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It Is Time To Overthrow The Pay Czar
The mere fact that "special masters" are even labeled "Czars" by the administration should be warning enough. One might guess either that the leaders of the administration have a very poor grasp of the historical import and meaning of the term, or they have the unabashed arrogance to wield it notwithstanding its many negative and authoritarian connotations. Not that the Obama administration is alone in its use of the term, but it has now exceeded the high water mark for Czar populations set by the Bush Administration. That we now have one in the process of dictating executive pay, indeed any compensation structure at all, is deeply concerning. So when Obama administration’s "Special Master for Executive Compensation" out and dictates that his Papal Bull on pay cuts for executives of banks receiving government assistance should become the model for Wall Street and for the United States generally, well:
1. Despite the protestations nearly since January that no one in the Obama administration would be meddling with compensation in private enterprise, you should have seen this coming months ago.
2. We told you so.
We think it painfully congruent that Czar Nicholas Feinberg II comes hot off the throne of another Czarist dais to his present exultation. More appropriate still that he brings his experience from the 9/11 victims fund to his present post. "I am extremely sensitive to the public outrage," he quipped to Bloomberg. Excellent. We are most pleased, Your Imperial Majesty, that it is you, given your sensitivity, pulling the levers on the longer-term variables in this complex system.
The fact is, much as the public may yearn to cut bankers down to size, and much as getting at someone's cash is, after all, the most vicious and ghastly punishment there is in the United States, this will all end in tears. The proper way to have dealt with executive pay (which is a tiny fraction of corporate cost in any event) would have been to permit these institutions to fail. Period. You might notice that no one needs to modify Dick Fuld's pay today.
Citizens of the United States do not need a "special master" to deliver them a spanking for losing money. Nor do they need a handout from government coffers. It's time for enterprise in the United States to leave the nest and forgo both the extra bedroom that Mom will keep just like you left it "in case," and the time out room Dad will send you to if you blow it again. Punishing firms that accepted government funds, effectively under duress, and who have managed to actually pay those funds back (at a gain to the taxpayer, you might also notice) is a dangerous act. It is a clear sign that political whim and "sensitivity to public outrage" is driving economic policy. Again, this will all end in tears.
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"The proper way to have dealt with executive pay would have been to permit these institutions to fail."
Amen to that.
Still, I can't get that bothered about this, because fuck the bankers, and I suspect that 90% of taxpayers agree with me.
Agreed. Fuck the bankers
dirty, dirty daytrader
@panda6 Word. should have let them fail. now its time to bust em up. the pay czar is just a dog and pony show.
NY Governor Parerson tells Bama: don't cut wall street pay. Blind leading the blind.
http://www.lohud.com/article/20091022/NEWS05/910220440/Gov.-tells-Obama--Don-t-cut-Wall-Street-execs--pay
Brilliant, you get the witty award.
My compliment to Marla as well on the mother keeping a room just like you left it just in case.
This site is humor, wit, outrage, financial information, political information (redundant), and philosophy wrapped into one. Now if I could only get a massage.
They'll get break-up bonuses and have hedged against their own break-up with AIG who will be flopping around like an almost-dead fish channeling money from the future. Then the small ones will need a bailout because we found out that they were almost-small-enough-not-to-bail-out. Rinse and repeat.
Yes! Fuck the bankers...and the real estate brokers and flippers, and the day traders and stock brokers, and the insurance agents, and the bond salesmen, and the CEO's of all the major- and minor corporations, and the presidents of companies, and the managers thereof, and eventually, those dirty mom and pop merchants...ad infinitum...ad nauseum...
That sentiment gets my vote.
It is absolutely fascinating what articles get us natives restless on ZH. Take a stroll back for the past few weeks and look at which stories received hundreds of comments and which received less than 30 or 40.
No real rhyme or reason to it that I can tell though I will take more time later and try to find some parallels.
Marla almost always rates high in the number of comments. Is it a "something about Mary" thing or do we just like it when we poke at the bee hive and Marla stings us back? She sure does defend her turf. I've yet to be able to fault her logic.
In the end it's us vs the banks and their political whores.
Fuck the banks.
A decent political class would have said: "screw you banks, you got yourself into the mess"
Banks were eager to create a nation of mortgage slaves.
I argree. Fuck the bankers. I'm fine w/cutting their pay 90%.
They are nothing but a bunch of worthless thieves anyway.
Added note to banksters : be sure to take the cell phone companies with you to insolvent hell. Fuck both groups of gouging, greedy arseholes !!!
