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Banks Paid $32.6B in Bonuses Amid U.S. Bailout (2009)

172 points by sjcsjc 12y ago

sjcsjc 12y ago
OP here. Given the current story re HSBC's misbehaviour, I thought it worth reminding everyone of the scale of the theft that took place during the bank bailout.
- themartorana 12y ago
  This, HSBC lending money to rouge nations and drug cartels, the LIBOR scandal, and not a single person is in jail. Not to mention that the Fed made available and lent up to $7T to banks (without telling Congress) right before TARP was rushed through. Smoke some weed, go to jail. Do it three times, go to jail for life in CA. MANDATORY. Especially if you're black. If these and other ongoing similar "crimes" don't convince you that we're living in an oligarchy, and our precious democracy/republic is a farce at best, well, I don't know what will.
  - rayiner 12y ago
    California's three-strikes law was supported by a 72-28 vote in a public referendum. At the time of the vote, nation-wide, the public supported keeping marijuana illegal by an over 70-30 margin: http://www.people-press.org/2013/04/04/majority-now-supports-legalizing-marijuana http://www.people-press.org/2013/04/04/majority-now-supports.... Our drug and sentencing laws are the result of democracy, not oligarchy.
    - themartorana 12y ago
      But we don't live in a democracy, and expect better from the Republic bound by the Constitution, which is pretty clear about unjust punishment. If a democracy and majority rule were the true rule of the land, we may still have segregation, slavery, illegal mixed-race marriages, and so on, and so on... Now look at what class our electorate is largely made up of. Mix that with a little Citizens United and it becomes clear again that money controls government (and now rather blatantly) and it's not often that decisions are made that benefit the weakest among us - drug policy and the war on drugs being just one example.
      - rayiner 12y ago
        You're trying to tie-together two narratives that make no sense in conjunction. Do we have the drug war because of tyranny of the majority, or Citizens United money overriding the will of the majority? I'd posit the evidence shows that the majority strongly supported making drugs illegal and meting out harsh sentences, at least at the time the laws were put into place. If that's the case, the whole "oligarchy" narrative is superfluous.
        themartorana 12y ago
        The majority is often in support all sorts of policies that are against their best interests. That has nothing to do with what agenda is moved forward by the oligarchy.
    - foobarian 12y ago
      That doesn't follow. All the oligarchs have to do is carefully pick the referendum topics to achieve their agenda. You sure didn't see any referendum on whether to bail out the banks.
      - arthurcolle 12y ago
        I'm sure the average citizen has enough working knowledge of monetary policy to make an informed decision about bank recapitalization. Please.
        themartorana 12y ago
        They then also have a working knowledge of the psychological, human, and monetary costs of a never-ending war against our own citizens, the inability to distinguish between crime and addiction and disease, the extremely regressive nature of drug addiction, recidivism rates of minor criminals in to hardened felons, the stifling effect of a felony conviction on upward mobility, and everything else proven to be utterly destructive about the war on drugs. The majority is rarely well educated about anything. Pretending their support on the war on drugs is somehow more informed than on bank bailouts is silly.
        arthurcolle 12y ago
        EDIT: My apologies, I didn't realize the comment thread I had posted to was started as a comment about drug laws. I was merely commenting about my general philosophical belief that democracy is not optimal because an uninformed population should not be making decisions it is uninformed about. Unedited previous comment: --------------------------------------------------------------- I don't understand your comment, friend. I said nothing about the 'war on drugs'. Uninformed participants in a political or economic system should not be making decisions that affect others in any way. Random citizen John Smith will, out of a sense of righteous indignation, decide against any useful regulation for banks because he is upset that they get recapitalized while his mortgage terms do not get favorably renegotiated, irrespective of the intellectual value of his decision. Banking and financial activities are fundamental to a healthy and growing economy and everything from home mortgages to credit cards to IPOs are driven by a bank's ability to extend credit and deliver banking services to the citizenry of a country. Bonuses are generally speaking a direct function of a bank's PROFITABILITY, not its ability to cater to every individual's whims and desires to become some rockstar 'rich person' or even the populace's desire to remain middle class. Services are provided, and profits are distributed accordingly. If affecting political policy is beneficial to shareholders, decisions like Citizens United are logical and the exact type of decisions I'd want my board of directors to make, as an investor, and if that contributes to maximal economic growth then it is optimal for human society, with the exception of environmental concerns which need to be taken more seriously then they have been in our immediate past.
