Why Are Banks Paying Signing Bonus So Early?
I love the smell of napalm in the morning. You know, one time we had a hill bombed, for 12 hours. When it was all over, I walked up. We didn’t find one of ‘em, not one stinkin’ dink body. The smell, you know that gasoline smell, the whole hill. Smelled like [sniffing, pondering] victory.
Someday this war’s gonna end…
-Robert Duvall (Lieutenant Colonel Bill Kilgore)
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I’ve recently learned from several MBAs graduating in 2010 about firm signing bonuses. They are being paid out unusually early.
I have been wondering why.
The FOMC’s Zero Interest Rate Policy has been a license to print money — literally for the Fed, and figuratively for the major banks.
Being able to borrow at near zero costs means that making billions of dollars is a no brainer, even for some of the planet’s most mismanaged bankers.
Banks are so flush, they have been repaying TARP funds, buying out toxic debt guarantees, and repurchasing preferred shares and warrants.
The most recent hint of their overflowing coffers are the class of 2010 hires. Traditionally, these new employees receive their sign on bonuses sometime in the spring. Some start work that summer; most (at least in my day) begin in September, following one last drunken promiscuous binge through Europe (Ahhh, youth).
I was surprised to learn that several firms, most prominently JPMorgan, are paying out their signing bonuses over the next few weeks.
Its not too hard to imagine why.
I doubt pending legislation has much to do with it, but who knows. Given how much cash they are throwing off, my best guess is they are trying to spend as much of it as possible in the current tax year.
The crisis, the bailouts, the obscene amount of taxpayer monies that have been usurped and wasted. One is reminded of Colonel Kilgore’s speech in Apocalypse Now: While Duvall’s famous Napalm line gets quoted all the time, it is that last wistful sentiment that is really is the most poignant — and relevant — to the present license to steal.
Someday this war’s gonna end…
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September 22nd, 2009 at 9:51 am
@BR
Apocalypse Now… Best friggin’ movie of all time!
If you’ve never seen the REDUX version… Well, it’s long (and it doesn’t add much to the story either way)…
But it is interesting…
There are scenes where they later meet up with the Playboy bunnies (from the show), and another interesting one where they encounter an old Indochine plantation of French expatriates.
September 22nd, 2009 at 10:01 am
Why Barry? Because they can. Simple as that, really. Now let’s all move along. Can’t wait until year-end bonus numbers are released, just in time for Christmas.
September 22nd, 2009 at 10:02 am
Charley don’t surf!
September 22nd, 2009 at 10:15 am
“….following one last drunken promiscuous binge through Europe…”
The ultimate left-wing conspiracy: indoctrinating our youth to European socialism, creating generation after generation of soft-minded, weak-willed, wards of the state here in America is now financed by TARP money.
Momma, don’t let your baby go party in Europe after graduation. Stop the Obama Socialist indoctrination before your grandchildren get names like Che or Vladimir. Send them to a Tea Party instead… Tell them to check out the purple mountain’s majesty rather than the communal Jungherberge… and those German teens of questionable sexual mores… let them join all the other god-fearing Fox-watchers (who missed out on the ’09 rally. )
Let Freedom ring… ding-dong…
P.S. Ohhh and the Clintons!
— recent unsigned, unattributed, colored large-font email
September 22nd, 2009 at 10:19 am
Signing bonuses? One last drunken binge through Europe? It’s an irresponsible spree to pay out so early?
No wonder. And then there are the others. If you can’t start today, someone else gets the job. Work six months and see if you qualify for health insurance.
Seems the elites include those that can afford graduate school and can get accepted. As the University of Illinois recently showed. And don’t forget the legacies.
September 22nd, 2009 at 10:25 am
because we are about to go through it all over again and the banks are trying to bring expenses into CY09…
america’s tiny manufacturing sector improves but massive service economy gets worse.
NEW YORK (Dow Jones)–Manufacturing activity in the central Atlantic region expanded for the fifth straight month in September, the Federal Reserve Bank of Richmond reported Tuesday. All broad indicators were in positive territory, with manufacturers noting their first increase in worker numbers since December 2007. The bank’s manufacturing index stood at 14 in September from 14 in August. Its shipment index rose to 22 this month from 21 in August. The employee index rose to 5 in September from 0 last month. Numbers above zero indicate expanding activity. On the service side, revenues deteriorated to -12 from -8 in August.
what’s the opposite of green shoots??
