance based again.
The problem is deregulation, which allows companies to obscure their bonus structure and fool the Wall street guys into thinking the company is better than it is.

[InsaneHanz]

Be angry at the government for being so corrupt.

[Watchman]

Be angry at your whole system for being so categorically ed up while you're at it.

Not that it helps anything, of course, but letting it out once in a while might be good for you.

[nopasties]

Be angry at your whole system for being so categorically ed up while you're at it.

Not that it helps anything, of course, but letting it out once in a while might be good for you.

Intellectualy I want to agree with the arguements but emotionally these stories make me a little bit of a populist.