- cones688 12y ago
  appreciate the sentiment but HSBC didn't take a dollar, pound or Euro of bailout money.
  - desdiv 12y ago
    HSBC got $3.5 billion from the AIG bailout: http://www.businessweek.com/the_thread/economicsunbound/archives/2009/03/german_and_fren.html http://www.businessweek.com/the_thread/economicsunbound/arch...
- sliverstorm 12y ago
  If it was all paid back though, what was the magnitude of the theft? If we say 8% return was too low given the risk, the value that was stolen from the public is the marginal interest the public missed out on. So what was the right rate of return? If it was 10%, that's 2% marginal rate not captured. How long was the term of the loans? 5 years? That works out to roughly $70B over 5 years. I'm not claiming that's a small number (!) but if we are calling it theft, we should qualify the theft more concretely.
mathrawka 12y ago
This is also some good reading material: https://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program https://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program
tormeh 12y ago
>“When the banks did well, their employees were paid well. When the banks did poorly, their employees were paid well,” Cuomo’s office said in the 22-page report. “When the banks did very poorly, they were bailed out by taxpayers and their employees were still paid well. Bonuses and overall compensation did not vary significantly as profits diminished.” Waaat. I think the government should stop bailing out businesses. Either you let the company go bankrupt or you nationalize. Also I clearly need a job in banking...
- jheriko 12y ago
  > Either you let the company go bankrupt or you nationalize. I vaguely agree with that sentiment, but the problem in practice is that government sucks at running things. They introduce layers of infrastructure that business doesn't and turn things into political footballs. Although thinking about that for a moment, its a big problem on its own...
  - cowsandmilk 12y ago
    > government sucks at running things Because a company that needs to be bailed out was doing a great job...
    - davidw 12y ago
      You should have seen how banks were run in Italy when they were essentially the financial wings of various political parties. Anyway, this is pretty clearly about politics, so... article flagged.
      - themartorana 12y ago
        You should either participate in a discussion OR flag it as inappropriate, because the second you agree to engage, you believe the conversation has some merit on this forum. Edit: I can't reply to you for some reason, but I didn't downvote you. However, saying "downvote" instead of just doing it, and then flaunting your karma score and elevating yourself to the position of de-facto moderator seems much like saying "here is MY political opinion, and now I will work to shut down any further discussion on the subject."
jheriko 12y ago
an industry driven by greed is greedy... why am i not surprised. that stuff needs some regulating. its all well and good making everyone richer and deregulating to encourage it, but if the gap widens, because of how the economy works, the poor get poorer in real terms :( also we have big explosive crashes...
- tomp 12y ago
  I think a better analogy would be, an industry that makes money has money. Just like a baker wouldn't go hungry and a shoemaker will have shoes.
  - collyw 12y ago
    Or a Foxconn worker wouldn't go without an iPhone. Oh, wait.
- neonhomer 12y ago
  It was properly regulated before, see https://en.wikipedia.org/wiki/Glass%E2%80%93Steagall_Legislation https://en.wikipedia.org/wiki/Glass%E2%80%93Steagall_Legisla.... Until people go to jail for the crimes (see Iceland) nothing will get fixed.
  - hnnewguy 12y ago
    >Until people go to jail for the crimes (see Iceland) nothing will get fixed. This is such a bizarre argument. You don't think there were/are oodles of prosecutors frothing at the mouth to throw some bankers in jail? Look around the internet! They'd be heroes! The public would rejoice, yet it hasn't happened, because proving that some of the perceived corruption and missteps are actual crimes is, apparently, more difficult than you think. And I don't want to live in a country when the government can decide, willy-nilly, to throw corporate executives in the slammer. Second, tthrowing here are far more effective means of "punishment" than some low-ranking employee in white-collar prison (which costs us MORE money). Fines have been used, which punish earnings, executive pay, and shareholders.