Just got my daughter's cell download charges.
Sadly in this case, I think you rather need a word with your daughter :)
"Still, I can't get that bothered about this, because fuck the bankers, and I suspect that 90% of taxpayers agree with me."
You people can not get more stupid then this. Have you had little common sense you would have realized that JPM, GS & CRONIES are NOT SUBJECT TO THIS REGULATION, DOES THAT SOUNDS BELLS YET?, NO I GUESS..
I'm not going paranoid but thats a fact, these miserable banks will banks (BAC, C, AIG and so on...) will have all the trash eventually and guess who will get richer and richer...and more powerful.
R!OT PPL....BEFORE YOU SELL YOURSELF TO THE CZARS
Don't worry JPM and GS are next :)
iF THEY didn't get the bailout, then ya a pay czar is bad. But tHeY dId so
fuck the bankers
I agree. Marla has it wrong with the 'paid it back'. They will not be allowed to fail in the future and interest rates are non-existent (rewarding the banks and ripping off the prudent).
Great point. How do they pay back on ongoing implicit backstop from the government that allows them to raise capital on better terms than they could get otherwise? How do they pay back government policies such as the 0% interest rate and steep yield curve designed to let them earn billions to repair their battered balance sheets?
To any companies whose executives chafe at the new pay restrictions, tell them they can get out of them by:
1. Paying back TARP funds if they haven't already done so.
2. Buying back any warrants associated with TARP at fair market value.
3. Paying off all outstanding debt backed by the FDIC and reimbursing the government for the effective interest rate subsidy received less the tiny premiums paid to the FDIC.
4. Paying back the government for any payments on credit default swaps and other derivative contracts made by the government on behalf of AIG, plus interest. You buy insurance from an insurance company that fails and can't pay its claims, tough luck. Stand in line as an unsecured creditor.
5. Signing a letter and issue an 8-K filing acknowledging that they have no explicit or implicit backing of the federal government and should they have liquidity or solvency issues in the future (whether from their direction actions or from counterparty exposure to one or more failed institutions), or should their regulator determine that they have an unacceptable level of financial risk without additional capital, they will either resolve their financial deficiencies entirely from private sources or be put into bankruptcy or government receivership.
Any executive who isn't willing to do all that can STFU and accept the pay restrictions until they're in a position to satisfy those conditions.
how about they buy back the securities that the Fed has purchased from them.
how about they meet acceptable capital ratios (if our regulators can get around to defining that) for assets marked to market, including those off balance sheet items soon to come back on board.
as to "Any executive who isn't willing to do all that can STFU and accept the pay restrictions until they're in a position to satisfy those conditions" the government of this country needs to tell the truth and admit that this is not a matter of exec compensation, but a matter of shoring up the capital of these banks.
once banks are completely independent in all regards and using private money with no gov't backstop, they can pay their tellers and janitors billions per year ala a true capitalist system
LOL
Deadhead, that shit is dead and buried at the Fed. No sense digging up the corpse. They buried those suckers so fast they didn't even get a chance to embalm them.
Can you imagine how bad the stink would be if we starting resurrecting those abominations? Talk about the living dead, those shit piles would walk away from their own stench.
Leaves those things alone. I've got a weak stomach. :>)
cd...article on cnbc dot com tonight where both william dudley and donald kohn both said that the fed might not lose a nickel on their emergency programs. maybe they define emergency programs differently than we do. i'll get the link and edit.
link http://www.cnbc.com/id/33436294
deadhead,
I'm absolutely convinced that the primary purpose of this type of nonsense being communicated to the general public at large is to communicate with the (financial) underground.
What they're saying is that the taxpayer will be stuck with the bill and thus, knowing this, all minions should act accordingly.
I've always said that conspiracies don't need to be directly verbalized. That non-verbal communication as well as innuendo and guarded speech serve the purpose and also provide plausible deniability.
When the government starts setting top line compensation freedom suffers. They have no self control. MS--kudos
If something big enough will fail, there would be a domino effect for entire economy, which any govt wouldn't allow for any cost. So, it's much easier to support them with inflated money and allow them collecting their bonuses.
Where does the entertainment industry fall in this scheme?
I saw this coming before last years election. The tears will be shed by duped employees who have their salaries capped or reduced to maintain the current gaps in executive compensation.
Chapter 7 of these politically connected institutions is the proper solution in my opinion. Following the loss of their jobs, these executives should be indicted for massive securties fraud.
