John from Riverside Posted January 30, 2009 Posted January 30, 2009 were bonuses really handed out from the bail out money given to Wall Street? I dont have a grasp on the issues as well as most of you but this just seems wrong. Meanwhile....California is in such a state of panic that the Chancellor of the University I work out had a open forum yesterday talking about impending layoffs and furlows (of course this just affects the staff and administrators....when someone asked him a question about the faculty taking a cut he moved on to the next question....fast)
The Big Cat Posted January 30, 2009 Posted January 30, 2009 were bonuses really handed out from the bail out money given to Wall Street? I dont have a grasp on the issues as well as most of you but this just seems wrong. Meanwhile....California is in such a state of panic that the Chancellor of the University I work out had a open forum yesterday talking about impending layoffs and furlows (of course this just affects the staff and administrators....when someone asked him a question about the faculty taking a cut he moved on to the next question....fast) From what I understand, colleges--even some of the finest--are in dire straits these days. Can't answer the particulars about the bonuses though, but if it's the case, the people who authorized them should be jailed.
VABills Posted January 30, 2009 Posted January 30, 2009 What do the prfits, bonus structures, etc... of one company or firm have to do with colleges, or other failing businesses? Are they supposed to take the profits and just hand them out instead of investing (through bonuses) in the resources (people) who got them there?
GG Posted January 30, 2009 Posted January 30, 2009 What hasn't been disclosed is the mix of current cash, vs deferred cash and stock. Accounting rules mandate that even noncash comp be reported as an expense in the year it was granted, even though there is a chance the noncash portion will be worthless when it vests. For example, if last year's mix was 1/3 cash, 2/3 noncash - there's a high probability that the employees will not see the 2/3 part any time soon. This year, both UBS and Credit Suisse are paying relatively small cash bonuses, with the majority either deferred comp or in illiquid assets. But for accounting purposes, the compensation has to be reported based on a "fair value" So while Wall Streeters do make a lot of money, it would be helpful to know the real $$ paid out, and not an accounting figure.
DC Tom Posted January 30, 2009 Posted January 30, 2009 What hasn't been disclosed is the mix of current cash, vs deferred cash and stock. Accounting rules mandate that even noncash comp be reported as an expense in the year it was granted, even though there is a chance the noncash portion will be worthless when it vests. For example, if last year's mix was 1/3 cash, 2/3 noncash - there's a high probability that the employees will not see the 2/3 part any time soon. This year, both UBS and Credit Suisse are paying relatively small cash bonuses, with the majority either deferred comp or in illiquid assets. But for accounting purposes, the compensation has to be reported based on a "fair value" So while Wall Streeters do make a lot of money, it would be helpful to know the real $$ paid out, and not an accounting figure. It would also be helpful to know how employment agreements are structured for people who get bonuses. It could be in a lot of cases that bonuses were unavoidable. A "bonus" on Wall Street isn't necessarily like a "bonus" in the real world.
Kelly the Dog Posted January 30, 2009 Posted January 30, 2009 What hasn't been disclosed is the mix of current cash, vs deferred cash and stock. Accounting rules mandate that even noncash comp be reported as an expense in the year it was granted, even though there is a chance the noncash portion will be worthless when it vests. For example, if last year's mix was 1/3 cash, 2/3 noncash - there's a high probability that the employees will not see the 2/3 part any time soon. This year, both UBS and Credit Suisse are paying relatively small cash bonuses, with the majority either deferred comp or in illiquid assets. But for accounting purposes, the compensation has to be reported based on a "fair value" So while Wall Streeters do make a lot of money, it would be helpful to know the real $$ paid out, and not an accounting figure. Agreed. I would add two things: 1] One element of the bonus structure that must be changed, however, are the bonuses paid out based on how many X an employee may write. Like in the housing market, a lot of the trouble seemed to come from people that got paid extra for every bad loan they gave out pretty much knowing they were bad loans. 2] It seems to me a ton of people complaining about these enormous bonuses these Wall Street crooks are taking home were not complaining about the enormous jumps in their stocks and 401Ks and paychecks, etc. that these same Wall Street crooks were providing them doing these same Wall Street things a short while ago. In fact, just the opposite. They are complaining "Where the hell did all my money go that these bastards stole from me!" These bastards, of course, were the same ones that got them the extra money in the first place.
