Its time for the quarterly hand-wringing amongst the populace regarding the over-sized bonuses at Goldman Sachs. This Q, its a mere $23B.

The focus on the bonuses of top performing traders and investment bankers is misplaced. There are many, many things to be upset about regarding the financial sector — but bonuses are not one of them. [BR: Or, at least not the most important thing to be enraged over]

We live in a capitalist system, where there are going to be winners and losers. Its not fair, but it is how it is.  You can complain about it, but it is all but pointless. Feel free to pursue a millionaire’s tax of 1% (or 10%) on everyone who earns more than $1m — a super top tier — to pay for health care reform or whatever you want. (Best of luck with that!)

Every few years, we lament overpaid athletes, musicians, movie stars. Bruce Springsteen is going to make $100 million+ this year on tour. While you can complain about it, ask yourself how many people can fill 50,000 seat arenas 200 night a year at $100 a pop. Lebron James, Peyton Manning, and others justify their salaries by generating massive revenue and profits for their employers.

So too it is with Goldman Sachs and others.

The traders who throw off the most profits, the bankers that generate the most lucrative deals are worth tens of millions to their “team owners.” That is how it is, and it is unlikely to ever change.

What should you be upset about?

• Paying people in year one for risks that last years or decades;

• The “privatized gains, socialized losses” of the current system;

• Dramatically reduced competition in the Banking sector;

• The idea that “Too Big To Fail” is now an official policy of the United States;

• The “gifting” of $100s of billions of dollars to mismanaged banks that should have been allowed to fail in a controlled fashion;

• Bank lobbyists preventing any sort of credible regulation from passing;

• Goldman Sachs wresting $19 billion from AIG;

• The absurd and poorly thought out $750 billion TARP plan;

• The suspension of mark-to-market allowing banks to hide losses and not accurately disclose their bad assets;

• The outsized influence Banks have on Congress and Goldman Sachs has within the Executive branch.

There are plenty of things to be upset about these days. Top performers earning huge paydays at the biggest firms is not one of them . . .

>

Previously:
Looking at Wall Street Pay (August 1st, 2009)

http://www.ritholtz.com/blog/2009/08/looking-at-wall-street-pay/

Why Financial Reform Died: “Banks Run Congress” (October 12th, 2009)

http://www.ritholtz.com/blog/2009/10/why-financial-reform-died-banks-run-congress/

What’s Wrong With Billionaire Fund Managers? (April 16th, 2008)

http://www.ritholtz.com/blog/2008/04/whats-wrong-with-billionaire-fund-managers/

Single Best Investment in History = 258,449% (October 12th, 2009)

http://www.ritholtz.com/blog/2009/10/single-best-investment-in-history-258449/

Derivatives Lobby Corrupts Congress (October 12th, 2009)

http://www.ritholtz.com/blog/2009/10/derivatives-lobby-corrupts-congress/

Total Campaign Contributions/Lobbying by TARP Recipients (October 12th, 2009)

http://www.ritholtz.com/blog/2009/10/total-campaign-contributions/

Top Hedge Fund Earners (March 25th, 2009)

http://www.ritholtz.com/blog/2009/03/top-hedge-fund-earners/

Category: Bailouts, Wages & Income

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

159 Responses to “Much Ado About Nothing $23B: Goldman Sachs Bonus”

  1. Bruce in Tn says:

    In the Carter days, Barry, the top tier was taxed at 70%…even though the deductions of that era are gone, Harry and I think this marginal tax rate reinstituted today would be only fair.

    B in T

    ~~~

    BR: I don’t have a problem with a super top tax rate.

  2. SINGER says:

    To the extent that these GS bonuses are directly related to the items you listed as things to get upset about, I disagree.

    This is the question: Would theses $23B in GS bonuses exist to be paid if:

    1) No TARP;

    2) No bailout of AIG counterparties;

    3) No influential GS lobby in Congress;

    4) No gifting of hundreds of billions by governments to TBTF’s;

    5) No obscene influence and conflict ridden relationships b/w GS and the Executive branch (Treasury);

    6) Future risks of the bonus worthy performance had to be taken into account????

    If the answer is that these $23 B in GS bonuses would exist even without the above, then I agree we shouldn’t be mad at the bonuses.

    ~~~

    BR: I am trying to separate out the foolish actions that caused the crisis, and were the bad decisions in response to it, versus regular bonuses paid to profitible employeess.

  3. Bruce in Tn says:

    By the way, Harry and I went out last night to see a magic act. It was pretty good. The final act though was the best by far. They put a guy flat on his back, and then the magician came out and waved his wand, and the man floated in the air for several minutes. Harry and I talked about that after we left the performance.

    “Did you see how that magician levitated that guy! Wow, that was some magic!” Harry said.

    I replied,” Harry, that was just a trick, he had a forklift behind the stage that fits under the fellow that is being levitated, there is no real magic there…”

    “No, I saw it with my own eyes. The guy was flat on the ground, and then he was floating in the air. I would have known if there was something unreal about it all.” Harry was adamant.

    “Well, ok, I guess we’ll just have to disagree. But I did enjoy the performance. Say, what are you going to do with that raise you got with your stimulus money?”

    “They’ve been advertising those Chia Obamas on TV. I’ve got to have one….”

    …..OH, well..

  4. Note that AIG is a different situation than GS, JPM, etc.

  5. HCF says:

    I have NO problem with bank bonuses whatsoever….

    However, I do have a problem that the very survival and profitability of the banks has been primarily driven by the largess of the government, and by proxy, the American taxpayer. Rather than lend freely at a PENALTY rate, the central bankers have chosen to lend freely to banks a ZERO rate. Give me trillions at 0% and even I could find something to do with it that would earn a $23B bonus!

    HCF

    ~~~

    BR: So what do we do about it ?

  6. Yet another thing to think about: the terrible deals cut by Paulson/Bernanke/Bush in lieu of bankruptcy…

  7. wunsacon says:

    Barry, after all you’ve written about and know about the crisis, what have you to say in response to Singer?

    I’m surprised by your post.

  8. Mike in Nola says:

    Agree with Singer. To the extent that the bonuses were generated with direct or indirect government support, we should be upset.

  9. spoonman says:

    Good post, Barry. Also, aren’t much of the bonuses paid out as stock that vests sometime in the future? If that’s the case(I’m not sure) then traders have a huge incentive not to blow up their company(at least until they can access their stock). What kills me is not that they get paid so much, but that they are government “supported”(or whatever their relationship is – bailed out, sponsored, etc). The capitalism for gains, socialism for losses is what is so aggravating…

  10. CuriousCreature says:

    @BR

    SINGER is dead on. The inquiry that I would like to see is how much GS contributed to the downfall of Lehman and Bear.

    This kind of rock star pay leads the best and brightest to believe that they are the masters of the universe. Their clever financial products nearly caused the collapse of our entire financial system. You may want their autograph. I want them to find another line of work.

