Friday, October 17, 2008

Bailout money to be used to pay Wall Street Bonuses

The massive government bailout given to Wall Street bankers will be used to pay billions of dollars in bonuses.

Looks like George and Hank got what they wanted - a failed bailout with Taxpayer dollars that will help the wealthy Wall Street bankers and do NOTHING for the other 99.9% of America. What a great country!

Wall Street banks in $70bn staff payout:

Financial workers at Wall Street's top banks are to receive pay deals worth more than $70bn (£40bn), a substantial proportion of which is expected to be paid in discretionary bonuses, for their work so far this year - despite plunging the global financial system into its worst crisis since the 1929 stock market crash, the Guardian has learned.

Staff at six banks including Goldman Sachs and Citigroup are in line to pick up the payouts despite being the beneficiaries of a $700bn bail-out from the US government that has already prompted criticism. The government's cash has been poured in on the condition that excessive executive pay would be curbed.

Pay plans for bankers have been disclosed in recent corporate statements. Pressure on the US firms to review preparations for annual bonuses increased yesterday when Germany's Deutsche Bank said many of its leading traders would join Josef Ackermann, its chief executive, in waiving millions of euros in annual payouts.

The sums that continue to be spent by Wall Street firms on payroll, payoffs and, most controversially, bonuses appear to bear no relation to the losses incurred by investors in the banks. Shares in Citigroup and Goldman Sachs have declined by more than 45% since the start of the year. Merrill Lynch and Morgan Stanley have
fallen by more than 60%. JP MorganChase fell 6.4% and Lehman Brothers has collapsed.

At one point last week the Morgan Stanley $10.7bn pay pot for the year to date was greater than the entire stock market value of the business. In effect, staff, on receiving their remuneration, could club together and buy the bank.

In the first nine months of the year Citigroup, which employs thousands of staff in the UK, accrued $25.9bn for salaries and bonuses, an increase on the previous year of 4%. Earlier this week the bank accepted a $25bn investment by the US government as part of its bail-out plan.

At Goldman Sachs the figure was $11.4bn, Morgan Stanley $10.73bn, JP Morgan $6.53bn and Merrill Lynch $11.7bn. At Merrill, which was on the point of going bust last month before being taken over by Bank of America, the total accrued in the last quarter grew 76% to $3.49bn. At Morgan Stanley, the amount put aside for staff compensation also grew in the last quarter to the end of August by 3% to $3.7bn.


Roman said...

Wow, the said part is that there is no doubt that something this stupid could happen. They should be cutting back on the idiots not feeding them.

Adam Smith said...

OF COURSE it would happen: the story just wouldn't be complete if it didn't happen. Just like how the stock market plunged when the House announced they voted down the bail-out bill, and then it plunged again when they PASSED their bill! Makes perfect sense!

In defense of the bonuses, I'd just like to point out how working at a bank that's lost 90% of it's stock value can be pretty darn stressful for the employees, as for example, they have to field phone calls from pissed investors who lost eh, 90% of their investment in the past year!

Trust me: that can be VERY TRYING on one's patience and customer service skills, having to remain polite when some hot-head is screaming at you over the phone as if YOU'RE the reason they lost their money!

What about the feelings of the employee? It's not like THEY personally lost your money, right?

But don't they deserve a bonus, too, so they can go to Greece to unwind for their next vacation? Just think of the bonus as the investor's way of buying you a drink and saying, "Thanks for a job well done!!", even though they're still a little too pissed right now to say it.... ;)

Anonymous said...

Adam - LOL!!!!

Adam SlowHand Smith said...

Well, at least these firms are reassuring Henry Waxman that they're not using the government's bail-out money to pay the bonuses:

If that's not the stupidest thing I've EVER heard!

It's like saying you won't give cash to a homeless alcoholic because he'll just spend it on booze. True enough. So instead, you give him food.

So he now has food, which he promptly can sell to someone else to get cash to buy the booze, or use the money he would've had to have spent on food for booze!

Stoopid is as stoopid does.