smoyer 12y ago
At the time these banks were claiming that they had to pay the bonuses to retain these employees ... I think this is logically false for two reasons: 1) Why do you want to retain the executive that helped run the business into the ground? 2) What other corporation in their right (collective?) mind would hire one of these executives (given their inflated salaries and poor performance). I still think the right way to fix this would have been to send those who propagated the whole financial scam to jail.
- javiramos 12y ago
  Also, the job market for bankers was pretty bad circa 2009 so I am sure bankers would have held up a year or two until business bounced back again. Everyone in the banking industry knew that 2008/2009/2010 were going to be bad years so bonus expectations were low. Bankers/traders find loopholes and opportunities in systems (stock market, real estate, etc.) and exploit them for profit. Of course any poorly orchestrated bailout was going to end in this.
- orbifold 12y ago
  Unless I'm mistaken it is not like the people handing out bonuses and the people who screwed up are completely separate. Also it is safe to assume that any organization of a sufficiently large size will have a fixed amount of incompetent people at any level, simply as a matter of statistics. Maybe the percentage will be less where the people come from field with a (different/harder) selection process like the natural sciences/law/medicine as opposed to business administration. The banking crisis also seems more of an institutional / regulatory failure than a failure of individuals. The pseudo-democratization of credit availability was something explicitly wanted by the government as a means of stimulating consumption. That this policy was completely misguided wasn't really the fault of the banks themselves who mainly took advantage of the admittedly ridiculous situation.
  - collyw 12y ago
    Are banking jobs given out based on meritocratic ideals, or who your dad knows?
daenz 12y ago
Hey, wealth redistribution is OK if it's going from bottom to top.
uptown 12y ago
While the data is accurate - the messenger, in this case, is Andrew Cuomo - a politician who aspires to run for President in the near-term. He had very little problem accepting campaign contributions from the financial services industry - they were his second-largest contributor by-sector. http://influenceexplorer.com/politician/andrew-cuomo/d83c5450d5604928ad35103ae2588e6f http://influenceexplorer.com/politician/andrew-cuomo/d83c545...
- eli 12y ago
  Well, hey if we're just going to ad hominem attack Andrew Cuomo, it'd probably be much more effective to point out the recent scandal where he disbanded an anti-corruption task force because it was too effective and started questioning his friends, and that there's allegedly an active federal investigation into his affairs. Doesn't have much to do with the bank bailout though.
- shawn-furyan 12y ago
  The criticism usually goes in the other direction: that a politician is too soft on an industry that contributed significant campaign contributions. In the era of the Koch brothers / Super PACs, everybody has contributions from one industry or another. Unless there's something I'm missing, it would seem a positive thing overall that financial industry contributions to Andrew Cuomo's campaign didn't keep him from analyzing and stumping over their bonuses later. Note: Andrew Cuomo is a name I'm only vaguely aware of. I don't know anything about him outside of what I've learned from the article, and these comments. I have no opinion on whether he should or shouldn't be elected. So the above would apply to any given politician who behaved similarly.
motters 12y ago
In other words taxpayers money was redistributed into the personal bank accounts of some of the richest people.
- hawleyal 12y ago
  Well, we all gave it to them. :/
- isaacremuant 12y ago
  IIRC, The official narrative from politicians, news anchors and think-tanks was that: - If the bailouts didn't happen, it would be mayhem, "too big to fail", etc. - You got your money back with interest. It was all payed back (disregard economic theory and value of money in hand). - Why are you complaining, you banjo-playing hippie? You can't be in OWS if you have an iphone! (In Erin Burnett's voice) ------ Many people will talk situations that forced the banks to hand out these bonuses and maybe they're right but the deeper problem is that when companies/banks/people suffer no consequence (and even worse, benefit from) doing illegal/harmful things then they're going to keep up doing them. profit vs "cost of infraction".