    Curious

    ~~~

    BR: I am not referring to the AIG FP people, or the JPM derivatives creators — but the rank and file traders bankers who do their jobs and make money for their employers.

  11. David Yaseen says:

    Barry, is there a reason the traders need to make exactly this much money? Was there an open auction of their talents (that somehow escaped my attention) where their compensation levels were set? If so, did the other bidders have all the relevant information regarding their performance, as they have in the NBA/NFL/NHL? Would $1m either way have any effect on performance? $10m? Any idea how GS (and others) decide how to compensate back-office and other employees who don’t directly produce the returns? Is there some formula that dictates exactly how much the employees should get relative to the account holders and share owners whose money they used to generate these returns? Does anyone have any idea what proportion of the bonuses are paid for employees’ loyalty rather than performance?

    I’m not against bonuses in principle, but absent transparency, IB compensation looks an awful lot like pure self-dealing with other people’s money.

    ~~~

    BR: Reason? No.

    Its a math formula that reflects their revenue and profits.

  12. austincompany says:

    I don’t have a problem with bonuses per se, only with the extreme amounts. One has to ask, at what point does a bonus become “obscene”? Especially in a very, very weak economy. A better suggestion might be deferred bonuses, and/or stock grants/options.

    It is foolish of any company to think that they are an “island” in the capitalist sea and while all of those around them are drowning, they have wine and cheese. It’s just bad business to give such large bonuses now while the economy is in the tank. Looks bad. And I think most “common people” would agree.

  13. Boo-urns says:

    Barry,

    what about the argument that the bonus culture, as currently constructed, leads bankers/traders/etc. to take outsized risks, with the incentives all aligned towards the immediate profits that can be posted, and with no regard whatsoever for the long-term consequences of these actions? Can you really claim that the bonus structure had no bearing whatsoever on bank managers loading up on crap MBS and CDO during this last cycle?

    and in this era of TBTF, the bonus issue isn’t simply a shareholder issue (although that might be enough justification, given that corporate governance is essentially defined by legal standards), it’s also a taxpayer issue.

    to posit a highly imaginative hypothetical, supposed that these Goldman profits were entirely the result of short-term profits booked on longer-term, high variance risk. if Goldman were to go under as a result of this risk, it seems pretty well established that we the taxpayers would step in and bail them out. so why aren’t their bonuses, which as the major portion of salary for most Wall Street bankers are the largest driver of behavior, of concern to us again? particularly when we are the ones who will bear the costs?

    ~~~

    BR: As I specifically noted above, “Paying people in year one for risks that last years or decades” is something that is both foolish and worthy of your anger.

  14. danm says:

    There are plenty of things to be upset about these days. Top performers earning huge paydays at the biggest firms is not one of them
    ———–
    Springstein is filling the arenas because people want to see him. The bankers are getting their friggin’ bonuses because of ALL the reasons you mention and not because people want to see them.

    It’s interesting how you can rationalize some stuff. Why bother blaming people for the credit bubble then? Isn’t life just unfair and what we got the natural evolution of laissez-faire?

    Bankers have 2 jobs: create leverage which is dictated by regulatory ratios and allocate capital efficiently. The first one is a commodity. The second one is a skill. But they’ve shown us that they have no skill whatsoever in allocating captial properly. So why should they get their bonuses?

    ~~~

    BR: Not all of them. We have to distinguish between the few people that brought the system down and the rank and file wall st employees that did not.

  15. Look at Citi dumping Phibro — that’s $600M in revs lost, becuase people were upset the person who generated those revs was paid $100M bonus as per K.

    We as taxpayers own a huge chunk of C …

  16. HEHEHE says:

    Capitalism? Are you kidding me? Crony capitalism perhaps but definately not capitalism!!!

    Barry they can pay out these bonuses when they take all the cr*p they dumped on the FED back onto their balance sheets. If they did that there’d be no bonuses because there’s be no profit from which to pay any bonuses; half of the banks wouldn’t even exist.

  17. cvienne says:

    @BR

    I was getting prepared to type almost exactly what SINGER wrote…

    I’ll add to that that it is disingenuous to group athletes, or pop artists in the same category…

    Sure, Peyton Manning & LeBron James earn their teams (and leagues) millions, but the last I checked the NFL, the NBA, the Indianapolis Colts, or the Cleveland Cavaliers weren’t coming to the US taxpayer and asking for a bailout…

    When the banks can stand on their own and produce profits to pay bonuses, then they’re entitled to do what they wish…

    I know this is an oversimplification, but I resent the idea of being taxed into future generations, so that capital can flow to the banks, allowing some “trader” to bid up the price of oil from $35 to $75 dollars a barrel, and collect a $100 million dollar bonus doing it…

    I’d prefer, even at the cost of enduring PAIN along the way, to let deflationary forces set in. From the ashes of that, what REAL capital that remains will find a way towards more productive ends.

    ~~~

    BR: Actually, the sport teams have huge subsidies in terms of Stadiums that cost Municipalities billions to build. And do you want to discuss anti-trust exemptions for them?

  18. danm says:

    Look at Citi dumping Phibro — that’s $600M in revs lost, becuase people were upset the person who generated those revs was paid $100M bonus as per K.

    We as taxpayers own a huge chunk of C …
    ——————
    Yes. And all this fast money is what got us in the bloody mess we’re in­. A lot of these dealings are integral to the credit bubble. No credit bubble no hundreds of millions per individual.

    Barry, you complain about the creators of the credit bubble but you have no qualms about those using the money supply created to line their pockets.

    We’ve created a layer on top of the real economy that does not produce anything and just skims the profits. This layer works fine as long as credit is being created at a fast rate. We know that debt creation forces us to create even more debt just to cover interest payments. A lot of this debt has not been created to generate productive businesses, it’s financial manipulation.

  19. ItalicBold says:

    “Its not fair, but it is how it is.” – If they ever start clawing back/intervening in this area, remember these words.

    People wouldn’t be so up in arms about this if there was performance to back it up. At the moment it feels like these people are not only being rewarded excessively but they are being done so for raping America.

    I fully agree it is used as a distraction and there are bigger issues, but I will be no more surprised by the govt intervening than I am about the bonuses themselves. The bottom line is we live in a rather broken and unfair system and the system as a whole needs to be fixed.

    ~~~

    BR: I am in favor of clawbacks !

  20. b_thunder says:

    Do we really “live in a capitalist system, where there are going to be winners and losers”? We supposed to be, but where are those losers? Fuld and Cayne? Puh-leeezeeee, they’re multimillionaires! I guess life’s a b***ch when you have to get rid og G5 and fly on a 2nd hand G4?

    The problem with $23B (B as in Billion) bonus pool is $23T (T as in Trillion) that The Fed, FDIC and the Treasury reportedly pledged to “support the system.” Not to mention that the “backstopping” also created those mega-winners – GS, JPM, and the PPIP partners. All at the public’s (and smaller banks’) expense.

