"These paychecks are highly rational from the shareholders' perspective. The basic pay structure is the same at all of these banks. The bankers make relatively modest base salaries and receive most of their compensation in the form of bonuses. The average bonuses will be around $500,000-$595,000 at Goldman Sachs and $463,000 at JP Morgan Chase, but some will make far more (as much as eight figures). These bonuses are big and they are unremittingly linked to performance. Together a mere five banks -- Citigroup, Bank of America, Goldman Sachs, JP Morgan Chase and Morgan Stanley, all of which got billions of bailout dollars -- have allocated about $90 billion for overall compensation, with bonuses comprising more than half."
Jonathan Macey
My simple mind tells me that giving large bonuses (Latin: to the good) to people who work for companies that wouldn't exist if not for billions in a government bailout (read taxpayer money) is ludicrous. Through their own greed and stupidity they almost brought down our financial system, but unlike a small business that would just be left to go out of business -- they were "too big" to let what should have happened -- happen. In true laissez-faire capitalism (those who do not want the government to interfere in business matters, or if governments do involve themselves in business matters, to keep government influence to a minimum) they would be unemployed now, not receiving billions in undeserved bonuses. We should have expected this from the Wall Street types who give hundreds of millions in golden parachutes to CEOs who run companies into the ground.
They are no different then degenerate gamblers who loses all their money and then file bankruptcy to avoid paying what they should... but when they win keep it all. Fr. Jim Martin, SJ, a Wharton graduate and former GE Capital executive prior to joining the Society, has an alternative...
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my concern with the church's reliance on the republican party for pro-life support is that many in the party favored the lack of bank regulation in the 90s, favored the bailout of these institutions and our currently fighting attempts to put in place some financial reform. These policies above and the obscene bonus payments with gov funds could not be more "anti-life" quite frankly, yet many in the pews and the church look away when the party abuses issues like this. The massive bonuses and continued highly leveraged trading which has not stopped are equally as obscene as an abortion.
ReplyDeleteFirst, I have read that most, if not all, of these bonuses have been given in the form of stock that vests over time. This method ensure that the CEO's personal interests are tied to the long term success of the company - and the many shareholders who benefit. This is not cash that incents a CEO to play for short term gains, then run.
ReplyDeleteSecondly, the gov't bailout was nto optional but forced on them by the current administration. A huge portion of these funds have been paid back with interest, so ending the gov't interest in their daily operations.
Thirdly, banking de-regulation is not the root cause of the current crisis. The strain on financial markets came from bad depts associated with lax lending practices which was driven by Barney Frank and his democrats colleagues. His legislation forced banks to lower lending standards and assume more risk. When coupled with the greed associated with a booming real estate market conditions were ripe for disaster.
Lastly, the previous administration pressed congress for MORE regulation on Freddie Mac and Fannie Mae, but were repeatedly rebuffed by Barney Frank et al. It is easy to vilify "big corporations" and they likely deserve some denunciation, but let's not forget the role of the boys in DC who have largely no experience in business, but feel compelled to steer the ship.
you're wrong on many counts.
ReplyDeleteA. Much of these bonuses are paid in cash.
B. Bush started the bailouts, Obama continued them.
C. Some funds have been paid back, most have not.
D. Its mathematically impossible for a percentage of poor people caused the crisis. In fact, that is blantant false and borderline racist and elitist. It has been statistically proven that the vast majority of the bad loans were taken my the middle class to use for cash, upgrades homes beyoned their value or buy above their head.
E. Bush openly bragged about the increase in home ownership during his terms when it was convientent for him.