Big Banks Paid Billions in Bonuses Amid Wall St. Crisis
The figures released on Thursday by the New York attorney general, Andrew M. Cuomo, provided the most detailed accounting yet of Wall Street’s millionaire ranks. In the report, Mr. Cuomo said that 738 bankers and traders at Citigroup took home bonuses of $1 million or more in 2008 even as the bank posted a $27.7 billion loss. In all, Citigroup paid $5.33 billion in bonuses; it received $45 billion in bailout funds.
I know you guys love posting all kinds of links making obama look like hitler, but what about this article? http://www.nytimes.com/2009/07/31/business/31pay…
Companies on the brink of bankruptcy using taxpayer money to fund huge bonuses. Someone please tell me this is how capitalism is suppose to work, socialize the losses and privatize the profits?
If those bonuses weren't paid out you would have seen 738 bankers leading a mass exodus from Citi. It was essential to keeing them afloat.
but there's a distinct possibility that the actions taken by some of those bankers lead to some of citi's losses. in which case it makes little sense to pay them bonuses for losing money for the company.
also keep in mind that 738 got over $1m. there's a LOT more that got less than that.
edit: they paid a total of $5.3b in bonuses.
Only two things are infinite, the universe and human stupidity, and I'm not sure about the former.
FullMonte- you hear this explanation all the time comp comes up on Wall Street. The so-called "talent" defense. Well the 738 could leave Citi in a mass exodus- who cares? These people are mercenaries but they'll find the market demand for their services is a lot less than they think. Banking and trading are pretty useless skills if you don't have access to money and there are just a limited number of seats at competitors. The vast majority of people who left would face protracted unemployment.
Everyone on Wall Street is replaceable- also, Citi has enough people in the rank and file who could take over. For all the talk about IBD being about the rolodex and relationships- at the end of the day it's about fundraising for comapnies, and anybody could in theory do deals for Citi if they had access to the balance sheet and the massive distribution network of Smith Barney retail and ECM/DCM for institutional.
Bankers don't do anything that leads to losses, or most likely they didn't - banking is extremely low risk and fee/spread based. The vast majority of groups made a profit or have profit making potential going into next year.
The majority of the problems facing the bank are due to 28 year old HS drop outs who aren't paying off their credit cards or ditching their mortgages.
The problem is that the term "bonus" is used. If the term "discretionary payment" were used Joe the Plumber wouldn't be so pissed. The bonuses are what keep people working 80 hours a week.
Only a minority of the people who get bonuses had anything to do with the collapse. I'm still not pleased with the situation but its blown way out of proportion.
Are people retarded? Bonuses = the cost of doing business.
If you don't pay them that, they leave, and what would banks be left with? NOTHING because financial services firms are primarily dependant on human capital.
Put it this way, would you rather see Citi not pay, then go bankrupt because it can't generate any revenue - meanwhile all the bankers go to boutiques and collect even bigger paychecks?
“If the government is going to be giving away money, it’s our fiduciary responsibility to take it on behalf of our investors,”
^ you could start another BB with all the people laid off in this current crisis. And they'd be grateful for their jobs and would do the work for a lot less than a million dollars a year.
To show you how insane these amount are:
The average nuerosurgeon makes 530,000 per year.
And this involves 4 years undergrad, 4 years med school, top board scores and seven years of resdiency/fellowship.
http://residents.neurosurgery.mgh.harvard.edu/ProgramOverview.html
http://bp0.blogger.com/_jyVH1tFBOXI/RxbeEJuAvGI/AAAAAAAABAI/qTiPegUk2FI…
why do people in the financial services industry get paid so well? probably because they are close to big piles of money and can skim some off without anyone noticing (like lawyers in corporate bankrupcty cases billing $900/hr)
Granted, there is a lot of risk from a job security standpoint and the jobs are hard to get, so that should factor in to some premium for Wall Street jobs- just curious it's that much.
Dude you make money and you get paid for a percentage of it.
Thats what finance is all about.
If you want to look at people who don't produce revenue but still get paid more than they should, look at unions.
Don't you think most of the 738 would already have jumped to boutiques for "bigger paychecks" if they could have? No reason for them to stay if there's more money and better job security elsewhere. Wonder why they're staying put if there are so many wonderful options out there, hmm?
Just like big unit is saying - people ARE leaving. But at the same time, nothing is guaranteed and there are trade-offs (i.e. you won't have a big balance sheet to back you, and you probably won't be doing equity financings). As well, it's not always about the money, especially because the marginal benefit to these guys may not be sufficient to motivate them to jump ship if they know they will still get paid handsomely at a big bank. As well, some people feel more prestige at a top BB than a boutique (esp. consider not everyone can start an evercore or moelis-esque boutique)
“If the government is going to be giving away money, it’s our fiduciary responsibility to take it on behalf of our investors,”
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