No, the entertainment industry is not left behind Sir.
They are doing the volunteer theme, remember? Promoting ObAmma's socialistist idealogies..
It's a good thing Goldman got themselves out from under the auspices of the government before this came down. They are so goddamn lucky...again.
Boy, they are good. How do they do it?!?
Reminder - they are the government.
Actually, Goldman structured a bunch of restricted stock as bonuses last winter to deal with "public outrage." Now that is what the other companies will do, also. Now, instead of having to pay regular income tax, they will get long term capital gains....as they will surely have easy access to funds enabling them to buy their options and secure long term capital gain rates (along with bloated stock prices). This is not a bad thing for these douchebags.
On the Goldman note...now they are paying gigantic bonuses, as well. They are pretty much waving their untouchable status in everyone's faces at this point. These "companies" are actually following Goldman's model of senior exec. compensation that was set up last December...when, by the way, Goldman stock was trading at (drum roll, please) $80 per share on Dec.18, 2008. I'm guessing their little employee stock plans look preeetttty good right now.
Link to Goldman's compensation:
http://uk.reuters.com/article/idUKN1828036120081218
How do it know ?
I agree, they should have failed. But now that the idiots who are imposing a communist state didn't allow the idiots to lose their jobs, we should still let them give themselves rich bonuses and pay packages?
I get why czar's are wrong, but what else are they going to do? They've handled this wrong from the start, it'll be wrong in the end,
Agreed, as I say below, I think this commentary is off base. Let the Fascists fight amongst each other.
All the firms affected are still propped up by government money. Let's just call the loans, and see if they survive. Guaranteed GMAC, AIG, C, would fail immediately if they had to pay back the government.
They work for the government now, they should be paid government salaries. I think the pay czar is being too generous.
+1
First choice is of course claw back of all monies lent, spent, promised, and all profits that accrued thereto.
Second choice is have the masses hurl agitprop at the banks and the Congress simultaneously, enjoying popcorn while observing the hilarity that ensues, as we are seeing right now.
I think Marla's point is that a shockingly dangerous precedent is being set. Do any of you remember the Clintons' poll on doctors' salaries?
Popcorn, anyone?
The stupidity compounds. Instead of letting the firms fail, the government invests billions directly and indirectly. The firms need to attract talent to survive, and pay out large bonuses thanks to government largess and interventionist policies. Public anger, basically constant since last year, suddenly becomes important when President's healthcare push is failing and numbers turn south. Solution? Bash the bankers and cut their salaries...which will cause them to leave for other firms and collapse the companies that the government owns and invests in.
EPIC FAIL
Leave for what other firms?
+10
"The firms need to attract talent to survive"
You are mistaken.
The kind of "talent" that only responds to financial gains and bonuses is useless otherwise.
Greed is not a "talent". Nothing wrong with greed per se but let's keep in mind that genuine talent can perform wonders without the big carrot dangling in front of its eyes.
25 y/o trading jockeys with multi billion Dollar accounts are not "talented".
That was beautiful
Hello there. I'm new here. This is my first post ...but I've been peeking in from the bushes (the virtual not the presidential) for some time . I confess don't understand everything said sometimes because my expertise is in criminal law not financial instruments. That said, it seems like the two disciplines have been merging a lot lately. Hence me wandering over. Since everything seems to be going to hell lately, I feel some kind of duty to see what I can learn from your insights. I've also come to respect the honesty, inteligence, and ugly truth spoken here. Hope you don't mind and I hope I have something to contribute.
Jump on in, the water's fine. Since you have an avatar and snappy name already, you're fully dressed and ready for battle.
One small warning. Please remember to keep your hands and feet away from Cheeky Bastards' mouth and you'll be fine. :>)
+1 good advice
+2
I like CB. Reminds me of my favorite crusty bench member. Equal opportunity abuser. But knows his stuff. Can't ask for a better trial.
We all love him. And we all keep our hands and feet away from his mouth. :>)
I confess don't understand everything said sometimes because my expertise is in criminal law not financial instruments
There's a reason why criminal law folks aren't allowed near the financial sector, lol!
Your criminal law experience and thoughts will be most welcome here, particularly with the continuing bac/ml/sec/judge rakoff/andrew cuomo/adolphus townes, etc. drama that continues to unfold.
"There's a reason why criminal law folks aren't allowed near the financial sector, lol!"
fyi CHANGE is coming.
The new SEC is much closer to the DOJ than you think.