  21. cvienne says:

    @BR

    But I do understand your defense of the “bonus babies”. After all, I wouldn’t want to be “odd man out” at the cocktail parties at the East Egg Marina Club…

    ~~~

    BR: I already am!

    Its pretty ironic that after I have spent years trashing the Wall Street execs who caused this mess, no one else seems willing to defend the legitimate rank and file workers who were profitable and risk aware and didn’t cause the problem.

    AIG had 86,000 employees, their FP division that killed the firm had just 400. Lehman had 25,000 employees, Bear Stearns had 16,000; The vast majority of these workers — my guess is something in excess of 95% — had nothing whatsoever to do with the collapse.

  22. DM RTA says:

    The system is built to reward success but what kind? This discussion, ultimately, is about how to regulate the assumption of long term risks. I am no fan of regulation but if “Too big to fail” must exist(right now), then better regulation must too. Why not just go there since we expect Congress to do it and, obviously, they are not. They need to be led to the idea.
    There’s got to be a good example from the past that modeled proper balancing of now and later incentives, no? And if not then that only makes the construction of new ideas to delay risk based reward more pressing.

  23. Rikky says:

    Lebron earning his money is one thing. GS getting paid by being not only saved when they would’ve surely went under but also given an unfair advantage by borrowing for free from their friends in the government is a completely different story. The game is rigged and you question why there’s anger over these payouts? The bonuses should be determined at the corporate level then some very large % should be given to the taxpayer for his ‘investment’ in this firm. Remember the investors always get paid first and with much of the pile before the workers.

  24. aupanner says:

    how are these bonuses unlike the first point you suggest we fret over: “Paying people in year one for risks that last years or decades” ?

    ~~~

    BR: Traders on desks run mark-to-market in stocks, bonds, options, etc. The risks are very different than the AIG CDS junk

  25. wally says:

    “Top performers earning huge paydays at the biggest firms is not one of them . . .”

    I know you’re just trolling here, but perhaps you should look up the meaning of the word “earning” as applied to somebody who was given a truck full of free money. My money, your money… everybody’s money.

  26. robertso2020 says:

    Please don’t compare a trader or banker from a bailed out bank to The Boss, a Pro Athlete or Movie Star. Yes, many think they too are overpaid but at least you have an option of paying with your feet. At least stadium funding comes down to a public vote. You discredit yourself when you defend record bonuses at bailed out financial institutions year one after a mini depression. At the minimum banks should have to give back the free carry trade money (ok…left field I know…but I didn’t get to borrow at zero this year).

    With that said Americans typically do not condemn the likes of a Bill Gates or Sergey Brin for making boatloads of money. They are what the general populous consider true risk takers.

  27. In case you were all wondering where fall went GS took that over too

  28. m111ark says:

    You’ve muffed this one Barry. But I’m not surprised, one wall st. prowler NOT upset by the ill-gotten gains of other wall st. rapist – but you should be. The fine line dividing civilized behavior from mob reaction is too, too thin. This is the kind of thing that stretches it even more. The black swans are circling attracted more black swans, don’t be anywhere near wall st. when the next one lands.

    ~~~

    BR: There are shades of gray that too many people are missing. Wall Street is not a wholly illegal, illegitimate business.

    There are ill-gotten gains that I have railed against, and legitimate monies earned. Stop lumping the criminal and the incompetent with highly compensated, profitable employees.

  29. KidDynamite says:

    dead on Barry. I am well aware that SINGER”S points above are very common concerns, mainly “but if we, the people, hadn’t given AIG money to funnel through to Goldman, they wouldn’t be able to pay those bonuses”

    yeah – and??? BE MAD AT THE PEOPLE WHO CONSTRUCTED THAT ILL CONCEIVED BAILOUT!!!! that is the whole point… don’t hate the player – hate the game. GS’s job is to make money and get paid. they are good at it. They had contracts with AIG. the government gave AIG money so that it could make good on its liabilities – and that makes you hate GS?!?!?! hate Paulson… Bernanke… Geithner… Barney Franks…Bush… OBama… the guys who GAVE the money out without any foresight as to potential problems and consequences.

  30. bsneath says:

    Barry – Aren’t we overlooking what is perhaps the greatest risk of concentrated accumulation of wealth? That is the corresponding decline in incomes and wealth in the middle/working classes and their inability to sustain consumption and growth of our economy. (Declining incomes now coupled with contracting debt levels.)

    This was taught to me as one of the causes of the great depression. It seems to be overlooked in the present day circumstances. My suspicion as to why is because it is the same liberal class that should be raising this issue that instead is benefiting economically from the current status quo. Less a statement of hypocrisy than an observation on human nature.

    The consequences may very well be that the greed of the wealthy class will ultimately result in the demise of the very systems that has perpetuated their wealth. However, even if they were to recognize this, they are incapable of pursuing any path other than the continuation of their greedy behavior.

    Just some thoughts to ponder.

    ~~~

    BR: That is a very different argument, and we are then talking about Bill Gates and Warren Buffett and George Soros and Steve Jobs . . . .

  31. KidDynamite says:

    oh – and another thing that I just realized i’m very very mad about – the BofA forced purchase of MER… someone should go to jail – i’m not quite sure who – I keep thinking it’s Ken Lewis for his complete screwing of his own shareholders. The quote from this morning’s NYT article between boardmember emails was ““Unfortunately it’s screw the shareholders!!” ” (http://www.nytimes.com/2009/10/14/business/14bank.html)… and in light of last week’s Vanity Fair excerpt from Sorkin’s book where he illustrates the negotiations to save MS and GS, we saw that real CEO’s actually said “NO” when Geithner called Dimon and said “you have to buy MS”… “NO” said Dimon – I can’t….

  32. bsneath says:

    Really bad grammar above. Note to self: need more coffee before I write.

  33. jayblonde says:

    “Top performers earning huge paydays at the biggest firms is not one of [the things to be upset about]…”

    Top performers generating millions for their firms do deserve their share of profits.

    But what is an appropriate share? 1 million? 10 millions? 50 millions? 1%? 10%? 50%?

    You could say: Nobody knows, so let the market decide.

    Unfortunately, the market rather resembles an oligarchy with its own standard of relative wealth (when you talk about millions, only relative wealth counts).

    As an example, the ratio of CEO to worker pay has increased from 24:1 in 1965 to around 300:1 in recent years. Have CEOs increased their skills 12 times compared to average workers? Didn’t workers also have to adapt to computerization and internationalization?

    Or is it rather a race upwards between a small (admittedly highly skilled) group of people that has lost touch with the life and incomes of society in general?

  34. Mannwich says:

    The mere fact this this firm wouldn’t even exist without the generous support of we the taxpayer is enough to make me upset about anything Goldman does. I realize that you work in the biz, Barry, and can’t hammer everyone and everything in it, but please, we all know this firm would be done for without gov’t support. The mere fact that we have to listen to just how brilliant these fuckers were/are when all along they only exist because of gov’t support is enough to get any thinking person a bit irritated.