  - maxerickson 12y ago
    Significant new regulations were enacted: http://en.wikipedia.org/wiki/Dodd%E2%80%93Frank_Wall_Street_Reform_and_Consumer_Protection_Act http://en.wikipedia.org/wiki/Dodd%E2%80%93Frank_Wall_Street_... In particular, the orderly liquidation authority created a legal framework to liquidate a broader range of financial institutions: http://en.wikipedia.org/wiki/Dodd%E2%80%93Frank_Wall_Street_Reform_and_Consumer_Protection_Act#Title_II_.E2.80.93_Orderly_Liquidation_Authority http://en.wikipedia.org/wiki/Dodd%E2%80%93Frank_Wall_Street_... Dodd Frank is at least toothy enough that banks are constantly whining about it now (and working to dismantle it).
Symmetry 12y ago
I don't really think that this is that surprising or the worst thing about the recent financial crisis. One thing about financial markets is that if everybody thinks you're doing badly suddenly they don't want to lend you money and this might do you in even if your problems had been survivable. And Lehman Brothers waited until the very last moment before telling the Fed they had a problem. So the Fed insisted on throwing money at every financial institution - even the ones that were hugely profitable during the crisis. And if your company is short on money or dying the last thing you want to cut is bonuses. If your employees smell blood they'll be thinking about jumping ship. If you stop paying salary but leave bonuses intact you'll do better at keeping people at their desks until until they've finished wrapping the company up. And if somebody screwed up in a way that contributed to the crisis they should be fired and replaced, not have their bonus cut. THere were a lot of things that should have been done differently in the crisis. Investors in insolvent companies really needed to be wiped out to encourage them to take better care in the future. Interest On Reserves was really not needed to prevent the economy from overheating the way the Fed feared (the Fed works with numbers months out of date and they still thought the larger economy was fine and that inflation has highish when the crisis hit). The bonuses are at best a distraction but one that's easy for politicians to make sound bites out of.
bborud 12y ago
Well, this is obviously the way we want it since we keep electing people who make this possible.
JoeAltmaier 12y ago
Its simple. People in the money chain-of-custody always take some. Corporation board members vote one another stock. Company executives (originally normal positions like secretary and treasurer, paid a normal salary) pay one another exorbitant sums. And bank employees always get paid.
hnnewguy 12y ago
What do you know, another anti-bank circle-jerk.
jostmey 12y ago
Funny, that's about the same amount of money as the budget for the NIH. Sadly, their research budget has remained stagnant for years as inflation has gone up.
harmonicon 12y ago
I don't think the bonuses is a problem per se. Companies should be allowed to pay their employee however they want, being true to the contract the employee signed, of course. The bailout is the problem. If there was no bailout, these banks would have totally reduced the payout. They would feel the hit and have to adjust accordingly to keep the company afloat. Bailout gave them the go ahead to disregard all the losses. It is extremely cynical for the same players to be crying for free enterprise, woe is regulation and the market always work its magic. But hey it's not their problem. We just had to be the sucker, pony up and bail them out.
oooooops 12y ago
It's only a matter of time until the scheme crashes again. 135 comments and not one mention of Bitcoin?
- oldpond 12y ago
  Because bitcoin is no different. Virtual currency speculation is not the answer.
RRRA 12y ago
Everyone should watch this documentary by Adam Curtis about the history of extremism and the rise of the banks... http://en.wikipedia.org/wiki/Bitter_Lake_%28film%29 http://en.wikipedia.org/wiki/Bitter_Lake_%28film%29
jim_greco 12y ago
Banks are a collection of loosely related business that are only tied together by their participation in the capital markets. The equities derivatives desk has little to do with the mortgage desk which has little to do with the health care investment banking group. As such, front office Wall Street bonuses are primarily based on personal and desk performance. In 2008 a handful of desks 'blew up' which took down the entire firm. Meanwhile equity and govie desks had a banner year. Does every desk deserve to get shafted? Do the back-office developers deserve to get shafted? I'm not here to defend the banks, but I can understand both sides of the argument. The Government should have just nationalized the banks if they wanted to control this.