Mary..., is that you?
Closer to John Mitchell unless my hunch proves out.
I could write a book. Let's leave it at that.
fyi CHANGE is coming.
The new SEC is much closer to the DOJ than you think.
I hope you are right. I will only believe it when I see executives of the big 5 doing perp walks. until then, I'm a skeptic. Mary Schapiro's actions to date on the Lewis matter have been a disgrace.
No, you got it wrong unfortunately.
I'd like to see the same actions but the new SEC is only going after the small time "criminals" (inside trading lol) like Raj.
The banker shysters are protected as "corporate executives" who just happen to be good friends with the Treasury Secretary or the Fed Chairman.
No SEC attorney will go after the crimes that are happening in plain sight.
- give us 700 billion or else - fresh cash new promo "green shoots" "recovery" - pump pump pump before a massive dump. all players involved - elected and not - got a piece of the action during the promo.
forget pennystockchasers.com .. look at Cramer, Kudlow, xyz financial pump talking head and their so called business "news" networks.
pull back the curtain and you'll see the wizard is not using any new magic.
i am confused by your words walkure...you first mention that "change is coming" and then proceed to state that "no sec attorney will go after....."
which is it?
DaveyJones, welcome aboard. I suspect that through the process of contribution you'll enlighten us all via your experiences and enrich the whole. I think you have discovered via your "peeking in from the bushes" that your experiences while unique are by no means invalid. Have fun. Cheers
Welcome. Maybe you could 'incite' your state AG to prosecute some of the rampant fraud ZH, Denninger, et al keep bringin up.
Actually the term "czar" makes little sense in the context of a public administration, as there was not a hierarchy of czars. The correct term here is "fuhrer", as there were many fuhrers of many ranks, Reichsfuhrer being the title for the man at the top.
Considering the US government is a majority stakeholder in many private companies, shouldnt they have a say in executive compensation for those companies? seems like it to me...
Actually, the government is a majority stakeholder in ZERO of them. Even where stock was transferred it now sits in a trust managed by a set of trustees, not the Treasury or anywhere else.
No where that I am aware do they hold more than 51% anyhow. That's fiction.
None the less.., if they are in charge of companies using TARP funds to survive, they have no moral or legal right to expect huge saleries and bonuses until they can do it without being on taxpayers payroll. Return the money and pay your "talent" what you will.
Goldman did just that.
GS has much more taxpayer loot hanging around. They could dig out from their couch the billions from AIG that was taxpayer booty, for one thing. That would be a start..course, that would wipe out all their gains for the last two quarters.., so ain't gonna happen.
Government-Sanctioned money laundering.
Something tells me that this is all a bunch of hocus pocus and somehow, someway the bankers will come out on top. More loopholes please.
he who feeds at the public trough shall be goaded by the public trough keepers....
the inevitability of interference with compensation was completely obvious to me when the companies went begging for bailout money to cover their bad management and hopeless broken businesses....
i am all for limited government but i am an extreme minority so i don't see this situation changing especially with the anti-christ in the white house....
Link: First They Came For The Bankers – How Tyranny is Set in Motion
@JohnKing. Johnny boi you are right. It's wrong for the gov to get involved with salaries. We should have let all those companies go under. That's capitalism. We are drifting further and further away from capitalism with these bailouts as well as pay regulations.
Certainly, everyone's gut instinct is to say "Fuck the bankers", including me.
Remember these words though;
First they came for the communists, and I did not speak out—because I was not a communist;
Then they came for the socialists, and I did not speak out—because I was not a socialist;
Then they came for the trade unionists, and I did not speak out—because I was not a trade unionist;
Then they came for the Jews, and I did not speak out—because I was not a Jew;
Then they came for me—and there was no one left to speak out for me.
We tread on very dangerous ground here. Maybe it's too late anyway. Oh well, whatever, nevermind.
Political change and a radical takeover always come from a banking cartel that puts the political whores in place to begin with. Hitler didn't finance himself, neither did Stalin.
The fat cats at the top are well taken care of.
You're probably right. I wouldn't be surprised if this proposal didn't originate from the bankers themselves.
This argument doesn't phase me, for I am the "they" you speak of.
You are way off base. The TARP legislation clearly states that firms receiving TARP are subject to compensation oversight.
Live by the TARP, die by the TARP, I say.
I actually find the whole thing amusing, seeing the Fascists fight amongst themselves.