    ~~~

    BR: I have pretty much burned every bridge there is to burn in the industry — it has nothing to do with that. I am less sure that GS would have disappeared, as opposed to Citi and BofA, who were toast.

  35. dawase says:

    I think Singer has it right. Normally, I wouldn’t join the chorus of “I agree”s, but this is too big an issue.

    And frankly, BR, you’re too smart for this completely bullshit post. At the end of the day, GS is paying out a taxpayer-sponsored bonus pool.

    One thing you left out – The complete abrogation of liquidation preferences. Why have bankruptcy laws if the government can rewrite them at will?

    ~~~

    BR: I agree that AIG should have been liquidated and GS disgorged their ill gotten $19b.

    But that is very different from saying the performers who generate revs/profits should not get their bonuses.

  36. Mannwich says:

    I agree with danm. Barry – why bother hammering this culture when you rationalize some things in it and not others? I realize that you’re trying to be a pragmatist but part of me thinks you do this just to fire up the minions here at TBP a bit so you can look like the “good guy” in the process, when in reality you’re just part of the machine on Wall Street that is killing this country .

    ~~~

    BR: I am part of the machine. But I try to be objective and honest and critical and pragmatic about what I see. (Its a niche abandoned long ago by the big firms).

    So far, I have seen arguments in this thread that there should be no Wall Street or Capital markets or incentive pay or profit sharing or concentration of wealth or millionaires.

    Please make an objective assessment as to how to implement any of these ideas.

  37. Mannwich says:

    @cvienne: Not to be picky, but there are PLENTY of taxpayer subsidies and their implicit monopolies in professional and big-time college sports. Tax paying suckers get duped into funding stadiums for all these wealthy entities and that subisides indirectly affects (pushes up prices) for everything else related to those entities, including players’ salaries. Without taxpayer subsidies for stadiums, the owners would have to find a way to pay for these money-losing boondoggles themselves and most wouldn’t do it. This would result in lower salaries for everyone else.

  38. HarryWanger says:

    I have no problem with the best in the game getting bonuses they deserve. I think what we see is a lot of jealousy from those who try to defend capitalism but then hate to see it in action. They cry that Obama is making a socialist state yet when true capitalism is on display they balk.

    I’ve been indicating to people for quite some time to share in the wealth by buying into the market. We are undoubtedly and inarguably in a mini economic boom. Look at the incredible results being posted by INTC, JPM. If these guys can navigate such rough waters and come out big winners, there employees deserve whatever bonuses they deem necessary.

  39. cvienne says:

    @Mannwich

    At least the local citizens get a VOTE on whether or not to subsidize a stadium…

    ~~~

    BR: Not always !

  40. contrabandista13 says:

    It’s kind of like back in the late seventies and early eighties, the kids would jump into bed with me on Saturday morning and we would tune the TV to championship wrestling and watch the choreographed matches of Good vs. Evil. That’s all business, politics and the media are in this country today, just one big championship wrestling pulling on your emotional strings…

    GS is what…. The Iron Sheik….? and….. Tim Geithner is who…. “FROM FLATBUSH AVENUE IN BROOKLYN NEW YORK…! THE PRETTY BOY….! GINO DE PASQUALE…!” Who jumps into the ring with the enthusiastic applause of the spectators, and immediately, to the shock and astonishment of the crowd and my daughters sitting in bed next to me, gets his ass stomped into the ground by the Iron Sheik.

    Now, that’s entertainment…

    Best regards,

    Econolicious

  41. Rikky says:

    >>At least the local citizens get a VOTE on whether or not to subsidize a stadium…

    not necessarily true. look at yankees stadium. bloomberg came up with the plan and did what he wanted. there are some very nice subsidies in the package for the yankees. but hey it’s good for NY and good for baseball!

  42. Mannwich says:

    @cvienne: Most folks do (and are too emotional and stupid about it when they do vote, not realizing they’re rooting for laundry anyway nowadays), but here in Minny, they find a loophile to ram through the Twins new ballpark WITHOUT our vote even though we denizens of Hennepin County are paying for it. Me-thinks that’s “taxation without representation”, no? Don’t get me wrong, I’m glad the Twins will play in a real baseball park outside (during the summer months), but I didn’t even get to vote. The owner here is a billionaire and could have paid for the whole thing. Instead, they’re paying almost half. To add insult to injury, they were too cheap to pay for a retractable roof, so games in April and October are going to be a joke, if they even play them at all.

  43. atswimtwobirds says:

    We need a financial transaction tax (tobin tax) to redirect to redirect the energies of creative smart people like our host(and GS traders) away from financial speculation to more productive parts of the economy.

  44. LeeX says:

    I don’t know exactly how they “earned” (or scammed) that much money, and I don’t care. These people are a cancer on society. Here in the boonies where the peasants live, you know, the folks who make real stuff like food and machinery – we are struggling to get by on a few crumbs. What in the world is happening to this country? The predators on Wall Street make ginormous money while ordinary people are trying to avoid financial calamity every day, and too often losing that fight.

    ~~~

    BR: Hence, the basis of our disagreement.

    Like your iPod? It is courtesy of capital markets that Apple raised cash, went public etc. Google, Cisco, Yahoo, etc the same.

    Try not to paint with too broad a brush. Distinguish between legitimate business in capital markets and the scammers, criminals,thieves and dirtbags.

  45. Marcus Aurelius says:

    Nothing is immoral, unethical, or obscene to a person with no conscience or compunction. That’s why we have laws.

    We all understand that criminality, in the form of fraud, committed specifically by “the banks” in league with “our government” (by both commission and omission, and at all levels) was what led to our current dire situation. That the money has been laundered and blessed by having passed through the corporate non-entity before being distributed among the participants in the underlying crimes is little consolation to those who have been robbed.

    The most telling and basic analysis of why such large bonuses are wrong, dangerous, and repugnant in the extreme is to observe that there are enriched “financial services” insiders on one side of the equation and defrauded (and increasingly destitute) investors and taxpayers on the other — with no net benefit or improvement in production levels or capacities, incomes, or balance sheets to be found.

    We have witnessed (as one would witness a crime) the largest illegitimate transfer of wealth in history. That wealth went from the many to the few in a very complex and entangled scheme involving new “financial products,” dishonest ratings, and tortured accounting principles. All guarded by the corporate veil and supported by the corporatist government structure (a silent coup, indeed).

    The sad thing is that we know what happened and we are watching it continue. No SEC or FBI investigations? No indictments under the RICO act?

    Under legitimate government, we would let the bonuses be passed out and begin the RICO investigations starting with the recipients and following the money backwards. I don’t think you’d have to dig very deep before you hit your first crime.

  46. Andy T says:

    Ridiculous post BR. Singer absolutely nailed it.

