I picked this off the News this morning.

It parallels another story about a number of banks defending paying out billions in bonuses, using at least in part, money that was part of the bailout program.

The central theme of both stories seems to be that this is the way we have always done business and we are going to continue to do business this way no matter what the circumstances.

In the case of the bonus issue, the parallel theme was that if we do not pay these bonuses, someone else, another bank or investment company, will poach our best employees. They gave some examples and in almost every case the bank being poached was failing/had failed before the bailout and the poaching bank was not involved in the program. I assume that means they were structually sound.

To me as a small business owner and employer, this is really rather hard to swallow.

My business is neither failing nor prospering, it is surviving. Last year, once the picture became pretty clear where the economy was heading, we cut out all business and pleasure trips for employees and ourselves.

No Christmas party, no year end bonuses for anyone including my wife and myself. Same thing this year, no Toy Fair in New York, we are skipping the HobbyTown USA getaway in the Bahamas as we skipped the trip to Cancun last year.

As I understand it, the banks etc. involved in the attachment as well as the one I quoted involving bonus pay would essentially be out of business if it had not been for the bailout. I find it hard to accept their story line that their employees deserve and expect to be rewarded for this sort of performance.

To return to the title of the thread, what really gets me is that this is still a current event. Even after the AIG fiasco and several others got shot at or shot down starting in November, December, here we have companies in the same business this very week still trying to pull off this sort of crap.

We often debate on this Forum the "Entitlement Mentality" that we see in this country but I think that this kind of behavior is indicative of a far bigger clash of cultures.

Bill

http://money.aol.com/news/articles/_...227x1201211819

 

Obama is working on a bill right now that would limit CEO pay for companies that take bailout money... Just heard that on the news. Haven't had a chance to find a link yet.

 

Here ya go:

http://www.foxnews.com/politics/firs...-institutions/

Sad thing is, I agree with him on this. You want my tax dollars?? Suck it up and get your house in order.

 

Here's Forbes take on it:

http://www.forbes.com/2009/02/04/oba...pensation.html

 

And I see the point of them not wanting to take the stipulations. However, if you can't run your business at a profit w/o tax payer money, I don't think you deserve to have a business. This TARP thing is a joke no matter how you slice it.

 

There is something I do not understand. Why would another bank want to hire away executives that have led an intitution into failure? Why would a failing bank care if they did? Be glad they are gone!

Bill, I agree with everything you said. I am tired of monster salaries and huge bonuses paid out for failure.

 

I think you hit the nail on the head. This is the attitude any other business that likes to make money would have. No bonus for you this year as you destroyed us financially and don't let the door hit you on the a$$ on your way out.

 

You will find the below quote here: http://www.nytimes.com/2008/10/15/bu...lout.html?_r=1

"The chairman of JPMorgan Chase, Jamie Dimon, was receptive, saying he thought the deal looked pretty good once he ran the numbers through his head. The chairman of Wells Fargo, Richard M. Kovacevich, protested strongly that, unlike his New York rivals, his bank was not in trouble because of investments in exotic mortgages, and did not need a bailout, according to people briefed on the meeting."

The way I understood it, Wells was forced into taking the money...not to mention the so-called junket was a reward to top-performing employees, not executives. Wells Fargo did nothing to deserve being dragged through the mud. Unless one believes they should be hung for not giving out high-risk loans...to people who have no business receiving them.

I do agree though, the other banks involved in the bailout, threw lavish parties, then came back for seconds can go to the white house, i mean hell.

 

It is my understanding that the 300+ banks that took Bailout money will not be held to the new CEO standards. Only banks that take a bailout in the future will be held to the 500k salary and decreased benefits packages.

 

I suppose it's a good old boys network.

 

I can't believe they are limiting the salaries to $500k. What kind of crap is that? If these executives completely fail their company and hit rock bottom, they make $500k. If I fail myself or my family.... rock bottom is ZERO!!!!! They shouldn't get paid at all. They should get fired. You know there have to be guys below them that can do their job at least as good as they did considering they failed.

 

I was recently shown an internal Wells memo that defended the "junket" that was subsequently canceled. The memo said in part the trip was to have been a reward for a group of people that brought in millions of dollars of profit for the institution. Their depts. were in no way involved in losing any money for Wells during the past fiscal year.
Wells did not need the TARP money to stay "afloat", they needed the TARP money to avoid costly losses inherited by the Wachovia side of the books. It was a no brainer, absorb the losses against their bottom line, or allow the govt. a share of Wells in exchange for writing it all off as govt. chump change that could eventually be paid back at favorable rates.
None of the TARP money collected by Wells falls under the CEO cap recently enacted by the Obama administration. Only if they go back to the "well" and dip again into TARP will they be subjected to the CEO cap requirement.