"Punishing firms that accepted government funds, effectively under duress, and who have managed to actually pay those funds back (at a gain to the taxpayer, you might also notice) is a dangerous act. "
Bullshit. First, I don't think any of the firms subject to the pay cuts have paid back the government. So get your facts straight first. Jamie Dimon's pay isn't being restricted.
Second, even if they did pay back the money, what about the benefits they will continue to get for years thanks to their implicit full faith and credit backing?
You are pissed off about this issue, but not about the fact that AIG continues to compete in the insurance space with companies that never took a dime from the government? Where is your commentary on that?
"Punishing firms that accepted government funds, effectively under duress"
Umm, that "under duress" was the fact that they were f***ing insolvent. I suppose we could've done some FDIC takeovers on actual banks, and let the blood sucking IB's just go Ch7 BK (and not suddenly declare themselves to be banks).
Or perhaps we could do what's being done to many employees, getting CEO's outsourced from India. Picture Rajiv from the call center running the Citi board mtg based on what the CRM system prompts him to ask? Priceless.
I personally like the idea of getting bank execs the same way they pick people for jury duty. "Oh great, I gotta do a week's worth of bonus evals over at JPMorgan." You can imagine the lack of enthusiasm Avg Joe would have hearing Blaine from M&A trying to justify a 6-figure bonus. Blaine would peobably end up getting fired and/or kicked in the nuts. Octuple-priceless!
Anon,
May I make a few small changes to your sentence below?
Umm, that "under duress" was the fact that they were f***ing insolvent.
They still are insolvent.
Welcome to Zombieland.
http://www.horror-asylum.com/news/pics/zombieland_zombie_clown.jpg
Well, actually it's not such a bad idea - considering the amount of brainpower these "CEOs" tend to possess. Would definitely save a lot of money.
+1
I get where you're coming from ghostface and totally agree, but I think Marla/ZH is taking issue with the very concept of a "Czar" regulating any and all executive pay, not just TARP institutions. Like she said:
Its normal for a creditor to insist on conditions when loaning money. Why is that such a bad concept when the lender is the Federal government?
Had the Federal government not bailed out the banks and other financial institutions, both with direct cash infusions, by buyng bad assets such as mortgage backed securities, and by changing the reporting rules, then the entities who received these benefits would be bankrupt: the executives would be getting Nothing.
If anything, the pay cuts did not go far enough. Executives do not deserve bonuses for losing millions (or billions) of dollars with bad decisions. And, as we've seen, the so-called profits run up from 2000-2008 were illusionary to begin with as the banks were actually losing money.
For blame the government for everything nut jobs, like Sarah Palin who bungled a million dollar building in Alaska of all places, I'd suggest that its a bad use of public funds to pay for incompetence and failure--even if the people getting the dollars donate heavily to your political causes.
I'd also argue that these so called "cuts" are not really that, as they are directed at people who did not deserve the money in the first place. "Cuts" is a misnomer. Reducing pay from $38 million to $19 million for a screw up? And their are complaints about that. Please. They should pay the guy $100K and require him to perform a public ass kissing before he gets his pay.
None of the reductions effect banks which did not take or need the Gov's money.
Last, since the government guarantees deposits AND has started guaranteeing the mistakes of the investments banks, the Government can and should have the right to look and and regulate the pay of the executives running the companies who use the guarantees. Why should benefits flow without attendant burdens?
IMO, the ONLY valid criticism is that these reductions came too late: they should have been required at the time the money from the government was given. So blame Paulson and Bernancke, who did not think to place these requirements in place before any money was doled out. But this is a minor quibble given that the financial institutions would be gone already without the government's assistance.
"Its normal for a creditor to insist on conditions when loaning money. Why is that such a bad concept when the lender is the Federal government?"
+1 for common sense
Then the creditor should have outlined those terms UP FRONT and not put a gun to the head of the borrower while muttering "SIGN."
You really think the government put a gun to the head of GMAC? Or AIG?
Far from it, more like the other way around.
Then the government should not have responded to the bluff....
Are you asserting there is nothing in TARP that authorized these actions? That the banks that accepted the TARP funds had no idea these actions were possible?
Are you asserting there is nothing in TARP that authorized these actions? That the banks that accepted the TARP funds had no idea these actions were possible?
96% of the American people did a thumbs down on the TARP. Authorized>>>>>>>
The government never expands the law in any circumstance... OOOOOOKKKKKKK
Yes yes, I understand your arguments: Government bad.
You can put those arguments in the same place you pulled your 96% statistic from.
