Posts filed under “Bailouts”

Adventures in Banking: Responsibility & Blame

Morgan Housel makes the delightful if infuriating observation that bank execs take credit — along with fat paychecks and even fatter bonuses — on the way up.

On the way down, its always seems to be someone else’s fault:

Robert Rubin, a former Treasury Secretary, joined Citigroup in 1999 as chairman of the executive committee. He was paid $126 million over the next eight years for his experience and wisdom to guide the bank’s management toward success.

When the bank nearly collapsed in 2008, Rubin pled ignorance. After writing a 2003 memoir largely devoted to explaining how extreme circumstances ruin banks, Rubin explained in 2009 that he “did not recognize the serious possibility of the extreme circumstances that the financial system faces today.”

Nine-figure pay on the way up; a fluke and someone else’s problem on the way down.

Tom Maheras, another former Citigroup executive, was paid $97 million in the three years before Citigroup imploded, ostensibly for his skill. After a division he oversaw hemorrhaged losses from subprime mortgages, Maheras told Congress that his division’s fateful decisions were “based in part on a careful study from outside consultants.” Even as markets unraveled, “I continued to believe, based upon what I understood from the experts in the business, that the bank’s holdings were safe,” he said.

Ninety-seven million in pay on the way up; someone else’s fault on the way down.

Its no surprise that people rationalize their own self-interest. Its only human nature.  However, that does not mean investors and/or taxpayers should have to subsidize the stupidity.

“Clawbacks” need to be a legal term that corporate execs must become more familiar with . . .


It’s Your Fault
Morgan Housel, February 3, 2015

Category: Bailouts, Corporate Management, Really, really bad calls

Sarkar on Greece

There has been a great deal written about Greece recently. I therefore, somewhat timidly, add my penny’s worth. The Syriza Party, through their PM and their finance minister, has rejected the idea of cooperating with the Troika, the EU, ECB and the IMF. They are seeking debt forgiveness to meet their election pledges to the Greeks population….Read More

Category: Bailouts, Think Tank

The “Greek Issue”

Fascinating flowchart from Deutsche Bank: It is wrong to think that contagion stems only from Grexit. An excessive compromise with Greece could result in moral hazard, particularly in relation to structural reforms. This could undermine the medium-term stability of the euro area. The tail risk is that Greek politicians try to leverage too much the fear…Read More

Category: Bailouts, Politics, Really, really bad calls

The Greek Economy: Which Way Forward?

Category: Bailouts, Think Tank

Super Mario Delivers

Mr Draghi (Super Mario) delivered yesterday, despite the leaks which virtually gave away the details of his announcement ahead of the press conference. The EZ Central Banks (coordinated by the ECB), together with the ECB is to buy E60bn of government, ABS’s, covered bonds and agency debt, per month, commencing March 2015 up to at…Read More

Category: Bailouts, Federal Reserve, Think Tank

Finally the details . . .

The ECB said the combined monthly purchases which includes ABS and covered bonds and now include sovereign and agency bonds will total 60b euros per month and will continue to do so “until we see sustained inflation improvement.” The ratio will be based on the capital key where about half is made up of Germany,…Read More

Category: Bailouts, Federal Reserve, Think Tank

Category: Bailouts, Federal Reserve, Regulation, Think Tank

Financial Stability and Central Bank Governance

Category: Bailouts, Federal Reserve, Think Tank

The Truth About Bailouts, the Economy and Stock Markets

I sat down wiht the folks from Epic Times to talk about, well, everything:

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Category: Bailouts, Media, Video

Big Banks Manipulate Physical MarketsPrices

Giant Banks Take Over Real Economy As Well As Financial System … Enabling Manipulation On a Vast Scale Top economists, financial experts and bankers say that the big banks are too large … and their very size is threatening the economy.  They say we need to break up the big banks to stabilize the economy. …Read More

Category: Bailouts, Legal, Think Tank