Congress gives some 170 billion to AIG, some 200 billion cumulatively to BofA and Citi, then grandstands in the House and Senate, yelling at the bank CEOs to 'lend the money.' Either the Congressmen and Senators are giving the Oscar-Award winning performances of their lives, or are completely ignorant of basic economics. The banks can't lend the money the government has poured into them. That money has to be used to recapitalize their balance sheet, and they can't afford to loan it under even conservative methods, let alone during the worst slump in economic activity since the 40s (anyone who doubts this, look at the acceleration trend in unemployment claims around the globe, manufacturing activity, contraction of GDP in major Western Economies of 10%+ per annum, and just today, an announcement by the Bank of China, formerly warning of hyperinflation, that they can afford to cut central bank interest rates to 'near 0,' as inflation risks have subsided). As Landis and Makloda have aptly stated, the strongest argument to bailing out megabanks with major counter-party risk like BofA and Citi is that not doing so would take down those institutions who they owe money to, whether Goldman Sachs, JP Morgan or Republic Bank of Toledo. However, even if one were to conclude that the systemic shock waves to the financial community would be too great for the economy to distill and handle in a relatively manageable fashion, even if a very painful one, that certainly doesn't mean these 'saved' institutions aren't de facto wards of the state, and that they should be able to take taxpayer money and act independent of any oversight when it comes to compensation of employees or other aspects of their operations that use taxpayer dollars - after all, money is fungible, and without the taxpayer dollars, they would fail, rendering all of their employees jobless. I do not personally buy the government's argument that the systemic risk is so great that they can't shore up the deposits of these banks and wind them up in an orderly fashion, at a lower total cost than what the government is doing now. Paint me cynical or ignorant, it makes no difference to me. I do know that many regional and local banks don't need TARP funds, and maybe the greatest stress test of all is to call the big boys on their threats to return the TARP money if they don't like having to live under an new, imposed set of rules. They're zombie banks, anyways...kept alive through artificial means. As for their talented employees, whatever portion of their employee base these people constitute, they should feel liberated and even motivated to get the hell out of those shell banks, and move on to greener pastures. They're going to remain there, while the brass tries to give them the same or more pay, calling it salary rather than a bonus, when their institution is hardly in a position to do much lending anyways, and then bitch about the fact that people are objecting to their pay structure? Just leave the bank and go somewhere else if jobs are so plentiful elsewhere. What's the big deal? It's all bullshit. It's a big ruse. The jobs elsewhere aren't plentiful. Anyone who believes that investment bankers face anything other than a dreadful job market is truly naive on a scale I can't imagine.
It's about time America wakes up and realizes it's not B of A per se, but the Federal Reserve itself. To this day, very few people realize the Fed is a private bank. 98% of the population believes it's a branch of the government.
The urgent task now, he says, is to realise that the system that collapsed was flawed. âTherefore you canât restore it. You have to reform it.â He worries that politicians have not yet accepted the need for fundamental change and that âa lot of bankers have their head in the sandâ.... ...The G20 summit in London next week is, he says, the last chance to avert disaster. âThe odds would favour that it fails because there are such differences of opinion. Itâs difficult enough to get it right in your own country let alone with 20 governments coming together, but if itâs a failure I think then the global financial and trading system falls apart.â If the G20 is nothing but a talking shop then he thinks we are heading for meltdown. âThat could push the world into depression. Itâs really a make-or-break occasion. Thatâs why itâs so important.â The chances of a depression are, he says, âquite highâ â even if that is averted, the recession will last a long time. âLook, we are not going back to where we came from. In that sense itâs going to last forever.â http://www.timesonline.co.uk/tol/news/uk/article5989163.ece - George Soros- quoted just today, on the banking crisis. Whether one likes him or not, he's absolutely right. Yet bankers subsidized with taxpayer money want to be compensated as if everything is back to normal, when normal won't be for a long time again, if ever. There will be a new normal.