    Additionally, the banksters are the very first people to receive the Dollars from the FedRes. They are given the cheap access to unlimited funding now. So, it’s not like these hot shit traders are operating on a level playing field of any kind.

    That said, GS does have some excellent prop traders who can make money from nothing. They deserve some bucks. But, how much money should the Phibro guy get? He was using money from the taxpayers to lock in huge “cash and carry” trades when the oil market was severely contangoed. Any monkey could have made the $$s with those assets and, more importantly, the cheap cash!

  47. Mannwich says:

    And on cue over at Naked Capitalism…….I read the William Black article yesterday as well. A very thoughtful piece.

    http://www.nakedcapitalism.com/2009/10/does-banking-contribute-to-the-good-of-society.html

  48. jdmckay says:

    The focus on the bonuses of top performing traders and investment bankers is misplaced. There are many, many things to be upset about regarding the financial sector — but bonuses are not one of them.

    Couldn’t disagree more.

    Especially at GS… there is very little real value added by these crooks: trading gains based on opportunistic electronic sophistication is one thing in a healthy economy. But these guys were at the core of everything that crippled US economy, and the same methods/practices continue in spades.

    I would go back to your articles around election time citing ideas like a Manhattan Project for economics and such, and compare that to the rolling-the-dice strategy Obama has carried over from Bush.

    GS is at the heart of that… a cancer AFAIC.

    We live in a capitalist system, where there are going to be winners and losers. Its not fair, but it is how it is.

    Sheesh… it’s a corporate welfare system w/a CAPITALISM sign hanging out front. This thing has degenerated into reap the spoils, take what you can get, and the hell w/identifying real underlying value, much less badly needed economic initiatives which CAPITALISM has entirely ignored and demonized.

    Love your blog, get a lot of great info here. But you sure miss the boat on this one Barry… seemingly ignoring everything you wrote on circumstances and practices that got us here.

  49. Mannwich says:

    If one ultimately connects ONE too many dots, one may not ultimately like where those dots lead………

  50. Marcus Aurelius says:

    “Sheesh… it’s a corporate welfare system w/a CAPITALISM sign hanging out front.”
    ______

    Ha!

  51. SINGER says:

    As a general proposition, I am all for bonuses. I think the issue here is not so much the bonuses, in and of themselves.

    If I worked at GS I probably would take the bonus money offered to me as an aspect of my contractually agreed upon compensation package, even in the current circumstances.

    I think the real issue is the disdain that has built up, and rightly so, over the cozy relationship between: current government officials (judicial, legislative, and executive), former government officials, and current and former employees/partners/etc. of the major investment firms. This is what rubs people the wrong way.

    The distinction between the public and private sector has become blurred and the common factor between both is that neither is looking out for the taxpayers, (why we pay taxes like we do is another issue), and/or the common man/society.

    Not only that, but all this bailout money, etc. might be justifiable if it were really being used to innovate in an entrepreneurial and productive way, but alas, it appears not to be.

    Basically, people made bets that made short term money, got paid bonuses for that, those bets went south, the government/taxpayer stepped in and replenished their funds, they made more bets, which are now profitable in the short term and they, again, collect bonuses for those bets.

    Another part of the disdain is an inevitable jealousy, which although common among normal people toward those with high levels of success and wealth, is distinguishable with regards to sports/music figures and the likes of GS.

    I know that whatever I do, at this point, I will never be Peyton Manning, Lebron or Springsteen, so I can respect their individual success without being too jealous.

    On the other hand, if the government handed me $10 million at 0% and let me trade any market, I believe I could make a nice profit, after paying back my interest free loan. Therefore, because they, the ones with the cozy relationships to the government, get this boatload of cheap money to trade the markets with, and make sick money on a bounce that was pretty callable, and make huge bonuses because of that access to government money, that understandably engenders jealousy and ill will.

  52. rootless_cosmopolitan says:

    Harry Wanger,

    “I’ve been indicating to people for quite some time to share in the wealth by buying into the market. We are undoubtedly and inarguably in a mini economic boom.”

    This must be based on a new definition of “economic boom”. Latest data for retail sales: down. Latest data for business inventories: down. But the “economic boom” is “undoubtedly” and “inarguably” here. Bullying posture of Harry “knows it all” Wanger instead of arguments, analysis, and substance.

    “Look at the incredible results being posted by INTC, JPM.”

    Go ahead and buy Intel shares then, Harry. They have been doing really great for the last 10 years.

    rc

  53. carol7 says:

    Barry, I could not believe my eyes reading your post…, I was relieved by all but 1 commentator.

    like dawase says: I think Singer has it right. Normally, I wouldn’t join the chorus of “I agree”s, but this is too big an issue.

    The City example doesn´t cut it; it might have been + $ 600 million (well, $ 500 million after his $ 100 million bonus; why can he claim a hedge fund type salary, when on his own he could never get his hand on the money amounts to play with, like he did at City?), but how would it work out when he had hedged his bets for $200/bbl oil, like GS projected? The Phibro thing is a prime example of heads I win, tail you stupid taxpayer lose.

    KidDynamite: ¨that is the whole point… don’t hate the player – hate the game. GS’s job is to make money and get paid. they are good at it. They had contracts with AIG. the government gave AIG money so that it could make good on its liabilities – and that makes you hate GS¨

    ?????
    Without players no game, sorry Kid, but after you´ve grown up, you´ll realize that players and game go together. And if players are gaming the game, then we have all the right reasons to be very upset!
    You’re reasoning like that bullying schoolkid: ¨If that other kid had not let himself be bullied, I would not have done it¨, or that thief: ¨If they had locked the door, I would not have stolen¨.

    ¨GS’s job is to make money and get paid. they are good at it¨
    UTTER NONSENSE
    GS job is to EARN their living IN SOCIETY. They do not operate in a vacuum you know. There is ´collateral dammage´. Plus.., GS was so good at it, that their derivatives portfolio and other gambles were imploding in their faces September ´08.
    By the way, how much money would you have made, borrowing at 0%, riding the liquidity induced stock market rally, getting fees for selling loads of Treasuries (to pay for your bail-out), etc.?

    Barry, after having read the comments above and given this outrageous, paid-for-by-the-unwilling-taxpayers bonus issue some more thoughts, what´s your take now?

  54. Mannwich says:

    @carol7: I don’t think Barry cares. He’s “getting paid”. He’s “good at it”.

    ~~~

    BR: What I am getting paid for is intelligent insight…

  55. SteveC says:

    Barry, the people you list like Lebron James, Bruce Springsteen, or Tiger Woods are essentially sole proprietors. They are main attractions and true rainmakers. For the majority of bankers at GS, their success has more to do with the name GS on the top of their cards (along with their access to the US treasury), than actual skill. Doug Kass says there are very few real rainmakers in the business world, and I agree.

  56. Init4good says:

    Whatever percentage of those firms that are “owned” by “the government” (via TARP, TARP+, or bailout) – the same ratio should be used to determine the percentage of trading profits that should be “clawed back” to the taxpayer.

