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asylum seeker
Joined: 22 Jul 2007
Location: On your computer screen.
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 Posted: Sun Dec 21, 2008 9:39 am Post subject: Wall Street Bonuses |
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So much moral outrage from Republicans in the US about the auto industry bailouts because of the 'overpaid' UAW workers and yet not a word from them about the fact that some of the banks that have been bailed out are still going to pay out millions of dollars of bonuses to their executives. Talk about hypocrisy.
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But Merrill�s record earnings in 2006 � $7.5 billion � turned out to be a mirage. The company has since lost three times that amount, largely because the mortgage investments that supposedly had powered some of those profits plunged in value.
Unlike the earnings, however, the bonuses have not been reversed.
As regulators and shareholders sift through the rubble of the financial crisis, questions are being asked about what role lavish bonuses played in the debacle. Scrutiny over pay is intensifying as banks like Merrill prepare to dole out bonuses even after they have had to be propped up with billions of dollars of taxpayers� money. While bonuses are expected to be half of what they were a year ago, some bankers could still collect millions of dollars.
Critics say bonuses never should have been so big in the first place, because they were based on ephemeral earnings. These people contend that Wall Street�s pay structure, in which bonuses are based on short-term profits, encouraged employees to act like gamblers at a casino � and let them collect their winnings while the roulette wheel was still spinning.
�Compensation was flawed top to bottom,� said Lucian A. Bebchuk, a professor at Harvard Law School and an expert on compensation. �The whole organization was responding to distorted incentives.�
Even Wall Streeters concede they were dazzled by the money. To earn bigger bonuses, many traders ignored or played down the risks they took until their bonuses were paid. Their bosses often turned a blind eye because it was in their interest as well.
�That�s a call that senior management or risk management should question, but of course their pay was tied to it too,� said Brian Lin, a former mortgage trader at Merrill Lynch.
The highest-ranking executives at four firms have agreed under pressure to go without their bonuses, including John A. Thain, who initially wanted a bonus this year since he joined Merrill Lynch as chief executive after its ill-fated mortgage bets were made. And four former executives at one hard-hit bank, UBS of Switzerland, recently volunteered to return some of the bonuses they were paid before the financial crisis. But few think others on Wall Street will follow that lead. |
http://www.nytimes.com/2008/12/18/business/18pay.html?em |
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sojourner1
Joined: 17 Apr 2007
Location: Where meggi swim and 2 wheeled tractors go sput put chug alugg pug pug
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| Posted: Sun Dec 21, 2008 3:08 pm Post subject: |
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Look at this garbage about bailed out banks. We all know bailout monies are just going to line executives pockets. And then they'll be nothing left. This government bailout is only prolonging and going to worsen what really is a great depression. http://www.msnbc.msn.com/id/28337800?GT1=43001
The takers will always be lining their pockets as long as this broken corrupt system is allowed to operate. What's the takers explanation for why they deserve bonuses when they fail to produce something of value? They think they are the movers and shakers who are so vitally important to the American economy just becuase they press buttons. The universe evolves around them so they deserve $500,000 to $10,000,000 extra for an end of year Christmas bonus.
Who else gets a bonus? Not many. Used to be that companies shared in the profits and if it didn't do very well, bonuses were small, even for the executives. If it did well, you might get an extra month or two of pay and have a real Merry Christmas for your family. Profit sharing is great, but greed killed that company management model and workers now just live paycheck to paycheck with no appreciation shown for them. Wall Street no longer has nothing to do with bonuses based on performance either while they act like they don't depend on no one to make all these great things happen. Capitalism is a flawed model that will collapse since it rewards those who don't deserve and under rewards those who do deserve. |
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