true about top and bottom performers...bottom performers should be out the door or happy to be employed. However, for the top performers, many indeed were worth every penny and a lot more than what they made, before the crisis, during the crisis, after the crisis. Period. If not, then anyone of you should step in and make the big bucks instead. Point is this crisis was not brought about by every single trader, clerk, accountant, structurer in this financial industry. There were the ones responsible for running desks and making decision whether to take on more risk or less. Those should be held accountable. But its not that easy. In the end every one should take part of the blame, not just the finance industry. Consumers alike made mistakes, rating agencies, and yes, POLITICIANS who now tell everyone what a clean sheet they were having. Disgusting... Bottom line for me is (and I have worked and still work for more than a decade in the industry) there are plenty of jobs in the front office that pull in and generate a huge amount of revenue at managable risk (that some blew out should not be extrapolated). Those top performers should be rewarded accordingly. Now capping their pay at such ridiculously low levels just takes EVERY incentive away to perform. Its the same as if you pay a urologist 1000 dollars per month to stick his finger in peoples' asses. Or what about a waitress who is paid just 8 bucks an hour no bonus? Fair? This for sure will drive talent away, and not just to other firms but out of the country all together. I dont think th US can afford that.
noticed in my earlier post that I said "so far"? What so far has happened is this: The government and fed has extended loans and made investments. Those loans are supposed to be repaid with interest and the investments are expected to yielda positive return. This is not guaranteed. For the shortfall the taxpayer will ultimately need to step in. BUT SO FAR nobody has stepped in whatsoever, or have YOU received an additional tax bill to pay an additional 5000 USD to the government? I have not, nor has anybody else. That is what makes me upset. Most just repeat like stupid parrots what the media is trumpeting and some politicians voice in order to satisfy their uneducated constituency. Listen to the congressional hearings. It is laughable many of those congressmen and women are so clueless its utterly rediculous and they had the time to prepare and come up with intelligent questions or statements. No, most of them conduct themselves and ask in a way as if they are the mob on the street in persona.
Yea right. It's real obvious that you're a hot shot multi-millionaire twenty something in Detroit cutting and pasting bitterness 24/7 on ET. Not exactly living it up like Spencer and Brody are you? Don't even DARE to compare your self to me. When I was your age I was flipping 500 lots in the pit while you're a dildo sitting on a message board. And it's me who in a month is launching a pool that trades live on line where the whole world can see in real time whether I suck or don't. Back to the thread. Point 1. The bailout is about saving the FDIC. Period. Some of you guys have the same goofy ideas I once had when I was young but no there isn't any "conspiracy" here. The shareholders in these banks are as good as broke. Do you see evidence of anyone in these institutions being "saved?" Arabs are out billions on Citi, LEH went dust along with a haf bil of NY Fed member Dick Fulds money, The G pawned off toxic on BAC whose share price is 80% off it's highs. MER, BSC, essentially gone but NOT ONE DEPOSITOR HAS BEEN HURT. That folks is the headline story. 2. Salaries.If the government isn't going to allow these institutions to compete for talent then they'd might as well nationalize them. You can't collect revenue without salesmen. Producers are afraid to work at these places because they're afraid of not getting paid. Banks trade debt and there's still mucho fixed income trading going on and despite what loser bi lo sell hi thinks, not all of Wall Street is a morgue. If you've got customers you've got employment options. These institutions need business if they're ever going to see double digits again and you gotta incentivise folks to want ANYTHING to do with AIG, C, or BAC as either counter parties, custodians or employers.
Get accustomed to the fact that there's 9 million people in Michigan, 4.5 million of whom live in the tri-county area I live in, and I've closed more commercial real estate deals dollar wise in two years than you have your entire life. I have two homes in Michigan, including Oakland Township, and I've been all over Illinois, and you've got few areas that can rival the area I live in. As far as posting goes, it's easy to post 10 times a day or so, when the real estate development area has been as slow as it has. I've also been reading a lot of good books given the time I have. Sometimes slowing down saves you more money in a bad economy than spinning your wheels in the mud. What about you? The self-acclaimed prolific trader? Where do you find the time to post rant after rant in politics and religion about 'kikes?' You are a complete asshole. Anyone who'd post the racist, anti-Semitic shit you have, and attach their real name to it, must be brain dead. The next logical step for you is to post a 'whites only' sign at your prop shop or whatever it is that you run, and to join Stormfront and become one of their community agitators (if you haven't already). It's always nice to see an asshole such as yourself out himself. At least people can keep tabs on your future political endeavors, if any. Oh, right. I know..you always planned it that way, and you have Jewish friends. Sure, Kurt. Sure.
What difference it makes if it is shareholder or taxpayer? They both are in same shoe with a little difference that taxpayers does not have option to opt-out. It is always people's money that they are abusing. - My 2 cents.