Who are you watching for your election night coverage?

No WTF...you're missing the point. How much did these scumbags (yep, I think so too) get away with over the course of the last decade? $10's of millions?...$100s of millions?...a $Billion?...$10Billion?...$100 Billion?

The GDP...of which this banking system is its main support...was $14,000 Billion in 2009 alone. And you're running around carping about a bunch of guys who got off with less than 1% of one year. I'm all for pruning the trees of the deadwood. But setting the forest on fire because there are some web worms is foolish. Originally Posted by Rudyard K

If your premise is correct about 1% being a non-factor, then I'll just pocket that amount myself. Percentage points reflect dollars, they do not equal dollars - in fact, using points is a convenient way of dodging dollar amounts. A point on $1B ain't too shabby - might be considered real money by some. The point is that the dollar amounts are obscene and the fact that they are such a small percentage of the overall picture only reinforces how reliant we are on that sector. We need to make more in this country than moves with money.

grrrr, Wall Street (the whole bunch of them) would have collapsed into one giant sink hole if not for the bail out, so just look up the name of any of the investment houses, investment banks, street sweepers and hot dog vendors and providers associated...

Just can't split that hair thin enough for you, eh? Originally Posted by Randy4Candy

Okay, now we are getting somewhere. Anyone who works on Wall Street is at fault here. The investment bankers in Charlotte NC are okay right? Same with the people who work in NY, but not on Wall Street. Like maybe the folks on Pine Street (one block north of Wall) are cool too. Right?

okay, okay...ummmmm, let's say that "Wall Street" was used by me as a convenient way to describe the financial sector, much as others use "liberals" to denote anyone who is not to the right of Atilla the Hun. Yes, one can say that the entire group of people and entities that makes up the "financial sector" are not all crooks, but how is it that when mega shit hits the fan (say in 1929 and 2007) and economies are nearly ruined the fault largely comes to rest at the feet of people monkeying with investments? If the "innocent" entities of that sector were so insulated, how was it that they were effected too? Perhaps they might have looked into policing their own.

Record bonuses on Wall Street do anything for ya? Originally Posted by Randy4Candy

a) You do realize that there is much more to banking than "Wall Street"
b) You do realize that some Wall Street bankers earned their bonuses by doing things that in no way endangered the banking system. Originally Posted by pjorourke

Maybe - but I DO realize that they were the ones bailed out. Originally Posted by Randy4Candy

Who? What companies. Give me a few examples. Originally Posted by pjorourke

grrrr, Wall Street (the whole bunch of them) would have collapsed into one giant sink hole if not for the bail out, so just look up the name of any of the investment houses, investment banks, street sweepers and hot dog vendors and providers associated...

Just can't split that hair thin enough for you, eh? Originally Posted by Randy4Candy

The part that bothers me is the bonuses. Sure X-Mas '08 was bleak, but '09 was great and '10 will be pretty swell as well.

I understand the "necessary to retain top talent" argument and even agree with it to a point, but I have a problem with the short term focus and most of these folks have limited downside risk (downside risk, that is betting their own money). All of the value lost in '08 shouldn't all be forgotten in one bonus cycle.

The part that bothers me is the bonuses. Sure X-Mas '08 was bleak, but '09 was great and '10 will be pretty swell as well.

I understand the "necessary to retain top talent" argument and even agree with it to a point, but I have a problem with the short term focus and most of these folks have limited downside risk (downside risk, that is betting their own money). All of the value lost in '08 shouldn't all be forgotten in one bonus cycle. Originally Posted by atlcomedy

I agree except for that part about '10 being swell and '09 being great - it's not from where I sit and the same is true for others. I'm not convinced that "top talent" describes the people who created this mess in the first place. I think that there is a flaw in their talent, or the use thereof, and it does go to not having what you called a "limited downside." I'm not sure that those folks ever felt a significant downside and I think that their actions require that they do, either legally, criminally or financially. Though it will never happen, it may not be bad to have a miniature Nurenburg for some of those folks and not allow them to hide behind the "I was just following orders" defense.

This gets me off onto Enron - a lot of what happened could be written off to "bending the rules" or playing it close to the edge, but the fact that Lay and his guys REQUIRED Enron employees to put their retirement money on the line and become part of their scheme without the employees' knowledgeable permission is truly criminal and wanders off into the realm of the criminally insane. Well, maybe not, just the arrogance of "top talent."