+1
+1 What the fuck, at least You Can't Handle... More properly spelled. shows some integrity by responding with an articulate argument. I would never marginalize a person for at least EXPRESSING HIMSELF . In Greece the land of free expressionand and the U.S. should be coveted. Thanks You Can't Handle... for being a good antagonist....
+1 Follwow up I'm sure you have good things to say,, I'm all ears..
Dear Geopol,
I, in no way, was marginalizing you. The '+1' was given to YCH for his remark 'government bad'. He and I both are arguing the same point that you are. We just feel that, even though the government is way too intrusive for our tastes, this particular path of maintaining some control over the salaries and bonuses of the corrupt people responsible for landing us in this shithole, don't deserve to use taxpayer funds to purchase villas in the south of France, and hence, the pay Czar, by default, actually got it right this time. Believe me, it was only a fluke he got it right.
Bingo. Thank you.
I understand the +1 shortcut.
The fact that we have the government regulating, "as you say", "corrupt people responsible for landing us in this shit-hole" is a perfect indictment on government to begin with.
I think the two of you are suffering from the left/right paradigm. I don't harbor the republican party any more than the democrats, all are parliamentary cretins. The discussion about the czars and the communist implications is moot. I graduated collage in 1973 and in those days you can't imagine how much freedom there was in everyday life. Where there problems? you bet, but we have come a long way and slouching in a dangerous way from those days.
I'm glad the you and Can't Handle The...are part of this discussion. I think that people that have a different point of from myself need a special right to freedom of speech. As it was once said:
Freedom of speech is not functional when people of different views are not heard..My right to hear people is just as important as speaking.
Go forth and pontificate...
gmrpeabody
And thanks for your input, I'm glad you responded...
May have been a plugged number, but it's close.
Thanks Marla,,
That's a ridiculous bit of revisionism. You might be able to make a case that early on Paulson coerced some big banks that didn't want TARP to take it in an effort to hide the truly insolvent sausages. However, the banks that really didn't want or need TARP have already paid back the money, which means they are not subject to the pay restrictions. All of the terms were outlined and apparant. The banks were on the phone with Paulson and with members of congress right up to the very end, haggling out the details. I know you can't really be this clueless.
It's like Marla hasn't even read TARP, the regulations the treasury has created around TARP, etc.
This whole diary is fail. It attacks the "czar" title as if Marla had never lived through, say, the Reagan administration and its drug czar, or God forbid, the "czars" of previous administrations. It's a silly argument about a label and has nothing to add to the matter.
And then we're supposed to think that all these failed banks are blind-sided that the executive compensation provisions in TARP are actually being used to do exactly what they are there to do.
I guess this diary is just in that parallel universe that the Government is going to take all the TARP funds back and let the banks fail, so that it can avoid the horribly unethical and Communist and evil step of these LAUGHABLY WEAK restrictions.
Epic fail is a great tag for this diary.
GS Payed all the money back to the taxpayer from the TARP?? BS
Exactly. No one is cutting Dimon's pay, because he paid the money back.
As I said, if GMAC, for example, is unhappy, let them pay back the money. Oh, they can't? Surprise.
In fact, they still haven't raised the capital they were supposed to under the stress test. Funny how the MSM hasn't mentioned that.
I'm shocked to see gambling going on in Ricks cafe. Gun running to Etheopia, money not being payed back to the federal govenment... The government can't even run a whorehouse without it going broke. Get that, a fucking whorehouse. How do you fuck that up?... Amtrak=broke medicare=broke medicade=broke ss =broke all alphabet agencies BROKE..... Can't handle the..... Put the 10k you saved and give it to the government, I'm sure you will experience a huge return.
Government should not be in this business.......................................
"The government can't even run a whorehouse without it going broke"
are you talking about the one in Washington or the one in Nevada?
I get confused when I see a debate about whose fault this is - big bad banks or big bad government. I thought all this is happening because they've become one two headed monster...
Mustang Ranch Pahrump Nevada,
Look under The Glass-Steagall Act of 1933
GS Had puts on AIG for 13Billion and when AIG went down the sink the feds payed off as well as the puts. Total=13Billion owed to the taxpayer, not 1.3 billion they gave to TARP.
I seem to remenber
Lloyd Blankfein
+1
doesn't it feel like ZH is trying to be fair and bala=int to the bankers?
