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In many fintech endeavors, the participants have different time horizons and different payment schedules, so there seems to be a pretty persistent trend for the

In many fintech endeavors, the participants have different time horizons and different payment schedules, so there seems to be a pretty persistent trend for the short term participants to take their money upfront and leave the long term participants holding the bag. I don't think it's accidental that investment bankers, the people who should be most savvy in valuing complex securities, get cash bonuses, while software engineers get options which take years to vest and in pre-IPO companies may not even be readily traded once they vest.

eru 6y ago
In one notable transactions, investment bankers got their bonuses as toxic assets. That was a genius move. It got those assets of Credit Suisse's balance sheet, looked good in PR, and receiving bankers were happy because those assets were worth more in the end than they looked like during the height of the panic when the transfer happened. https://www.bloomberg.com/news/articles/2012-01-26/at-credit-suisse-toxic-bonuses-turn-into-gold https://www.bloomberg.com/news/articles/2012-01-26/at-credit... As for software engineers: there's a tax dodge in them getting stock options in pre-IPO companies. But in my one startup job, I negotiated a cash bonus, because we couldn't agree on how to value the options they were originally offering. (Basically, I thought they were next to useless, and the company obviously pretended otherwise.) While Google, Microsoft etc are hiring, a software engineer who accepts a bad deal in options only has herself to blame. (Stock options can also be a good deal. But they are hard to value.)
- microtherion 6y ago
  > investment bankers got their bonuses as toxic assets. Good point, but it boggles the mind that those bankers got bonuses AT ALL in 2008 (CS had to be bailed out by the Swiss government that year).
  - eru 6y ago
    If you are in trouble, you need the best people you can afford. If anything, it should perhaps boggle our mind more anyone got bonuses in eg 2007 that weren't clawed back later. In general, I don't think bonuses by themselves are a problem. It's just a different way to structure total comp. And if you restrict bonuses, you just force banks to pay higher base salaries instead. To make banks behave better, I would suggest abolishing (government-backstopped) deposit insurance. That way depositors will keep a sharper eye on their banks, and hopefully pro-actively move their funds to institutions with a reputation for low risk and transparency. (Depositors who want to simulate the current regime could just pick a bank that for their money that invests only in short term government debt.)

eru 6y ago

In one notable transactions, investment bankers got their bonuses as toxic assets. That was a genius move. It got those assets of Credit Suisse's balance sheet, looked good in PR, and receiving bankers were happy because those assets were worth more in the end than they looked like during the height of the panic when the transfer happened. https://www.bloomberg.com/news/articles/2012-01-26/at-credit-suisse-toxic-bonuses-turn-into-gold https://www.bloomberg.com/news/articles/2012-01-26/at-credit... As for software engineers: there's a tax dodge in them getting stock options in pre-IPO companies. But in my one startup job, I negotiated a cash bonus, because we couldn't agree on how to value the options they were originally offering. (Basically, I thought they were next to useless, and the company obviously pretended otherwise.) While Google, Microsoft etc are hiring, a software engineer who accepts a bad deal in options only has herself to blame. (Stock options can also be a good deal. But they are hard to value.)

microtherion 6y ago
> investment bankers got their bonuses as toxic assets. Good point, but it boggles the mind that those bankers got bonuses AT ALL in 2008 (CS had to be bailed out by the Swiss government that year).
- eru 6y ago
  If you are in trouble, you need the best people you can afford. If anything, it should perhaps boggle our mind more anyone got bonuses in eg 2007 that weren't clawed back later. In general, I don't think bonuses by themselves are a problem. It's just a different way to structure total comp. And if you restrict bonuses, you just force banks to pay higher base salaries instead. To make banks behave better, I would suggest abolishing (government-backstopped) deposit insurance. That way depositors will keep a sharper eye on their banks, and hopefully pro-actively move their funds to institutions with a reputation for low risk and transparency. (Depositors who want to simulate the current regime could just pick a bank that for their money that invests only in short term government debt.)