The point is that the dollar amounts are obscene and the fact that they are such a small percentage of the overall picture only reinforces how reliant we are on that sector. We need to make more in this country than moves with money. Originally Posted by Randy4Candy

I can't argue they are not obscene. They most certainly are. And I also can't argue that A-Rod ain't worth what they are paying him. But why would I try? As Mama always told me...Life is not fair!!

I guess I'm more interested in seeing that the system gets fixed that put in place the events that allowed those never-really-to-be-realized profits that the companies were all booking. Those events had more to do with the economy today. These scumbags simply utilized those events for their own personal gain and walked away with a ton of money. But it was us who pushed the system into that position.

You can lay your money on the sidewalk and carp about the man who got away with it...or you can not lay your money on the sidewalk. I choose the latter.

RK, true - as far as it goes, but A-Fraud actually has to perform (or not) before witnesses on an almost daily basis during the season. He wouldn't make that kind of money if it wasn't there to pay out.

I agree except for that part about '10 being swell and '09 being great - it's not from where I sit and the same is true for others. I'm not convinced that "top talent" describes the people who created this mess in the first place. I think that there is a flaw in their talent, or the use thereof, and it does go to not having what you called a "limited downside." I'm not sure that those folks ever felt a significant downside and I think that their actions require that they do, either legally, criminally or financially. Though it will never happen, it may not be bad to have a miniature Nurenburg for some of those folks and not allow them to hide behind the "I was just following orders" defense.

This gets me off onto Enron - a lot of what happened could be written off to "bending the rules" or playing it close to the edge, but the fact that Lay and his guys REQUIRED Enron employees to put their retirement money on the line and become part of their scheme without the employees' knowledgeable permission is truly criminal and wanders off into the realm of the criminally insane. Well, maybe not, just the arrogance of "top talent." Originally Posted by Randy4Candy

R4C - not sure exactly what you do but I'm guessing it isn't managing other peoples money...from your other posts it sounds like you are a small business owner, and, no there hasn't been a great turnaround. That was my point relative to Wall St. vs. Main St.

As for Enron, one of the outcomes is across the board, a lot of companies offered employees new options relative to retirement plan options (e.g. not just company stock), but I still think having a good chunk of employees' compensation tied to company performance (obviously, different for varying levels). But by its very nature, it that it is awarded in the form or stock or options with a long vesting period, it rewards LONG TERM performance. Again very different than Wall Street.

Well, seems like we have come full circle again. Moral hazard vs complete economic collapse or the few benefit greatly for the greater good of the whole. None of the philosophers I have read have ever come up with a way of reconciling these two contradictory options. I would posit that if TARP was not put into place that even more banks would have failed (among them Citicorp). AIG would have likely gone under pulling along with it even some of the healthy banks.

The real question should be what do we do about the system now to avoid similar scenarios in the future.

alt - there was some positive moves made in light of the Enron fiasco, but as is often the case, it helped for the future - and that ain't all bad. Well, I can't say that having ANY of the base employee compensation, including 401K-type of retirement benefits, mandated to be in the form of company stock is called for under any circumstances. Now, if you want to talk bonuses or "extras," then, hell yeah, go for it. Salary and basic benefits are compensation for work already done and should be in the form of immediately negotiable compensation - the employee did the work and should have immediate access to the pay for that work. If the employee wants to invest HIS money, the fine and dandy, but it's the employees money, period. Anything else sort of smacks of the "company store."

The real question should be what do we do about the system now to avoid similar scenarios in the future. Originally Posted by discreetgent

EXACTLY!!!

Recognize that most folks want to make as much money as they can...and most want to do it while staying between the lines of morality.

As my tag line says...How do we go about harnesssing that motivation (go ahead and call it "greed" if you want) so that it does the most good for the most people, while allowing for that motivation to push us forward?

That would be a thread worth reading and participating in.

EXACTLY!!!

Recognize that most folks want to make as much money as they can..
. Originally Posted by Rudyard K

Therein lies the problem. Everyone has a different set point on morality.

If you let the ones that have barely any morality profit the most, corrupt the system , then all you have is a corrupt system.

How do you fix that ''problem''? Not that I think greed is a problem , nor is it anything you can fix nor want to fix from a individual standpoint. You set up a system where you do not have 'to big to fail'. How do you do that, one might ask? You tax the crap out of folks above a certain wealth and you tax people upon their death. Having a million millionaires is better IMHO than having one billionaire.