Fu3k tea bangkers
I don't even care if they're still under TARP or not, put any financial institution that has been a recipient of TARP, or has issued debt under the FDIC backed paper program, or that ducked into bank holding company status on short notice under these pay restrictions. That would include companies like GE and American Express. Until Goldman and others pay back their subsidized loans or start paying the government the interest rate subsidy they receive on those loans they're not out from under TARP in my opinion.
The idea that some of the financial firms didn't need TARP is a red herring. The biggest ones are all linked to each other via counterparty exposure on derivative contracts. Goldman would have failed had the government not stepped in to save other financial institutions, picked up the payments on AIG's bad derivatives bets and allowed Goldman to raise debt under an FDIC guarantee. With its dependence on the commercial paper market, GE probably would have gone bankrupt without being able to issue short-term debt backed by the FDIC.
The people who run these institutions aren't capitalists. They operate with government safety nets and spend enormous sums lobbying Washington to give themselves advantages against competitors and to stop legislation that is in the public interest but against their own financial interests (i.e. fighting regulation of derivatives, consumer protection in lending, stock option expensing).
The idea that some of the financial firms didn't need TARP is a red herring. The biggest ones are all linked to each other via counter party exposure on derivative contracts. Goldman would have failed had the government not stepped in to save other financial institutions, picked up the payments on AIG's bad derivatives bets and allowed Goldman to raise debt under an FDIC guarantee.
I think you said what I was thinking.
The above is right on..
dexter? is that you? you left knives and plastic wrap at my place again...
Marla, if the commenters on ZH aren't angry about these pay cuts, then NO ONE is angry about these pay cuts. Hang it up.
"Hanging it up" is not the ZH way. And plenty of people are pissed.
"Hanging it up" is not the ZH way.
That's true. And of course that's what we all love about ZH.
As for people getting pissed, I don't see many from out here. Maybe in Manhattan. There are House elections next year, and you ain't seen populism yet.
If people are cheering the pay cuts and the fact that the government is now setting wages, well then the government's strategy to keep people in line is working. Unfortunately, the strategy for fixing the problem will fail.
This is like a bizarro-world version of the I Love Lucy comedy of errors. Government keeps piling on mistake after mistake, and no end in sight, until Ricky comes home and says "Lucy you got some 'splaining to do."
This should not be primarily about revenge or justice, this should be about restoring the natural function of market-based corrections. The pay-czar thing is going further away from that, no matter how well-intentioned.
The people are cheering the pay cuts because they have a shallow view of things. They suffer from the continuous propaganda machine, not their fault, it's very effective. I personally think that the root of our problems go back to the watering down of our constitution. Constitutional Republic,,,Not a democracy. You are right, let the free markets work. When government gets involved it skews everthing.
cheering the pay cuts, HA. I ain't cheering this meager shit. I'd be cheering when Justice prevails. Until then the daily tares continue.
I can't say this enough. FTBs
I'm just laughing at the naive bankers who thought their Fascist protectors weren't going to turn on them, sooner or later. Poetic justice.
As individuals, they should have allowed their institutions to fail rather than accept government money, they would have been better off.
Despite what some say here, no one put a gun to GMAC's head to accept the government money, or Citi's, or AIG's; they were begging for the money.
+1
The creditor was in a bit of a rush to keep these halfwits from collapsing the global economy so maybe they missed a few details.
Another of many issues you're leaving out is that the government did not drive a hard bargain with any of the beggar institutions like a normal creditor would have. Preferred stock with a 5% interest rates and warrants to Goldman Sachs? Warren Buffett had just gotten 10% plus warrants from Goldman. 5% preferred to financial basket cases like Citi and BAC that couldn't have raised the funds from private sources at virtually any cost? How about allowing these companies and many others to raise funds by giving them FDIC backing at a time when nobody would buy their commercial paper?
Elizabeth Warren's Congressional oversight commission issued a report documenting that Hank Paulson got about $250 billion worth of fair market value for the first $350 billion in TARP money he handed out to his old pals.
You need to extend that thinking like the TPTB are. Do you receive gov't contracts? SBA loans? Anything they touch, they control, that my friend is what they are after.
Why is that such a bad concept when the lender is the Federal government?
Stealing money from A for the economic benefit of B is in no way the governments right or moral duty.
Are you an anarchist, or just willing to bend the word "stealing" to encompass any regulatory decision you dislike?
Regulatory decision by whom?
535 comiditized temple monkeys scouring the ruins of America searching for bribes, the whorehouse on the hill where you can slide in a quarter and out comes the desired legislation. Go hit the books under reality.