172 points by sjcsjc 12y ago

OP here. Given the current story re HSBC's misbehaviour, I thought it worth reminding everyone of the scale of the theft that took place during the bank bailout.

themartorana 12y ago
This, HSBC lending money to rouge nations and drug cartels, the LIBOR scandal, and not a single person is in jail. Not to mention that the Fed made available and lent up to $7T to banks (without telling Congress) right before TARP was rushed through. Smoke some weed, go to jail. Do it three times, go to jail for life in CA. MANDATORY. Especially if you're black. If these and other ongoing similar "crimes" don't convince you that we're living in an oligarchy, and our precious democracy/republic is a farce at best, well, I don't know what will.
- rayiner 12y ago
  California's three-strikes law was supported by a 72-28 vote in a public referendum. At the time of the vote, nation-wide, the public supported keeping marijuana illegal by an over 70-30 margin: http://www.people-press.org/2013/04/04/majority-now-supports-legalizing-marijuana http://www.people-press.org/2013/04/04/majority-now-supports.... Our drug and sentencing laws are the result of democracy, not oligarchy.
  - themartorana 12y ago
    But we don't live in a democracy, and expect better from the Republic bound by the Constitution, which is pretty clear about unjust punishment. If a democracy and majority rule were the true rule of the land, we may still have segregation, slavery, illegal mixed-race marriages, and so on, and so on... Now look at what class our electorate is largely made up of. Mix that with a little Citizens United and it becomes clear again that money controls government (and now rather blatantly) and it's not often that decisions are made that benefit the weakest among us - drug policy and the war on drugs being just one example.
    - rayiner 12y ago
      You're trying to tie-together two narratives that make no sense in conjunction. Do we have the drug war because of tyranny of the majority, or Citizens United money overriding the will of the majority? I'd posit the evidence shows that the majority strongly supported making drugs illegal and meting out harsh sentences, at least at the time the laws were put into place. If that's the case, the whole "oligarchy" narrative is superfluous.
      - themartorana 12y ago
        The majority is often in support all sorts of policies that are against their best interests. That has nothing to do with what agenda is moved forward by the oligarchy.
  - foobarian 12y ago
    That doesn't follow. All the oligarchs have to do is carefully pick the referendum topics to achieve their agenda. You sure didn't see any referendum on whether to bail out the banks.
    - arthurcolle 12y ago
      I'm sure the average citizen has enough working knowledge of monetary policy to make an informed decision about bank recapitalization. Please.
      - themartorana 12y ago
        They then also have a working knowledge of the psychological, human, and monetary costs of a never-ending war against our own citizens, the inability to distinguish between crime and addiction and disease, the extremely regressive nature of drug addiction, recidivism rates of minor criminals in to hardened felons, the stifling effect of a felony conviction on upward mobility, and everything else proven to be utterly destructive about the war on drugs. The majority is rarely well educated about anything. Pretending their support on the war on drugs is somehow more informed than on bank bailouts is silly.
        arthurcolle 12y ago
        EDIT: My apologies, I didn't realize the comment thread I had posted to was started as a comment about drug laws. I was merely commenting about my general philosophical belief that democracy is not optimal because an uninformed population should not be making decisions it is uninformed about. Unedited previous comment: --------------------------------------------------------------- I don't understand your comment, friend. I said nothing about the 'war on drugs'. Uninformed participants in a political or economic system should not be making decisions that affect others in any way. Random citizen John Smith will, out of a sense of righteous indignation, decide against any useful regulation for banks because he is upset that they get recapitalized while his mortgage terms do not get favorably renegotiated, irrespective of the intellectual value of his decision. Banking and financial activities are fundamental to a healthy and growing economy and everything from home mortgages to credit cards to IPOs are driven by a bank's ability to extend credit and deliver banking services to the citizenry of a country. Bonuses are generally speaking a direct function of a bank's PROFITABILITY, not its ability to cater to every individual's whims and desires to become some rockstar 'rich person' or even the populace's desire to remain middle class. Services are provided, and profits are distributed accordingly. If affecting political policy is beneficial to shareholders, decisions like Citizens United are logical and the exact type of decisions I'd want my board of directors to make, as an investor, and if that contributes to maximal economic growth then it is optimal for human society, with the exception of environmental concerns which need to be taken more seriously then they have been in our immediate past.
cones688 12y ago
appreciate the sentiment but HSBC didn't take a dollar, pound or Euro of bailout money.
- desdiv 12y ago
  HSBC got $3.5 billion from the AIG bailout: http://www.businessweek.com/the_thread/economicsunbound/archives/2009/03/german_and_fren.html http://www.businessweek.com/the_thread/economicsunbound/arch...
sliverstorm 12y ago
If it was all paid back though, what was the magnitude of the theft? If we say 8% return was too low given the risk, the value that was stolen from the public is the marginal interest the public missed out on. So what was the right rate of return? If it was 10%, that's 2% marginal rate not captured. How long was the term of the loans? 5 years? That works out to roughly $70B over 5 years. I'm not claiming that's a small number (!) but if we are calling it theft, we should qualify the theft more concretely.