    If a firm is 75% owned by the gov’t then 75% of the trading profits should go back to the government.

    If an entity is totally 100% owned by equity or private debt – then they can keep 100% of their trading progfits.

    How’s that for an incentive to “get off the dole?”

  57. Init4good says:

    <>

    True

  58. Marcus Aurelius says:

    Singer:

    The whole sports figures/entertainers vs. the bankers analogy is bullshit. It’s like comparing Al Capone to Charlie Chaplain.

    Your comments on jealousy, especially your last paragraph, seem misplaced and a little logically twisted. True, you’ll never be a rock star, and you aren’t jealous of rock stars — yet you say that jealousy exists against the banking class because of their “success and wealth.” You then tie this “success and wealth” to insider connections and access to free money. So, it’s not the wealth, it’s how the wealth was obtained that irks people. By extension, it’s not jealousy you see, it’s anger. Bill Gates is a wealthy man, but no one is pointing a finger at him, ’cause he’s legit.

  59. Mannwich says:

    I have FAR more respect for the likes of Lebron James than I do Lord Blankfiend. One has real talent. I honestly don’t think most of our culture cares about what elite athletest or movie starts make. I hardly EVER hear that being discussed anymore by sports fans, whereas in prior years it was discussed all the time. I think most have accepted the fact that these folks have special talents that very people in the world have, so they’re OK with it for the most part.

    @MA: Great comparison. Spot on.

  60. blueoysterjoe says:

    What Singer said:

    “To the extent that these GS bonuses are directly related to the items you listed as things to get upset about, I disagree.”

    Yup. Let’s give them bonuses after we subtract all the largess they have extracted from the taxpayer due to their buddy buddy status with the White House.

  61. Daffyorbugs says:

    I want to be in the investment bankers union.

    Strongest union ever.

  62. Mannwich says:

    Try rationalizing Goldman’s bonuses to these people. It’s going to be a fun holiday season when all the garish numbers start trickling out.

    http://www.nytimes.com/2009/10/14/business/economy/14income.html

  63. KidDynamite says:

    wow BR – i’m surprised i’m the only one who agreed with your post!

    Carol – my point is that your anger is misplaced. The bailouts were a massive clusterf*ck initiated by Paulson, Bernanke, Bush, Frank etc etc… You cannot blame the recipients of the money for the lack of foresight of the idiots handing out the money. I completely agree that when money was given to the banks (and newly chartered banks, like GS) there should have been severe restrictions. but guess what – THERE WERE NOT! That’s the fault of the lawmakers – BLAME THEM. The whole process was sick from top to bottom, and was evidenced from the beginning that the government got significantly inferior terms for their investment when compared to private investors like Warren Buffet. but again – that’s not the fault of the recipients. It’s the fault of the lawmakers. Vote them out of office.

    ps – yes, i know GS has tremendous influence and connections within the government – so what – total strawman argument – VOTE THEM OUT if you don’t like it! That’s how America works.

  64. SINGER says:

    @MA

    I agree, it is anger, too… I think we need MEH to put up the definitions of anger and jealousy from that search engine he always quotes from…

    I was talking generally about how people have a tendency to be jealous of the successful and wealthy, from whatever field for whatever reason, whether it be a self-made oil billionaire, to a trust fund kid worth 100 million through no effort of their own. I was distinguishing that sort of general jealousy with that of the GS’ers and that ilk, who got help and dough from the govvie…

    I wasn’t really talking about “bankers”. There are people who have run hedge funds ,etc. and real traders at these major firms that have and continue to make money on their skills and merit. So my analogy isn’t Al Capone to Charlie Chaplin, cuz not every Wall Street player is Al Capone-esque or a criminal.

    BTW, didn’t Gates steal stuff from Apple and even “Warr Buff” was a Silver manipulator, upon information and belief, see the Martin Armstrong literature…

    Also, see my last line, “jealousy and ILL WILL” i.e., anger…

  65. Mannwich says:

    @KD: Because you and BR are IN the business. Don’t you get it? You can’t totally disavow things that go on in the industry because that would be too sobering to admit to yourself. You HAVE to drink SOME of the kool aid? I, on the other hand, stopped drinking the kool aide in ’06 and never went back, nor will I ever.

  66. SINGER says:

    @Kid Dyn

    How can I vote them out? All I could theoretically do is vote for my congressman and senator from NY. So I can’t vote them out. If everyone banded together, then there would be a chance.

    BTW, the GS’ers and the like have foreseen your logic, which is why the contribute mightily to the campaigns of those politicians. So while I and whoever is with me try to “vote them out” since “we don’t like it”, the GS’ers, et al. will be funding their being voted in…

  67. cvienne says:

    @KidDynamite

    While I see your premise (vis-a-vis “lawmakers”)

    Don’t forget that it was the banks themselves that shoveled the campaign contributions TO the lawmakers to get them to do their bidding in the first place…

    Therefore, it revolves back to THEM…

  68. cvienne says:

    Singer & I…

    Same concept… Same time stamp…

  69. Mannwich says:

    Voting is a waste of time and energy (and money for me this past election). I won’t make that mistake again.

  70. KidDynamite says:

    mannwich – see, the interesting thing is that i am no longer in the business. i’m not one of those hypocrites that wants low taxes for the rich when i’m one of them, and high taxes for the rich when i’m not one of them. but i don’t want to get off topic.

    SInger/Cvienne – it boggles my mind that you’re using the “but the lawmakers are bought and paid for” argument as one that renders you helpless. COME ON! Singer – 1) vote out your congressman from new york. That’s what you can do. That’s what i tried to do! Now i’m moving to New Hampshire (yeah! LIVE FREE OR DIE!) where my new senator is trying to end TARP funding. i will support him in that. 2) you have a blog/website/voice/intelligent demeanor. EDUCATE people – EXPLAIN to them how much the lawmakers fk’ed up – and how we need new rule (change we can believe in ! hehehhehe). 3) use the populist anger around Goldman Sachs to explain that it’s the policies of Barney Frank and the senate finance committee that made such largess possible – spread the word.

    you guys using the “banks get lawmakers to do their bidding for them” are proving my point: the problem isn’t the banks – IT”S THE LAWMAKERS!

  71. KidDynamite says:

    mannwich – with the comment that “voting is a waste of time” you are basically forfeiting any say you have in this or any other debate. if you don’t like the bonuses GS is paying and the money they are making, you can work to get that changed (regulations, Glass-Steagall, etc), by campaigning (to spread the word) and voting. if you don’t want to do that, well, then, I can’t think of a nicer way to say STFU! (And i mean that in the nicest way possible, really).

  72. SINGER says:

    Sorry, KD. No time. I got Giants, Yankees, and Rangers games to watch…

    Plus, saying the “it’s the lawmakers” is oversimplifying it. But yes, the lawmakers are part of the problem…

  73. Dennis says:

    How is it on our dime? They repaid the TARP in full

  74. [...] handwringing” about record-breaking Wall Street bonuses.  (WSJ also Big Picture, FT Alphaville, Rolfe [...]

