4 ms·

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 d

by 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?
  - rayiner 12y ago
    Most people are there because they got excellent grades at excellent colleges. These criteria objectively select for people who are sharp, though not necessarily geniuses, and have a demonstrated track record of working very hard and paying a lot of attention to detail and deadlines. In many ways, banking hiring is more "meritocratic" than tech hiring. There is less emphasis on "fit" and "culture" and because new hires are viewed as tabula rasa there is less emphasis on criteria that might be gender-biased (e.g. high-school extra-curricular activities).
    - tptacek 12y ago
      It's funny that this got downvoted grey: my sense is that it really gets under nerd skin that tech isn't a great example of a meritocracy.
rhino369 12y ago
1) Bank bonuses aren't just paid to executives. These losses were from one department of the bank and that one department could have losses so large that it destroyed the whole bank. Even if you got rid of the people who fucked up, you'd have a lot of people left who didn't. Also, the banks that failed were typically sold off to banks who healthy. The government was strong arming banks into buying weaker banks with gov loans. Goldman, Chase, BoA all didn't get trapped in the subprime mess. 2) Talent will flee to the money. I've seen this in law firms. Firms that don't properly pay their "rainmakers" lose them to firms who will. The banks laid off tons of people.
danielweber 12y ago
1) Why do you want to retain the executive that helped run the business into the ground? It's not just "executives." Most of the staff gets paid bonuses, essentially as part of their salaries. And there was a desire to keep these companies as on-going concerns. If you suddenly ax their pay, they quit. You can say "good riddance, they caused the problem!" But you still want to leave these companies as on-going concerns, by definition: they got bailed out. It's not simply a matter of sweeping out all the old traders and bringing in new traders to decode the books. You need people with direct experience, if for no other reason than to unwind the deals. And you need to pay them market wages. You can point out, correctly, how high those market wages are. That still doesn't mean you can keep the company running by trying to cram down their wages. This ESPECIALLY goes for a company that is going out of business. No one wants to work at a company that is going bankrupt; they'd rather look for a new job instead. You need to pay people extra money to stick around while the ship is sinking.

by smoyer 12y ago

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?
- rayiner 12y ago
  Most people are there because they got excellent grades at excellent colleges. These criteria objectively select for people who are sharp, though not necessarily geniuses, and have a demonstrated track record of working very hard and paying a lot of attention to detail and deadlines. In many ways, banking hiring is more "meritocratic" than tech hiring. There is less emphasis on "fit" and "culture" and because new hires are viewed as tabula rasa there is less emphasis on criteria that might be gender-biased (e.g. high-school extra-curricular activities).
  - tptacek 12y ago
    It's funny that this got downvoted grey: my sense is that it really gets under nerd skin that tech isn't a great example of a meritocracy.

rhino369 12y ago

1) Bank bonuses aren't just paid to executives. These losses were from one department of the bank and that one department could have losses so large that it destroyed the whole bank. Even if you got rid of the people who fucked up, you'd have a lot of people left who didn't. Also, the banks that failed were typically sold off to banks who healthy. The government was strong arming banks into buying weaker banks with gov loans. Goldman, Chase, BoA all didn't get trapped in the subprime mess. 2) Talent will flee to the money. I've seen this in law firms. Firms that don't properly pay their "rainmakers" lose them to firms who will. The banks laid off tons of people.

danielweber 12y ago

1) Why do you want to retain the executive that helped run the business into the ground? It's not just "executives." Most of the staff gets paid bonuses, essentially as part of their salaries. And there was a desire to keep these companies as on-going concerns. If you suddenly ax their pay, they quit. You can say "good riddance, they caused the problem!" But you still want to leave these companies as on-going concerns, by definition: they got bailed out. It's not simply a matter of sweeping out all the old traders and bringing in new traders to decode the books. You need people with direct experience, if for no other reason than to unwind the deals. And you need to pay them market wages. You can point out, correctly, how high those market wages are. That still doesn't mean you can keep the company running by trying to cram down their wages. This ESPECIALLY goes for a company that is going out of business. No one wants to work at a company that is going bankrupt; they'd rather look for a new job instead. You need to pay people extra money to stick around while the ship is sinking.