VABills Posted January 30, 2009 Posted January 30, 2009 Agreed. I would add two things:1] One element of the bonus structure that must be changed, however, are the bonuses paid out based on how many X an employee may write. Like in the housing market, a lot of the trouble seemed to come from people that got paid extra for every bad loan they gave out pretty much knowing they were bad loans. 2] It seems to me a ton of people complaining about these enormous bonuses these Wall Street crooks are taking home were not complaining about the enormous jumps in their stocks and 401Ks and paychecks, etc. that these same Wall Street crooks were providing them doing these same Wall Street things a short while ago. In fact, just the opposite. They are complaining "Where the hell did all my money go that these bastards stole from me!" These bastards, of course, were the same ones that got them the extra money in the first place. On number 2, these same people who got paid to buy your stock also got paid to selll it. They are making money coming and going. Also, when somone is selling someone is buying, the money just doesn't magically disappear, someone is getting it. These broker get it boths ways. So, the profits, so the bonuses.
Dan Posted January 30, 2009 Posted January 30, 2009 On number 2, these same people who got paid to buy your stock also got paid to selll it. They are making money coming and going. Also, when somone is selling someone is buying, the money just doesn't magically disappear, someone is getting it. These broker get it boths ways. So, the profits, so the bonuses. That's kinda how I see it. The only ones to make out were the Wall Street guys. They make money coming and going with each transaction, now they get nice bonuses for all that coming and going. If I had money in the stock market, sure I was looking good then; but now I've lost it all. So, when it's all said and done; Wall Street made money all year and they're making money now. I got nothing but a warm fuzzy back in July because I was advised to keep trading right up until the bottom fell out. (not me, I have no money in the stock market, but it sounds better if I say I) So, Kelly, I'd have to disagree with your point #2.
Kelly the Dog Posted January 30, 2009 Posted January 30, 2009 On number 2, these same people who got paid to buy your stock also got paid to selll it. They are making money coming and going. Also, when somone is selling someone is buying, the money just doesn't magically disappear, someone is getting it. These broker get it boths ways. So, the profits, so the bonuses. Oh, I agree for the most part. I wasn't defending the Wall Street guys at all. I was simply pointing out that a large portion of people complaining about the Wall Street guys made a ton of money off the Wall Street guys, free, and in a lot of cases somewhat tainted money, so they shouldn't be doing so much complaining. And a lot of the money they are whining about losing they probably shouldn't have had in the first place.
GG Posted January 30, 2009 Posted January 30, 2009 That's kinda how I see it. The only ones to make out were the Wall Street guys. They make money coming and going with each transaction, now they get nice bonuses for all that coming and going. If I had money in the stock market, sure I was looking good then; but now I've lost it all. So, when it's all said and done; Wall Street made money all year and they're making money now. I got nothing but a warm fuzzy back in July because I was advised to keep trading right up until the bottom fell out. (not me, I have no money in the stock market, but it sounds better if I say I) So, Kelly, I'd have to disagree with your point #2. You're double counting. The spread that they make on both sides of the transaction and the profit it generates is paid as a year end bonus to the guys who earn their comp based on sales & trading. Wall Street salaries are relatively small for big NYC standards.
Dan Posted January 30, 2009 Posted January 30, 2009 You're double counting. The spread that they make on both sides of the transaction and the profit it generates is paid as a year end bonus to the guys who earn their comp based on sales & trading. Wall Street salaries are relatively small for big NYC standards. OK. But for the sake of my non-factual, largely unknowing argument; they made some money and got a bonus for doing so. Yes, they made me money in that the value of my stocks went up, but if I kept my money in the market (which I'm assuming most people do) then I've made no money by year's end and most likely lost money. Yet, they've still made their money. So, how did they make me money and if they would not have artificially driven up my stocks all year, I'd actually be better off at year's end?
GG Posted January 30, 2009 Posted January 30, 2009 OK. But for the sake of my non-factual, largely unknowing argument; they made some money and got a bonus for doing so. Yes, they made me money in that the value of my stocks went up, but if I kept my money in the market (which I'm assuming most people do) then I've made no money by year's end and most likely lost money. Yet, they've still made their money. So, how did they make me money and if they would not have artificially driven up my stocks all year, I'd actually be better off at year's end? Follow KtD's example. If you kept your money in cash or money market, Wall Street wouldn't have made a dime and you wouldn't have lost anything. But because you wanted to play the market, Wall St makes a spread on every buy & sale order no matter where the market ends up. Think of it as a vig that the bookie keeps.