  75. Lugnut says:

    Is it ok to be pissed about how their obnoxious wives flout their largess to the great unwashed?

    http://blogs.reuters.com/reuters-dealzone/2009/08/05/mixed-messages-from-goldmans-first-family/

  76. Transor Z says:

    I’d agree if this were true capitalism, but Barry you can’t decry TBTF bailouts and regulatory capture on the one hand and defend bonuses paid to incompetent/corrupt persons benefiting from that tilted playing field on the other. WTF?

    GS was insolvent last year and that should have been that.

  77. This is what I am upset about:

    • Paying people in year one for risks that last years or decades;

    • The “privatized gains, socialized losses” of the current system;

    • Dramatically reduced competition in the Banking sector;

    • The idea that “Too Big To Fail” is now an official policy of the United States;

    • The “gifting” of $100s of billions of dollars to mismanaged banks that should have been allowed to fail in a controlled fashion;

    • Bank lobbyists preventing any sort of credible regulation from passing;• Goldman Sachs wresting $19 billion from AIG;

    • The absurd and poorly thought out $750 billion TARP plan;

    • The suspension of mark-to-market allowing banks to hide losses and not accurately disclose their bad assets;

    • The outsized influence Banks have on Congress and Goldman Sachs has within the Executive branch.

    Bonuses paid to profitable employees who generate real revenue do not bother me.

  78. M says:

    “There are plenty of things to be upset about these days. Top performers earning huge paydays at the biggest firms is not one of them . . .”

    Hate to add a “me too” but really, BR, your post reeks of sophistry.

    Why, exactly, should tax payers be unconcerned that “top performers” (who’s standards of performance are undisclosed) are getting huge paydays working for the “biggest firms” (in this case a firm that has been bailed out and is making profits at the public expense) when other public employees are taking huge pay cuts (eg. teachers in my state just took an 8% pay cut)? Sure there are other things that we can easily be upset about in the Big Picture, but many folks are upset at the bonuses because they have every appearance of a taking from taxpayers and because in a time of shared pain it is distasteful even unpatriotic, for folks to leverage government welfare into personal wealth.

  79. ben K says:

    I see what you are trying to do — chase away the non Wall Street readers so your demographics show higher incomes, and hence your advertising revenues are much higher. Very clever, Barrysan!

  80. njtking says:

    Barry,

    You should completely refrain from commenting on Goldman Sachs as your are obviously a huge fan boy just like Cramer. Goldman should have collapsed just like Bear and Lehman but they got bailed out.

    Give it a rest. I use to respect your insight. Now I just laugh at you like I laugh at Cramer.

    You are talking your position…give it a rest and stop kissing GS @$$. Pathetic!

    ~~~

    BR: I have no position in GS, and have been VERY CRITICAL of Goldman Sachs at this blog over the years:

    How to Puff Up Earnings, Goldman Sachs Style
    http://www.ritholtz.com/blog/2009/04/how-to-puff-up-earnings-goldman-sachs-style/

    Backdoor Bailouts for Goldman Sachs?
    http://www.ritholtz.com/blog/2009/03/backdoor-bailouts-for-goldman-sachs/

    Is Goldman Sachs Trustworthy? (No)
    http://www.ritholtz.com/blog/2009/09/is-goldman-sachs-trustworthy/

    The Goldman Sachs Tax
    http://www.ritholtz.com/blog/2009/07/the-goldman-sachs-tax/

    Treasury/Fed: All Goldman Sachs, All the Time
    http://www.ritholtz.com/blog/2009/01/allgoldman-allthetime/

    Feel free to disagree with me, but at least get your facts straight . . .

  81. rootless_cosmopolitan says:

    Transor Z,

    “I’d agree if this were true capitalism”

    What is “true capitalism”?

    rc

  82. Lugnut says:

    PS – IBs are a tax on the capitalist process

  83. KidDynamite says:

    RC – i would guess that TransorZ meant that in TRUE capitalism, the insolvent banks would have failed, rather than been bailed out

  84. Marcus Aurelius says:

    BR says:

    “Bonuses paid to profitable employees who generate real revenue do not bother me.”
    ________

    Reminds me of the Mish/Denninger debate over fractional reserve lending.

    What, exactly, is “real revenue?” Was anything of value created or was value added to anything that resulted in “real revenue?” Is a profit actually realized if the losses are not counted? Arbitrage is easy for insiders if the markets are rigged.

  85. bsneath says:

    @BR: “That is a very different argument, and we are then talking about Bill Gates and Warren Buffett and George Soros and Steve Jobs . . . .”

    I can distinguish between Gates and Jobs whose personal wealth is created as a result of adding significant economic value to the benefit of many and Soros, Hedge Funds & Investment Bankers who transfer and concentrate wealth without creating economic value (except for the esoteric efficient capital argument). Gates’ and Jobs’ wealth are dependent upon a strong economy and the concurrent creation of wealth for others. I would be more than happy to see 1,000 new Gates and Jobs because their wealth is the result of economic growth and prosperity.

    Irrespective of the above debate however, Why isn’t anyone discussing the risks inherent in a society where income and wealth is increasingly concentrated? I would love to see Krugman address this. I would have much respect for him if he did.

  86. ottnott says:

    BR, who usually is so good about, well, seeing The Big Picture, has got tunnel vision here.

    He’s irked by people who automatically assume that large bonuses aren’t deserved, and is having a knee-jerk response here.

    Your list of concerns, which supposedly makes this a thoughtful position on your part, merely highlights what you are missing, namely: he who has the gold makes the rules.

    $23 billion is a lot of gold, enough to influence the rules enough to make it $30 billion next time. And so on.

    You’ve seen the graphs showing the massive growth of financial services as a % of the U.S. economy, with little to show for it outside of trickle-down spending and massive amounts of unserviceable debt.

    Did you ever stop to wonder how that occurred? Do 23 billion reasons help at all here?

    Please, don’t insult us with analysis that stops at: they made a bunch of money for clients/shareholders and have earned their cut.

  87. DL says:

    I’m largely in agreement with all of BR’s comments. There’s plenty (about Congress and the financial system) to be angry/resentful about, but bonuses at GS is not among them. They paid back the TARP money, so they should be able to do what they want. In any case, I think there’s more harm than good in the government trying to regulate bonuses (except where bailed out firms are concerned).

  88. I know who should be mad at the GS bonuses. Shareholders of GS!!! They are taking value out of the company.

  89. jdmckay says:

    Barry said:

    Bonuses paid to profitable employees who generate real revenue do not bother me.

    Key word there: real. The whole CDS fraud was most certainly not real, nor was it’s insurance (AIG… no funds), nor was the entire premise upon which it was all built: that a house of cards is supported from the roof down.

