Wall Street bonuses jumped 17% in 2009

I can understand getting your pay and a bonus in normal economic times. This however, ought to be questioned:

news.bbc.co.uk/2/hi/business/8531036.stm

Peace,
Ed

[quote="edwest2, post:1, topic:188206"]
I can understand getting your pay and a bonus in normal economic times. This however, ought to be questioned:

news.bbc.co.uk/2/hi/business/8531036.stm

Peace,
Ed

[/quote]

Ed,

I understand your questioning, and, as someone who has really struggled financially during this downturn, it does bother me a bit. However, I think it depends on what the bonuses are based on. Look at it this way - if you had a contract with your employer that said you would get paid a bonus based on a percentage of corporate profits, what would you do if the company said "well, it wouldn't look good, so we aren't going to pay you according to your contract?"

What happens to the money if they don't pay the bonuses?

Do they still owe the government for the bailout, or has it all been paid back? If it's still owed, then that should be deducted from profits and bonuses adjusted accordingly.

[quote="rlg94086, post:2, topic:188206"]
Ed,

I understand your questioning, and, as someone who has really struggled financially during this downturn, it does bother me a bit. However, I think it depends on what the bonuses are based on. Look at it this way - if you had a contract with your employer that said you would get paid a bonus based on a percentage of corporate profits, what would you do if the company said "well, it wouldn't look good, so we aren't going to pay you according to your contract?"

What happens to the money if they don't pay the bonuses?

Do they still owe the government for the bailout, or has it all been paid back? If it's still owed, then that should be deducted from profits and bonuses adjusted accordingly.

[/quote]

To answer my own question, a news clip I just watched on FoxNews said that they paid the bailouts back with interest. So, there you have it. They made a profit and paid the bonuses according to the contracted pay agreements. I don't have a problem with that.

Well, I do have a problem with Wall Street getting right back to “business as usual” – that is, the same exact business practices that landed us in the economic mess we’re in – with absolutely zero regulations or restrictions on their practices.

Everyone else is doing terribly, but these companies that had to be rescued by the government last year are right back to making the kinds of super profits they were turning out before the bubble burst.

It’s a sign that something needs to be done to regulate them – if we don’t want another, worse financial meltdown on our hands, that is – and perhaps if the Obama administration wasn’t a complete and total failure in terms of producing meaningful change in any areas, we would see some serious regulation of these companies.

[quote="AntiTheist, post:4, topic:188206"]
Well, I do have a problem with Wall Street getting right back to "business as usual" -- that is, the same exact business practices that landed us in the economic mess we're in -- with absolutely zero regulations or restrictions on their practices.

Everyone else is doing terribly, but these companies that had to be rescued by the government last year are right back to making the kinds of super profits they were turning out before the bubble burst.

It's a sign that something needs to be done to regulate them -- if we don't want another, worse financial meltdown on our hands, that is -- and perhaps if the Obama administration wasn't a complete and total failure in terms of producing meaningful change in any areas, we would see some serious regulation of these companies.

[/quote]

What is your proposition to control their "super profits?"

Before a Senate committee, Allan Greenspan was shocked, shocked over the behavior of Wall Street. If I recall correctly, for every dollar they actually held, Lehman Brothers owed 23. Imagine their surprise, and mine, when they said, "How did we allow ourselves to become so exposed?" Exposed being that fancy word for: Ooops! I guess we weren't paying attention and we are now in debt up to our eyeballs. We just turned our heads for a moment, and the bills came due!

In the business press, it was revealed that home valuations were arbitrarily raised by those tasked with giving those numbers to their employers. Apparently, instead of a chicken in every pot, certain politicians wanted to give everybody a home. A banking professional friend of mine told me: "Who took away all the rules? A few years before all this, people had to jump through hoops to get a mortgage, what happened?"

An aquaintance in the mortgage business had the following reply after I asked him what happened: "Greed."

How long is this country going to go through the Savings & Loan Scandal, Enron, Tyco, Global Crossing and similar abuses, including a man sitting in jail who made at least $50 billion disappear? Billion.

Apparently, the only guiding principle is There's no such thing as too much money.

But... When other people in whom we give our trust in exchange for dealing with us honestly regarding our money abuse that trust or take whatever risks they see fit, only to have us bail them out later, there's a problem.

Yet the moment the President whispers the word regulation, everybody grabs their money and holds it tight on Wall Street and the market is down. The problem? It's not their money. Most of it isn't.

Credit Default Swaps? Making money if the value of a certain stock goes down? They are playing with our money. They should be good stewards. In this second Great Depression, do you know what else is going on? Companies are buying other companies right now. Why? Because they can get them at bottom dollar. So the next time someone tells you there's no money out there, just have them check on the number of mergers and acquisitions.

Regulation good, letting them do whatever they want, bad.

Peace,
Ed

[quote="rlg94086, post:5, topic:188206"]
What is your proposition to control their "super profits?"

[/quote]

I don't claim to have an answer myself -- I'm not an economist -- but I am pointing out that simply allowing business to continue as usual without any regulation whatsoever on these companies is going to lead to a bad place in the long run.

There are certain business practices that led to the near-implosion of the economy in 2008, and there need to be restrictions on what these companies can do, restrictions determined by qualified economists and put into place by laws with real teeth to enforce them.

Frankly, if the implementation of restrictions and regulations leads to a few multi-millionaires earning slightly fewer megamillions than they might have earned otherwise, I'm not going to lose any sleep over it.

The state of the economy is more important than a couple of rich guys getting slightly richer.

[quote="edwest2, post:6, topic:188206"]
Before a Senate committee, Allan Greenspan was shocked, shocked over the behavior of Wall Street. If I recall correctly, for every dollar they actually held, Lehman Brothers owed 23. Imagine their surprise, and mine, when they said, "How did we allow ourselves to become so exposed?" Exposed being that fancy word for: Ooops! I guess we weren't paying attention and we are now in debt up to our eyeballs. We just turned our heads for a moment, and the bills came due!

In the business press, it was revealed that home valuations were arbitrarily raised by those tasked with giving those numbers to their employers. Apparently, instead of a chicken in every pot, certain politicians wanted to give everybody a home. A banking professional friend of mine told me: "Who took away all the rules? A few years before all this, people had to jump through hoops to get a mortgage, what happened?"

An aquaintance in the mortgage business had the following reply after I asked him what happened: "Greed."

How long is this country going to go through the Savings & Loan Scandal, Enron, Tyco, Global Crossing and similar abuses, including a man sitting in jail who made at least $50 billion disappear? Billion.

Apparently, the only guiding principle is There's no such thing as too much money.

But... When other people in whom we give our trust in exchange for dealing with us honestly regarding our money abuse that trust or take whatever risks they see fit, only to have us bail them out later, there's a problem.

Yet the moment the President whispers the word regulation, everybody grabs their money and holds it tight on Wall Street and the market is down. The problem? It's not their money. Most of it isn't.

Credit Default Swaps? Making money if the value of a certain stock goes down? They are playing with our money. They should be good stewards. In this second Great Depression, do you know what else is going on? Companies are buying other companies right now. Why? Because they can get them at bottom dollar. So the next time someone tells you there's no money out there, just have them check on the number of mergers and acquisitions.

Regulation good, letting them do whatever they want, bad.

Peace,
Ed

[/quote]

Ed and I almost never agree on anything, but in this case we do. Ed you are absolutely right!

Thank you.

Ed

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