mathrawka 12y ago

This is also some good reading material: https://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program https://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program

tormeh 12y ago

>“When the banks did well, their employees were paid well. When the banks did poorly, their employees were paid well,” Cuomo’s office said in the 22-page report. “When the banks did very poorly, they were bailed out by taxpayers and their employees were still paid well. Bonuses and overall compensation did not vary significantly as profits diminished.” Waaat. I think the government should stop bailing out businesses. Either you let the company go bankrupt or you nationalize. Also I clearly need a job in banking...

jheriko 12y ago
> Either you let the company go bankrupt or you nationalize. I vaguely agree with that sentiment, but the problem in practice is that government sucks at running things. They introduce layers of infrastructure that business doesn't and turn things into political footballs. Although thinking about that for a moment, its a big problem on its own...
- cowsandmilk 12y ago
  > government sucks at running things Because a company that needs to be bailed out was doing a great job...
  - davidw 12y ago
    You should have seen how banks were run in Italy when they were essentially the financial wings of various political parties. Anyway, this is pretty clearly about politics, so... article flagged.
    - themartorana 12y ago
      You should either participate in a discussion OR flag it as inappropriate, because the second you agree to engage, you believe the conversation has some merit on this forum. Edit: I can't reply to you for some reason, but I didn't downvote you. However, saying "downvote" instead of just doing it, and then flaunting your karma score and elevating yourself to the position of de-facto moderator seems much like saying "here is MY political opinion, and now I will work to shut down any further discussion on the subject."

jheriko 12y ago

an industry driven by greed is greedy... why am i not surprised. that stuff needs some regulating. its all well and good making everyone richer and deregulating to encourage it, but if the gap widens, because of how the economy works, the poor get poorer in real terms :( also we have big explosive crashes...

tomp 12y ago
I think a better analogy would be, an industry that makes money has money. Just like a baker wouldn't go hungry and a shoemaker will have shoes.
- collyw 12y ago
  Or a Foxconn worker wouldn't go without an iPhone. Oh, wait.
neonhomer 12y ago
It was properly regulated before, see https://en.wikipedia.org/wiki/Glass%E2%80%93Steagall_Legislation https://en.wikipedia.org/wiki/Glass%E2%80%93Steagall_Legisla.... Until people go to jail for the crimes (see Iceland) nothing will get fixed.
- hnnewguy 12y ago
  >Until people go to jail for the crimes (see Iceland) nothing will get fixed. This is such a bizarre argument. You don't think there were/are oodles of prosecutors frothing at the mouth to throw some bankers in jail? Look around the internet! They'd be heroes! The public would rejoice, yet it hasn't happened, because proving that some of the perceived corruption and missteps are actual crimes is, apparently, more difficult than you think. And I don't want to live in a country when the government can decide, willy-nilly, to throw corporate executives in the slammer. Second, tthrowing here are far more effective means of "punishment" than some low-ranking employee in white-collar prison (which costs us MORE money). Fines have been used, which punish earnings, executive pay, and shareholders.

