Posts filed under “Wages & Income”

Taibbi: “The Best 18 Months of Grifting This Country Has Ever Seen”

I have a few quotes in Matt Taibbi’s no holds barred look at Wall Street’s profits and bonus culture.

It is classic Taibbi, full of righteous indignation and fury over the bailed out banks quick transformation from near bankruptcy to record profits. He details 7 scams the various TARP recipients have pulled.

Here’s a taste of the article:

“The nation’s six largest banks set aside a whopping $140 billion for executive compensation last year, a sum only slightly less than the $164 billion they paid themselves in the pre-crash year of 2007.”

The question everyone should be asking, as one bailout recipient after another posts massive profits — Goldman reported $13.4 billion in profits last year, after paying out that $16.2 billion in bonuses and compensation — is this: In an economy as horrible as ours, with every factory town between New York and Los Angeles looking like those hollowed-out ghost ships we see on History Channel documentaries like Shipwrecks of the Great Lakes, where in the hell did Wall Street’s eye-popping profits come from, exactly? Did Goldman go from bailout city to $13.4 billion in the black because, as Blankfein suggests, its “performance” was just that awesome? A year and a half after they were minutes away from bankruptcy, how are these assholes not only back on their feet again, but hauling in bonuses at the same rate they were during the bubble?

The answer to that question is basically twofold: They raped the taxpayer, and they raped their clients.”

Every now and again, you spend some time with a journalist, trying to push them down a particular path of discovery. Sometimes you influence a story a bit, end up with a quote or two, but otherwise are a minor factor.

I am thrilled with how much of our conversation ended up in this article. Regular TBP readers will see my fingerprints all over this one . . .

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Source:
Wall Street’s Bailout Hustle
MATT TAIBBI
Rolling Stone, Feb 17, 2010
http://www.rollingstone.com/politics/story/32255149/wall_streets_bailout_hustle

Category: Bailouts, Corporate Management, Wages & Income

Banking Compensation Around the World

This chart, from a Reuters’ analysis of pay at the 18 biggest banks by market value, illustrates the massive differences in pay among the CEOs of the world’s top banks. The compensation of the CEOs of the largest U.S. banks towers above what’s paid to banking chiefs in other parts of the world. > Source:…Read More

Category: Corporate Management, Wages & Income

American Idol, Goldman Sachs Edition

Ever wonder why Goldman execs don’t speak to mere mortals? The answer was hidden in a tongue-in-cheek Michael Lewis Bloomberg column, which he slipped this by everyone late night Friday. Its an internal memo to Lloyd Bankfein, chock full of suggestions to improve GS’ public image. This one was my favorite: Each year, for example,…Read More

Category: Corporate Management, Humor, Wages & Income

Hours of Labor Needed to Buy SPX, CRB, Gold

I find these 3 charts, courtesy of Ron Griess of The Chart Store, fascinating. They contextualize market gains, dollar weakness and inflation and deflation relative to various markets: click for larger charts S&P500 Commodities Gold

Category: Commodities, Inflation, Investing, Wages & Income

Wages of Failure: Exec Comp at Bear, Lehman 2000-08

I stumbled across a fascinating pierce of research (via a reader) regarding misaligned pay incentives Bear Stearns and Lehman Brothers: “The standard narrative of the meltdown of Bear Stearns and Lehman Brothers assumes that the wealth of the top executives of these firms was largely wiped out along with their firms. In the ongoing debate…Read More

Category: Bailout Nation, Bailouts, Corporate Management, Wages & Income

A Long Look at Banker Compensation

Today’s NYT magazine has a long, well done interesting piece on Kenneth Feinberg, the government’s special master for executive compensation, titled What’s a Bailed-Out Banker Really Worth?. Anytime I read a discussion on compensation, bonuses, and bailouts, I am astonished as to how much of the general discontent over these issues traces back to the…Read More

Category: Bailouts, Corporate Management, Wages & Income

Elizabeth Warren: The Coming Collapse of the Middle Class:

Distinguished law scholar Elizabeth Warren teaches contract law, bankruptcy, and commercial law at Harvard Law School. She is an outspoken critic of America’s credit economy, which she has linked to the continuing rise in bankruptcy among the middle-class.

2007:

The Coming Collapse of the Middle Class: Higher Risks, Lower Rewards, and a Shrinking Safety Net – UCTV – University of California Television.

Category: Economy, Employment, Video, Wages & Income

The Vilification of Goldman Sachs’ Pay Practices

Mike Santoli has an interesting perspective on the furious reactions to Goldie’s bonuses in this week’s Barron’s: “Absent in the rage against people earning impressive pay after their firms got public help is the key question: Do we want the firms that received aid to continue operating as autonomous, profit-seeking businesses, or as quasi-utilities operating…Read More

Category: Bailouts, Corporate Management, Wages & Income

Much Ado About Nothing $23B: Goldman Sachs Bonus

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 . . .

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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/

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Category: Bailouts, Wages & Income

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….Read More

Category: Bailouts, Corporate Management, Wages & Income