September 22nd, 2009 at 10:33 am
While it is a little early now, I do remember signing bonuses going out in recent years past well in advance of the start (i.e. get your offer in September, bonus by December). Lots of time to pretend to be a banker.
September 22nd, 2009 at 10:42 am
Maybe “this war’s gonna end”, but Col. Killgore can take comfort from the knowledge there’ll always be another one !
September 22nd, 2009 at 10:51 am
“one last drunken promiscuous binge through Europe”
.. and why did no-one tell me these had ended?
“what’s the opposite of green shoots??”
Green chutes. Housing data not very green, or shooty.
September 22nd, 2009 at 10:56 am
“Never get out of the boat… never get out of the boat.”
If you’re an Apocalypse Now fan, go out and immediately rent Hearts of Darkness: The Making of Apocalypse Now. Documentary by Francis’s wife. Some of the segments are absolutely priceless.
September 22nd, 2009 at 12:08 pm
Tranzor,
how ’bout using a little free time, and that quality legal training of yours, to peep into this:
http://www.barefootsworld.net/uscivilflag.html
and, more specifically, this: “Before 1940, no U.S. flag, civil or military, flew within the forty-eight states except in federal settings and installations. Only state flags did. Since the 1935 institution of Social Security and the Buck Act of 1940, 4 U.S.C.S. Ch. 4 Sec. 104-113, by clever legal maneuvers the feds have entirely circumvented the U.S. Constitution, and have overlaid federal territorial jurisdiction on the sovereign States, bringing them under the admiralty/military jurisdiction of Law Merchant, the Uniform Commercial Code (UCC), the law of Creditors and Debtors.
Since then the U.S. military flag appears beside, or in place of, the state flags in nearly all locations within the states. All of the state courts and even the municipal ones now openly display it. In the last half century they have more openly declared the military/admiralty law jurisdiction with the addition of the gold fringe to the flag, the military flag of the Commander-in-Chief of the Armed Forces.
Such has been the path that has brought us under the Law of the Military Flag…”
and see if you agree with the authors conclusions..
~~
w/the point, to the Post, in re: “Banks”, “Money”, if we’ve no basis of understanding in the subject matter of Law, We can have no Jurisdiction.
http://www.thefreedictionary.com/jurisdiction
September 22nd, 2009 at 12:51 pm
“Someday this war’s gonna end…”
And when it does, to quote another great flick:
“The world needs ditch diggers too, Danny…”
September 22nd, 2009 at 12:55 pm
Such a stark contrast to the law school grads, where all the big firms have either stopped hiring entirely or placed all the new hires on six month – 1yr long deferments at 1/3 pay. I guess the big firms can’t tap the fed window for cheap cash. Anyway, I wonder how many full-time offers JP Morgan and GS and the others are making this year? It’s got to be a tough time to be graduating from b-school… and here i am applying.
September 22nd, 2009 at 1:27 pm
Had Enough – you should start your own blog, you’re a good poster
September 22nd, 2009 at 1:43 pm
Mark,
Without any more legal research than what’s in my little noggin I can tell you there’s a problem with the passage you quoted. The Uniform Commercial Code (UCC) was adopted by the legislatures of various states, with some minor variations, and was not imposed by federal fiat. Uniform and model acts tend to come out of specialized committees within the American Bar Association/national legal associations.
I’m a fan of the U.C.C. but I’ll grant you sometimes I think state legislatures abdicate some responsibility/state power by enacting these wholesale uniform/model statutes. But I think it’s more out of laziness than creeping federal power.
September 22nd, 2009 at 3:06 pm
If they have so much money, why aren’t they taking writedowns on their crap assets? Oh, right. Yeah, that is funny. Ha ha.
This isn’t any different from a defaulted-on-the-mortgage home buyer stripping out the copper pipes the day before foreclosure.
September 22nd, 2009 at 3:16 pm
As usual, disappointing yet completely unsurprising
And now… Allow me to administer a few milligrams of uncut economic populism from the past to alleviate the throbbing pain of righteous indignation emanating from your poor readers’ fairness glands…
“The planter, the farmer, the mechanic, and the laborer all know that their success depends upon their own industry and economy, and that they must not expect to become suddenly rich by the fruits of their toil. [These classes] form the great body of the people of the United States; they are the bone and sinew of the country [yet] they are in constant danger of losing their fair influence in the Government. The mischief springs from the power which the moneyed interest derives from a paper currency, which they are able to control, from the multitude of corporations with exclusive privileges which they have succeeded in obtaining in the different States. Unless [the people] become more watchful… [they] will in the end find that the most important powers of Government have been given or bartered away, and the control over [their] dearest interests has passed in to the hands of these corporations.”