    I don’t see GS “profits” as real. I don’t see BofA, CITI, Wells or all the others having even fessed up to what they’ve done. And I’m reading Treasury’s management of all these assumed toxic assets by Blackstone is drawing hires from same crowd that created this whole debacle.

    You’re entitled to an opinion, no problem. My opinion is that, until a legitimate economy is restored w/fundamentally sound initiatives, these bastards trading around the top can go pound sand. That they get per-centages in 6 figures for creating no value whatsoever…

    ~~~

    BR: Are you suggesting this current bonus pool is made up of CDS profits, or that they are somehow artificial?

    Help me see how that is the case . . .

  90. DL says:

    BR @ 12:23

    I would disagree with one point here. To the extent that suspension of “mark-to-market” requirements can minimize the need for bailouts, I’m all for it.

  91. DL says:

    Calvin Jones @ 1:11

    You may have a point there. Shareholders often get the shaft; this is yet another example.

  92. Mannwich says:

    @KD: I did all that in the previous election. What has changed? Voting out the incumbents is all well and good and I may do that in ’10, but if the system stays the same, we will get the same result no matter who’s in office. Sorry……

  93. Transor Z says:

    Barry, I’m all in favor of bonuses paid to honest hardworking people who outperform in a competitive environment. But I thought this post was about Goldman Sachs.

    ;)

    @RC: One mark of true capitalism is that over-leveraged insovent businesses are allowed to fail.

    ~~~

    BR: heh heh

    I have been pounding the table about letting insolvent banks fail. But the public focus these days seems to be elsewhere . . .

  94. highside says:

    Sorry Barry but a couple of things get in the way of this argument.

    There are no rank and file traders doing the sort of job that these bonuses are an appropriate reward. After 30 years in this business all I have seen is those who stuff the clients and external shareholders and those who allow the clients and external shareholders to be stuffed. The idea of honest Joes and Joans working in these organisations is a fantasy. That is is the Darwinian nature of this sort of organisational culture.
    Dont get me wrong, I have friends in these organisations but they are not the deserving little worker ants you describe. They either left or were morally compromised years ago.

    These bonuses are the the result of the profits obtained from interest rates massively subsidised by the taxpayer on the liability side and still over leveraged balance sheets protected by the taxpayer. The authorities are hoping that the banks can generate sufficient profits from their solvent customers to recapitalise their balance sheets. I suspect even Mr Bernanke is startled by how much of that profit is going into individuals pockets rather than recapitalising balance sheets

  95. Greg0658 says:

    comment over 8:06am
    “BR: I am not referring to the AIG FP people, or the JPM derivatives creators — but the rank and file traders bankers who do their jobs and make money for their employers.”

    I don’t think we can allow the separation of profits on bankster acitivities as legal activities.

    Its like saying “it’s time to Legalize All hallucinogenic addictive Drugs” .. it’s commerce damnit .. and J6P needs a garage business startup now

  96. Mannwich says:

    And let me be clear (to borrow an oft-used phrase from the O-man): I have ZERO problem with successful firms who pay their top performers whatever they deem to be equitable, as long as those the gov’t was not in any way involved in propping up those firms. Otherwise, we taxpayers should have a say (I know, how quaint) in what these fuckers are paid. I’m not againt people making big money (or jealous of, for that matter), but the system on Wall Street with our politicians’ help only guarantees that we will see another blow up in the near future, maybe even sooner than we think and bigger than we think. Constantly bailing out failing firms and industries only insures that such bad behavior will continue. After all, if one is rewarded for bad behavior, why change one iota?

  97. BR: I already am!

    Its pretty ironic that after I have spent years trashing the Wall Street execs who caused this mess, no one else seems willing to defend the legitimate rank and file workers who were profitable and risk aware and didn’t cause the problem.

    AIG had 86,000 employees, their FP division that killed the firm had just 400. Lehman had 25,000 employees, Bear Stearns had 16,000; The vast majority of these workers — my guess is something in excess of 95% — had nothing whatsoever to do with the collapse.”

    BR,

    carol7, above, hits on it, with: “BR: I already am!

    Its pretty ironic that after I have spent years trashing the Wall Street execs who caused this mess, no one else seems willing to defend the legitimate rank and file workers who were profitable and risk aware and didn’t cause the problem.

    AIG had 86,000 employees, their FP division that killed the firm had just 400. Lehman had 25,000 employees, Bear Stearns had 16,000; The vast majority of these workers — my guess is something in excess of 95% — had nothing whatsoever to do with the collapse.”

    LSS: maybe, we should re-view “The Sting”
    http://www.popentertainment.com/thesting.htm

    past that, Singer*, MA, and many others make valid points..

    but, it’s good of you to open up this line of discourse, it’s, yet, another boil to be lanced..
    past that, *
    http://www.thefreedictionary.com/anger
    http://www.thefreedictionary.com/jealousy as jealousy is, most, commonly used, it ~ envy..

  98. Bruce in Tn says:

    Barry:

    Would you feel the same if, over the last year, your firm went head to head with Goldman with all the advantages they have? If GS had put you OOB, you mean you’d say,” Well, gee, the better firm won…”

    Think about it for awhile…this is what the readers are getting at…

    ~~~

    BR: We did, we’re still standing.
    (we are a flea on their arse, but . . . )

  99. nice cutting ‘n pasting..

    carol7: The City example doesn´t cut it; it might have been + $ 600 million (well, $ 500 million after his $ 100 million bonus; why can he claim a hedge fund type salary, when on his own he could never get his hand on the money amounts to play with, like he did at City?), but how would it work out when he had hedged his bets for $200/bbl oil, like GS projected? The Phibro thing is a prime example of heads I win, tail you stupid taxpayer lose.

  100. mcHAPPY says:

    Barry,

    All of your bullet points are valid and I’m sure most here agree.

    “Bonuses paid to profitable employees who generate real revenue do not bother me.”

    The question I have for you is:

    Could GS have generated any of this “real revenue” without market manipulation and government intervention? The answer is clearly no because the company probably should be out of business ala BS and LB.

    The response that profitable employees deserve bonuses doesn’t hold much weight either given the above. Continuing with the sports analogy – in 1992 World Series, Joe Carter hit a game winning homerun for the Toronto Blue Jays. Everyone on the Blue Jays got a World Series ring because they won – obviously. Well, why didn’t everyone on the Phillies get a World Series ring except Mitch Williams – I mean, he was the one who gave up the homerun, the Phillies would have most likely won except for him. ANSWER: Because they win and lose as a team. Winners are not supposed to be picked or chosen – except on Wall Street, obviously.

    ~~~

    BR: 1) That is why we should be upset at Paulson/Bernanke/Bush for cutting such a terrible deal;

    2) The firms that repaid the TARP — what should their ongoing obligations be? (I don’t know)

    3) Are you arguing against anyone earning a Wall St bonus, or just against Bailoutees ?