John from Riverside Posted January 30, 2009 Author Posted January 30, 2009 What do the prfits, bonus structures, etc... of one company or firm have to do with colleges, or other failing businesses? Are they supposed to take the profits and just hand them out instead of investing (through bonuses) in the resources (people) who got them there? VA....I wasn't drawing a correlation between the two....just that I heard one piece of news almost directly after the other. California seems to get itself in this mess every so many years.
Cheeseburger_in_paradise Posted January 30, 2009 Posted January 30, 2009 It would also be helpful to know how employment agreements are structured for people who get bonuses. It could be in a lot of cases that bonuses were unavoidable. A "bonus" on Wall Street isn't necessarily like a "bonus" in the real world. Exactly. Not defending them. If nothing else, it's abysmal PR.
VABills Posted January 30, 2009 Posted January 30, 2009 It would also be helpful to know how employment agreements are structured for people who get bonuses. It could be in a lot of cases that bonuses were unavoidable. A "bonus" on Wall Street isn't necessarily like a "bonus" in the real world. Again, it doesn't matter. They are going to lose the PR battle either way. if they report record profits because they suspend bonuses they'll be vilified. If they give out bonuses they are evil. It's a lose, lose situation and the only way to win is to lose money, and go bankrupt.
Lurker Posted January 30, 2009 Posted January 30, 2009 What hasn't been disclosed is the mix of current cash, vs deferred cash and stock. Accounting rules mandate that even noncash comp be reported as an expense in the year it was granted, even though there is a chance the noncash portion will be worthless when it vests. For example, if last year's mix was 1/3 cash, 2/3 noncash - there's a high probability that the employees will not see the 2/3 part any time soon. This year, both UBS and Credit Suisse are paying relatively small cash bonuses, with the majority either deferred comp or in illiquid assets. But for accounting purposes, the compensation has to be reported based on a "fair value" So while Wall Streeters do make a lot of money, it would be helpful to know the real $$ paid out, and not an accounting figure. Agreed. The accountants are at the root of this "problem" as well. Options and bonuses are how most employees at the VP level and above are compensated in the financial services industry (as much as 40% or more of annual compensation for many folks). Since the average award was $112,000, we're talking about a lot of mid-level traders and managers, in addition to top executives.
stuckincincy Posted January 30, 2009 Posted January 30, 2009 (edited) Look at the harsh words directed by Congressmen at the auto industry. The Gang of 535 can't get jobs in manufacturing when they walk down from their Ivory Palace. They can't even pull up their own pants in the morning without the help of a favored contractor. What in the world do you think Motor Voter, Get-Out-The Vote was all about? No surprise how many saps swooned and fought the battle for them. They, the solons, are assured hansom employment in the financial sector. Advisors, board members, after a pesky while, they can become lobbyists. Here's how the game works...Obama's screed against lobbyists in his Administration fell short, and the loyal opposition understands... http://www.foxnews.com/politics/first100da...obamas-defense/ Edited January 30, 2009 by stuckincincy
blzrul Posted January 30, 2009 Posted January 30, 2009 Speaking of regulation, Claire McCaskill has gone off the deep end and is asking for legislation that would hold a CEO's salary to no more than the President's. I'm sure it feels good to scream about that, and it would be a wonderful gesture if these guys would forego obscene bonuses, PARTICULARLY if their company got a government handout. Much as I'd like to crush them like grapes beneath my heel, I don't think I want the government regulating salaries (and please let's not get into a fight over minimum wage...)
DC Tom Posted January 30, 2009 Posted January 30, 2009 Again, it doesn't matter. They are going to lose the PR battle either way. Of course they are. Not the point. The point is that in many of the cases of "wasting taxpayer money" people are complaining about, they may not have a practical choice, or it may simply be dumber not to. Like Citi paying for a plane two years ago and then not taking delivery now.
DC Tom Posted January 30, 2009 Posted January 30, 2009 Speaking of regulation, Claire McCaskill has gone off the deep end and is asking for legislation that would hold a CEO's salary to no more than the President's. I'm sure it feels good to scream about that, and it would be a wonderful gesture if these guys would forego obscene bonuses, PARTICULARLY if their company got a government handout. Much as I'd like to crush them like grapes beneath my heel, I don't think I want the government regulating salaries (and please let's not get into a fight over minimum wage...) Sure, people who run companies and employ people shouldn't make money...but McCaskill's okay with A-Rod making $27.5M annually? Have I mentioned recently that our "leadership" is !@#$ing retarded?
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