People go about their business based on incentives. Discourage people from being able to amass to much wealth. Second welfare is not a good thing, not for poor folks or rich ones. So tax death, the dead person will never know! Plus if he is that worried about his kids or charity he can give it away and they can pay income taxes on it as regular income. People on the right hate that but if they are not willing to do something drastic then they should just suc it up and live with where the markets take us. And markets always bust when greed triumphs and goes unchecked, greed will always triumph in the market. It is just human nature.

A couple of depressions and all this faith in the market might be questioned and people might start living within their means. Worked pretty well after the last depression. So we need a different mindset than the one that got us here.

EXACTLY!!!

and most want to do it while staying between the lines of morality.

. Originally Posted by Rudyard K

Most do but read the "Tragedy of the Commons"

That would be a thread worth reading and participating in. Originally Posted by Rudyard K

Are you sure we wouldn't just demonize those we disagree with? Maybe you and TTH can co- author that thread!

I understand the "necessary to retain top talent" argument and even agree with it to a point, but I have a problem with the short term focus and most of these folks have limited downside risk (downside risk, that is betting their own money). All of the value lost in '08 shouldn't all be forgotten in one bonus cycle. Originally Posted by atlcomedy

Agreed! Particularly your last point. But let me make a few more:

1) I would be the first to admit there were fundamental flaws in the compensation plans on Wall Street (and on Pine Street, which happens to be where AIG is located. ) They are too short-term focused and have no downside. In the old days, when investment banks were partnerships, those bonuses were largely paid into capital and kept in the firm where it was at risk -- not so in public companies. If banks are to be involved in proprietary trading or securitization (see #2 below) the people doing this business should have a very significant chunk of their bonus re-invested in their own cooking for a minimum of three years -- not restricted stock on the parent -- that doesny have direct downside. It should be invested in their trading book.

2) IMO, because banks are part of the money system, they have no business engaging in proprietary trading*. Yes, they will miss profits, but they also don't manufacture iPods either and I understand that's a real profitable business. Consider it just a cost of the charter. Securitization is another question. This is where a bank bundles up a bunch of loans (e.g., mortgages) and sells them off to investors. This is one of the problem areas in the meltdown, but a very useful function for the economy. Here, I think they should be allowed to continue this business, but should be required to keep some percentage (e.g., 5%) on their books to ensure credit quality. And the people that run these business units should have a big chunk of their bonuses invested in this stuff. Again, if you have to eat your own cooking, you make better decisions.

3) There are only a few Wall Street banks that survived this meltdown intact. (A better term is actually investment banks.) Most of the biggies are now gone. Even among those that survived, there were more pink slips than in Detroit.

4) Wall Street is not all of banking. There were banks that received TARP funds that had nothing to do with mortgages or trading (e.g., Northern Trust) and didn't need the money, but were pressured to take it. Others that were in no danger failing (e.g., large regional banks) needed it to prevent a bank run. Even if you look at a bank like J.P. Morgan or Bank of America, that has a big involvement in mortgages and investment banking, the vast majority of their employees have absolutely nothing to do with these business. They are tellers and branch managers like you deal with every day. I'd also note that JPM, although involved up to its ears in this mess, was never in any danger of losing money -- they are very well run and had started backing out of the mess almost a year before it cratered.

5) "Our money" did not pay any bonuses. All but one of top ten TARP recipients earned a profit in 2008 and 2009, even with whatever write-offs were necessary on their portfolios. (Surprise, surprise, the one was Citicorp.)

_______________
* That is trading where you take one side or the other of an unmatched book. This is different than just executing a trade for a client.

How do you fix that ''problem''? Not that I think greed is a problem , nor is it anything you can fix nor want to fix from a individual standpoint. You set up a system where you do not have 'to big to fail'. How do you do that, one might ask? You tax the crap out of folks above a certain wealth and you tax people upon their death. Having a million millionaires is better IMHO than having one billionaire. Originally Posted by WTF

Those two concepts have absolutely nothing to do with each other. The later is no more a cure for the former than buying freezers for polar bears is a solution to "global warming"

pj, post #88 of this thread made you Michael Irvin instead of Terrell Owens. Though it was probably remedial and boring to you, I appreciate you taking the time to write it.