smoyer 12y ago

At the time these banks were claiming that they had to pay the bonuses to retain these employees ... I think this is logically false for two reasons: 1) Why do you want to retain the executive that helped run the business into the ground? 2) What other corporation in their right (collective?) mind would hire one of these executives (given their inflated salaries and poor performance). I still think the right way to fix this would have been to send those who propagated the whole financial scam to jail.

javiramos 12y ago
Also, the job market for bankers was pretty bad circa 2009 so I am sure bankers would have held up a year or two until business bounced back again. Everyone in the banking industry knew that 2008/2009/2010 were going to be bad years so bonus expectations were low. Bankers/traders find loopholes and opportunities in systems (stock market, real estate, etc.) and exploit them for profit. Of course any poorly orchestrated bailout was going to end in this.
orbifold 12y ago
Unless I'm mistaken it is not like the people handing out bonuses and the people who screwed up are completely separate. Also it is safe to assume that any organization of a sufficiently large size will have a fixed amount of incompetent people at any level, simply as a matter of statistics. Maybe the percentage will be less where the people come from field with a (different/harder) selection process like the natural sciences/law/medicine as opposed to business administration. The banking crisis also seems more of an institutional / regulatory failure than a failure of individuals. The pseudo-democratization of credit availability was something explicitly wanted by the government as a means of stimulating consumption. That this policy was completely misguided wasn't really the fault of the banks themselves who mainly took advantage of the admittedly ridiculous situation.
- collyw 12y ago
  Are banking jobs given out based on meritocratic ideals, or who your dad knows?

daenz 12y ago

Hey, wealth redistribution is OK if it's going from bottom to top.

uptown 12y ago

While the data is accurate - the messenger, in this case, is Andrew Cuomo - a politician who aspires to run for President in the near-term. He had very little problem accepting campaign contributions from the financial services industry - they were his second-largest contributor by-sector. http://influenceexplorer.com/politician/andrew-cuomo/d83c5450d5604928ad35103ae2588e6f http://influenceexplorer.com/politician/andrew-cuomo/d83c545...

eli 12y ago
Well, hey if we're just going to ad hominem attack Andrew Cuomo, it'd probably be much more effective to point out the recent scandal where he disbanded an anti-corruption task force because it was too effective and started questioning his friends, and that there's allegedly an active federal investigation into his affairs. Doesn't have much to do with the bank bailout though.
shawn-furyan 12y ago
The criticism usually goes in the other direction: that a politician is too soft on an industry that contributed significant campaign contributions. In the era of the Koch brothers / Super PACs, everybody has contributions from one industry or another. Unless there's something I'm missing, it would seem a positive thing overall that financial industry contributions to Andrew Cuomo's campaign didn't keep him from analyzing and stumping over their bonuses later. Note: Andrew Cuomo is a name I'm only vaguely aware of. I don't know anything about him outside of what I've learned from the article, and these comments. I have no opinion on whether he should or shouldn't be elected. So the above would apply to any given politician who behaved similarly.

motters 12y ago

In other words taxpayers money was redistributed into the personal bank accounts of some of the richest people.

hawleyal 12y ago
Well, we all gave it to them. :/
isaacremuant 12y ago
IIRC, The official narrative from politicians, news anchors and think-tanks was that: - If the bailouts didn't happen, it would be mayhem, "too big to fail", etc. - You got your money back with interest. It was all payed back (disregard economic theory and value of money in hand). - Why are you complaining, you banjo-playing hippie? You can't be in OWS if you have an iphone! (In Erin Burnett's voice) ------ Many people will talk situations that forced the banks to hand out these bonuses and maybe they're right but the deeper problem is that when companies/banks/people suffer no consequence (and even worse, benefit from) doing illegal/harmful things then they're going to keep up doing them. profit vs "cost of infraction".
- maxerickson 12y ago
  Significant new regulations were enacted: http://en.wikipedia.org/wiki/Dodd%E2%80%93Frank_Wall_Street_Reform_and_Consumer_Protection_Act http://en.wikipedia.org/wiki/Dodd%E2%80%93Frank_Wall_Street_... In particular, the orderly liquidation authority created a legal framework to liquidate a broader range of financial institutions: http://en.wikipedia.org/wiki/Dodd%E2%80%93Frank_Wall_Street_Reform_and_Consumer_Protection_Act#Title_II_.E2.80.93_Orderly_Liquidation_Authority http://en.wikipedia.org/wiki/Dodd%E2%80%93Frank_Wall_Street_... Dodd Frank is at least toothy enough that banks are constantly whining about it now (and working to dismantle it).