-Andrew Jackson (Richardson, comp., Messages and Papers, III 305-306)
“Turn a deaf ear then, reader, we entreat you, to all these fraudulent attempts to cajole you into the belief that the banks, though broken, are as good as ever. They may be as good as ever, but they never were good. They were conceived in corruption. They were the spurious offspring of fraud and folly, and their whole career has been illustrative of their parentage. Attempt not, then, to heal the wound inflicted upon their credit by their own suicidal act. Set your face firmly against any legislative resuscitation of the exanimate brood of exclusively privileged money-changers. Now is the accepted time to overthrow forever the ignoble order of rag barons…”
On the very day when the banks of this city and Brooklyn declared themselves bankrupt, stocks rose in price some fifteen or twenty per cent. This was in the confidence of a new inflation of paper money trash. But will the community consent to this? Will they tamely be imposed upon by a spurious, irresponsible, unredeemable paper currency, not worth so much as the ink wasted in recording the lying promises on its face? Will they witness a fresh series of fluctuating prices; new enterprises of mad speculation; and the prostrate fabrick of monopoly credit, now confessedly without a basis, again reared up to the clouds, to fall again, sooner or later, with more disastrous ruin?”
“When a legislative body restrains the people collectively from exercising their natural right of pursuing a certain branch of business, and gives to particular individuals exclusive permission to carry on that business, they assuredly are guilty of a violation of the republican maxim of Equal Rights, which nothing but the plainest paramount necessity can at all excuse. This violation is the more palpable, when immunities are granted to the few, which would not have been enjoyed by the people, had their natural rights never been restricted by law. In the case of Bank incorporations such is clearly true; since those who are thus privileged are protected by their charters both from the competition of individuals, and from loss to any greater extent than the amount of capital they may risk in the enterprise—a protection which would have been enjoyed by no member of the community, had the law left banking on the same footing with other mercantile pursuits. As a monopoly, then—as a system which grants exclusive privileges—which is at variance with the great fundamental doctrine of democracy—we must oppose Bank incorporations, unless it can be shown that they are productive of good which greatly counterbalances the evil.”
-William Leggett, Democratick Editorials: Essays in Jacksonian Political Economy [1834]
“The peaceful and honest mortgagors of farms and homesteads are not the ones who have gotten up this political agitation. The jobbers, speculators, and boom-promoters have been one of the curses of this country from the earliest colonial days. They are men of the “hustling” type, jobbing in politics with one hand and in land or town lots with the other. It is they who, at the worst periods of financial trouble in our history, have always appeared in the lobby, eager for “relief,” declaiming about the “people,” the “money power,” the “banks,” “England,” etc. They have always favored schemes for fraudulent banks, or paper money, or state subsidies, or other plans by which they could unload on the state or on their creditors. Just now it is silver, because silver has fallen within twenty-five years so much that it is what is called “cheap money.” This type of men have always used a dialect, part of which is quoted above, which is so well marked that it suffices to identify them. The history of financial distress in this country is full of it. No scheme which has ever been devised by them has ever made a collapsed boom go up again. With very few exceptions, they have, on account of such expedients, only floundered deeper in the mire. The exceptions have been those who have succeeded in making the state provide them with capital, although by no means all of these have been hard-headed enough to use it to “get out.” Generally they believe in themselves and their schemes, and use new capital only to plunge in again still deeper.”
“We hear fierce denunciations of what is called the “money power.” It is spoken of as mighty, demoniacal, dangerous, and schemes are proposed for mastering it which are futile and ridiculous, if it is what it is said to be. Every one of these schemes only opens chances for money-jobbers and financial wreckers to operate upon brokerages and differences while making legitimate finance hazardous and expensive, thereby adding to the cost of commercial operations. The parasites on the industrial system flourish whenever the system is complicated. Confusion, disorder, irregularity, uncertainty are the conditions of their growth. The surest means to kill them is to make the currency absolutely simple and absolutely sound. Is it not childish for simple, honest people to set up a currency system which is full of subtleties and mysteries, and then to suppose that they, and not the men of craft and guile, will get the profits of it?”
