$70b of bonuses still being paid out

wolfman

http://www.guardian.co.uk/business/2008/oct/17/executivesalaries-banking

Not sure how true this article is, but if it is, it angers me greatly.

Not only have the banks taken from the US and Uk tax payer, they're still paying out huge bonuses. How can they be allowed to do this given the current financial climate and that they've bored from the tax payer. Madness.

ManAtHome

Sad but true - the pi$$ it up the wall principle. Was a story going round about various investment options - apparently one of the better ones was to buy £1k-worth of lager as cashing in the cans would have returned more than most investments over the last year. Was even a better return than converting $700bn of taxpayer dosh into $70bn wall street bonuses (no doubt there will be similar tales from poundland 'real soon now').

I suspect there will be a massive backlash against the *ankers when the sheeple finally twig)

Generali

I suspect that a lot of this is contractural although the article is specifically written in such a way as to confuse things as the writer moxes salary (contractural) with bonus (will be contractural but may or may not depend on performance).

Of course, if we'd let the banks go to the wall we wouldn't have this problem.

Nationalising the banks will cause a lot more problems. There are already rumblings about how wrong it is that NRK are reposessing people.

WTF?_2

wolfman wrote: »

http://www.guardian.co.uk/business/2008/oct/17/executivesalaries-banking

Not sure how true this article is, but if it is, it angers me greatly.

Not only have the banks taken from the US and Uk tax payer, they're still paying out huge bonuses. How can they be allowed to do this given the current financial climate and that they've bored from the tax payer. Madness.

Ahh .. but if they can't retain the 'talents' of these fine employees with bonuses reflecting their moneymaking skills they will be snapped up by another successful bank .

hmmmm, that doesn't sound quite right. :think:

chucky

wolfman wrote: »

http://www.guardian.co.uk/business/2008/oct/17/executivesalaries-banking

Not sure how true this article is, but if it is, it angers me greatly.

Not only have the banks taken from the US and Uk tax payer, they're still paying out huge bonuses. How can they be allowed to do this given the current financial climate and that they've bored from the tax payer. Madness.

these kind of articles make me smile... the journalist has obviously tried to pain a picture in a certian way.

a bonus for bad performance will never be paid. a bonus for a trader will be paid for his performance, if his desk has made money he will receive a percentage of this profit. not only him but this is reflected downstream in the middle and back offices that work for him.

if a trader makes no money he gets no bonus, simple.

if we work in ours job and perform as per our contracts we will be compensated, i don't see it as a bad thing.

if we're discussing the amount that they are paid - it's reflective on how much money they have made for the bank.

Kez100

If the bonuses move with the market though, profits give bonuses (that's OK) but losses don't appear to generate clawbacks of bonuses, or reductions in their income (that's wrong).

In other words the trader can only win, or get 'no bonus'. He cannot lose.

So, in a failed institution - the profit makers get their bonus but the taxpayer bears the losses of those that didn't.

Sort of didn't matter when the institutions were a going concern, so pooled profits and losses were borne by the shareholder.

Sort of does matter now that the taxpayer is paying.

Then again taxpayer won't moan if the institutions make future profits and repay their debt.

I wonder how likely that is? Taxpayer trusts no one at the moment. Thats the problem.

Just as taxpayer can't imagine his home to be falling in price neither can he imagine the banks ever being stable or profitable again. Those two thoughts are opposites of each other really and show the irrationality of feeling at the moment, but that is the way it is, isn't it?

I think also Mr Average Earning Taxpayer earning 20k a year who is worried for his job, tax, the economy - will he survive? And is also sick to the core of people from failing institutions being bailed out by him when Mr Trader with a profit behind him can take a level of earning he could only ever dream of and emigrate if he wished, or certainly invest the bonus into giving Mr Trader some sort of future secruity which Mr AE Taxpayer doesn't get .

chucky

you have to look at profit at the lowest level not by a firm but by department/desk within a bank.

so if part of the firm is making money that's all that team of people are interested in and they will be compoensated at bonus time.

i agree it should be done on a bank level - however i would say thet if it is done this way it would mean that we would have a "civil service" style banking system that wouldn't be great unfortunately.

Sapphire

Contract or no contract, due to the economic situation, NO ONE in the banking sector, which has ruined our economy, should get a bonus!

It will be absolutely disgusting if they do.

Kez100

chucky wrote: »

you have to look at profit at the lowest level not by a firm but by department/desk within a bank.

so if part of the firm is making money that's all that team of people are interested in and they will be compoensated at bonus time.

i agree it should be done on a bank level - however i would say thet if it is done this way it would mean that we would have a "civil service" style banking system that wouldn't be great unfortunately.

OK. You imply by that the banking system we have is great.

Mr AE Taxpayer doesn't see it as all that great at the moment. Is he wrong? If he is wrong, then why?

kennyboy66_2

Generali wrote: »

Of course, if we'd let the banks go to the wall we wouldn't have this problem.

They let Lehman bros go bust, it appear to have made little difference.
Are you saying Goldman Sachs & JP Morgan were likely to go bust?

Generali

kennyboy66 wrote: »

They let Lehman bros go bust, it appear to have made little difference.
Are you saying Goldman Sachs & JP Morgan were likely to go bust?

It's perfectly possible in the current climate. Just look at the level of leverage that Goldmans were using according to the brilliant article in this week's The Economist.