Symmetry 12y ago

I don't really think that this is that surprising or the worst thing about the recent financial crisis. One thing about financial markets is that if everybody thinks you're doing badly suddenly they don't want to lend you money and this might do you in even if your problems had been survivable. And Lehman Brothers waited until the very last moment before telling the Fed they had a problem. So the Fed insisted on throwing money at every financial institution - even the ones that were hugely profitable during the crisis. And if your company is short on money or dying the last thing you want to cut is bonuses. If your employees smell blood they'll be thinking about jumping ship. If you stop paying salary but leave bonuses intact you'll do better at keeping people at their desks until until they've finished wrapping the company up. And if somebody screwed up in a way that contributed to the crisis they should be fired and replaced, not have their bonus cut. THere were a lot of things that should have been done differently in the crisis. Investors in insolvent companies really needed to be wiped out to encourage them to take better care in the future. Interest On Reserves was really not needed to prevent the economy from overheating the way the Fed feared (the Fed works with numbers months out of date and they still thought the larger economy was fine and that inflation has highish when the crisis hit). The bonuses are at best a distraction but one that's easy for politicians to make sound bites out of.

bborud 12y ago

Well, this is obviously the way we want it since we keep electing people who make this possible.

JoeAltmaier 12y ago

Its simple. People in the money chain-of-custody always take some. Corporation board members vote one another stock. Company executives (originally normal positions like secretary and treasurer, paid a normal salary) pay one another exorbitant sums. And bank employees always get paid.

hnnewguy 12y ago

What do you know, another anti-bank circle-jerk.

jostmey 12y ago

Funny, that's about the same amount of money as the budget for the NIH. Sadly, their research budget has remained stagnant for years as inflation has gone up.

harmonicon 12y ago

I don't think the bonuses is a problem per se. Companies should be allowed to pay their employee however they want, being true to the contract the employee signed, of course. The bailout is the problem. If there was no bailout, these banks would have totally reduced the payout. They would feel the hit and have to adjust accordingly to keep the company afloat. Bailout gave them the go ahead to disregard all the losses. It is extremely cynical for the same players to be crying for free enterprise, woe is regulation and the market always work its magic. But hey it's not their problem. We just had to be the sucker, pony up and bail them out.

oooooops 12y ago

It's only a matter of time until the scheme crashes again. 135 comments and not one mention of Bitcoin?

oldpond 12y ago
Because bitcoin is no different. Virtual currency speculation is not the answer.

RRRA 12y ago

Everyone should watch this documentary by Adam Curtis about the history of extremism and the rise of the banks... http://en.wikipedia.org/wiki/Bitter_Lake_%28film%29 http://en.wikipedia.org/wiki/Bitter_Lake_%28film%29

jim_greco 12y ago

Banks are a collection of loosely related business that are only tied together by their participation in the capital markets. The equities derivatives desk has little to do with the mortgage desk which has little to do with the health care investment banking group. As such, front office Wall Street bonuses are primarily based on personal and desk performance. In 2008 a handful of desks 'blew up' which took down the entire firm. Meanwhile equity and govie desks had a banner year. Does every desk deserve to get shafted? Do the back-office developers deserve to get shafted? I'm not here to defend the banks, but I can understand both sides of the argument. The Government should have just nationalized the banks if they wanted to control this.