– William Graham Sumner, The Forgotten Man and Other Essays [1876]
September 22nd, 2009 at 3:35 pm
To paraphrase Chico Esquela “Benanke bine berry berry good to me”
September 22nd, 2009 at 3:43 pm
Maybe the banks moved up the bonuses for the same reason Thain moved up the ML bonuses from 1/1/09 to 12/31/08
September 22nd, 2009 at 4:10 pm
Probably to discourage people from jumping ship to a safer “offer” since the economy is apparently turning around. Also apparently heard, that JPM didn’t even do fall recruiting, only hired summers for Investment Banking post MBA positions.
September 22nd, 2009 at 4:36 pm
Transor,
I hear you, re: U.C.C., my understanding of it is similiar to yours, though, w?this:
“…have entirely circumvented the U.S. Constitution, and have overlaid federal territorial jurisdiction on the sovereign States, bringing them under the admiralty/military jurisdiction of Law Merchant, the Uniform Commercial Code (UCC), the law of Creditors and Debtors.”
the Author is, seemingly, fingering: “admiralty/military jurisdiction of Law Merchant” as well/distrinct from (?)
also, were you aware of the Civil Flag? and, do you concur with Author’s take on the Flag’s (Horizontal or Vertical Stripe) signaling of Jurisdiction?
September 22nd, 2009 at 8:41 pm
In most businesses the first payment received is a salary cheque after a month. In most businesses, when you make money for the shareholders you don’t expect a direct share of the proceeds. So why has the bonus culture in banking developed this way and why have shareholders been so passive?
These “geniuses” have made billions in bonuses firstly by derfauding everyone through shadey securitisation and now through a gratuitously steep yield curve. It truly takes a real genius to make money via borrowing for nothing and then deposit it back with the Treasury. Then expect a huge bonus.
These guys are truly living in cloud cuckoo land and it SHOULD BE the responsibility of the Boards and Shareholders of PUBLIC Companies to get it back in line. Of course, Corporate Governance is just as corrupt and broken as Government itself.
September 22nd, 2009 at 9:45 pm
“…Corporate Governance is just as corrupt and broken as Government itself.”
I think that even within the past decade I could have agreed with this to some degree but not any longer: Corporate governance is making federal and state government, the much maligned ‘public sector’ as it were, look not bad at all by comparison.
September 22nd, 2009 at 9:59 pm
Where are banks getting this largesse when so many of them were teetering on death’s door only a year ago? The NY Times had an article today on how banks are going to lend money to the FDIC (!), but was rather silent on their funding sources . Here’s a big part of the answer: The banks are making tens of billions of dollars in fees on mortgage loans that are backed by the government (read: we taxpayers). Three big banks, Wells Fargo, Bank of America, and Chase, earned $14 billion in the first half of the year, up more than threefold from $4.1 billion in the year-earlier period from these fees alone.
Here’s an idea: Let’s cut out the middleman. Get the government aggressively involved in modifying the toxic residential loans like Marty Feldstein suggested in WSJ months back. Force the banks to mark their toxic residential and commercial loans to market. By MBA’s measure (hat tip to Ritholtz), almost 1 in 10 residential loans is currently delinquent. Marking these toxic assets to market is a lot like bombing Iran: it is a horrible scenario, but waiting for things to somehow get better is a fool’s errand.
http://multifamilyinvestor.com/youll-never-believe-whos-lending-to-the-fdic/
September 23rd, 2009 at 2:36 pm
“Marking these toxic assets to market is a lot like bombing Iran”
Sorry, but what a horrid analogy. The fear of Iran is being used to prop up the war on terror, subsequent war profiteering, and Israeli expansionism. They are no threat to us, just like Iraq wasn’t.
If you want to include Iran in an analogy, base it around extortion.
You could say the debate over bombing Iran (If we don’t bomb them we’re going to get nuked) parallels the bankers saying if we don’t throw trillions of dollars at them then the world economy will collapse. Or if we don’t allow them to have a year-end bonus equal to that of a hundred middle-class lifetimes then they are going to leave to go to another fraudulent bank (oh, the horror?).
None of those are true, but in each we allowing fear to control our actions, or at least to justify the actions of those we allow to be in power, and to counterproductive ends. We shouldn’t of bailed out any of those f***ers, just like we shouldn’t of launched wars against foreign countries based on the word of some paranoid old Nixonites who lost their marbles from endless wargaming during the Cold War.
Collectively, we (or at the very least our leaders) are being stupid, ignorant, and immoral, and we deserve the future that looks to be in store for us. Nothing revelatory, I know, but I had to vent a bit. I will feel better when we bring back the tar n feathers for some of these people, mostly the bankers. Parasites.