I'm an anarchist if I happen to dislike government tyranny.
+ 1,000
TAKING my money via taxation and GIVING (oops, I mean loaning, sort of) it to banks is NOT stealing????
Are you retarded?
Go read up on the jurisprudence behind the Taxing and Spending clause. Or just read about American History for the last 100 or so years.
You can call people retarded all you want, but when you are so ignorant of law and history, and blind to reality, your insults have no sting, and only make the pity for someone like you grow.
Please tell us what enumerated power of the US Constitution was used to take money from the US Treasury and invest it in private companies.
Do you believe the Federal Government should be able to do whatever it feels is necessary and can be done with money? Are it's powers unlimited?
Some of us disagree with this assumption.
You seem somewhat hostile to this very basic and valid point of contention.
Theft has a very specific definition. If the shoe fits.
I am sympathetic to your point, but I hate to break it to you that a long line of Supreme Court jurisprudence has established that the "Spending for the General Welfare" clause of the US Constitution has given Congress plenary authority to "take money from the US Treasury" and do whatever the fuck they want to with it. And when you try to challenge that spending, good luck, because they've ridiculously limited taxpayer standing to challenges based on the Establishment clause!
So the answer to your question is: yes, the powers for spending are virtually unlimited.
Again, I'm sympathetic to your concern, but this isn't exactly a new issue or the first opportunity for outrage.
"Shortly after Butler, in Helvering v. Davis,[22] the Supreme Court interpreted the clause even more expansively, conferring upon Congress a plenary power to impose taxes and to spend money for the general welfare subject almost entirely to its own discretion. Even more recently, the Court has included the power to indirectly coerce the states into adopting national standards by threatening to withhold federal funds in South Dakota v. Dole.[15]" -- wikipedia
http://en.wikipedia.org/wiki/Taxing_and_Spending_Clause
[Or sit through a Con law course in law school.]
The whole idea of appointing a "Czar" to oversee some aspect of governance is simply abysmal and reminds me of the urge by government to cheapen the concept of going to war by declaring war upon every perceived ill. Doing so while avoiding at all costs the actual constitutional process of taking the nation to war when we commit the nations blood & treasure to the prospect of sustainment of this deeply flawed economic system and the political & governing processes that have been captured by it. In the case of government Czar's we can ascertain areas of special emphasis via their creation and staffing.
A close second is attempting to determine what constitutes an actual real life private enterprise today. In the name of avoiding the prospect of "nationalization" both political parties have endeavored to destroy the concept of private property and by extension private enterprise and the concept of the rule of law upon which all is premised.
The simple fact is that the structure of the world economy cannot continue to stagger without increased amounts of "intervention" to sustain it. Once again we are reminded by events that the current model is deeply flawed and action to reinvigorate the entrepreneurial spirit is required to form the basis of a sustainable and sensible system of actual free enterprise and the responsible self government that flows from this process.
Wage controls are silly, no question about it.
The problem we have here is that the matter is being framed by the US gov't as one that simply satisfies the population's blood lust as they know that they have bailed out the banks, are currently still bailing out the banks (all of them via the FDIC TLGP, the devaluation of the dollar, the easy money discount window, blah, blah) and the american population is pissed. of course, by reacting to the pitchforks and reducing the distribution of profits to compensation, the feds force the non compensation money to remain in the banks as capital, which this whole exercise is about anyway, i.e. recapitalization of banks by stealth.
The truth and a little honesty by the Fed/Treasury/Banking complex would go a long way, though we won't see that. Here's what we should be doing:
* the regulators (i'll include FASB here by reference) should cut the shit and admit the capital problem, which I believe is no better, maybe worse, than one year ago. Now that we have some bank profits due to societal absorption of risk (ex FDIC TLGP), devaluation of dollar, outright purchase of mortgage backed shit by the Fed, etc., the regulators should immediately enforce actions to mark assets to market, which would easily absorb the profits currently being booked by the banks.
* further, we are about to have a load of crap come back to the bank's balance sheet from the qspe/siv critters, which will necessitate enormous amounts of capital to offset and provide a cushion.
The government should stop pussyfooting around on the current bank profit matter and positioning it as a compensation issue. Let's just tell the American people that the capital levels are still too low and the profits belong back in the bank's capital accounts.
I'll finish by saying that the management leadership of the nation's banks, at least those with profits that are planning to divert even a nickel of that towards compensation, are absolutely derelict in their duty of being reasonable stewards of the financial integrity of our banks by not plowing every phucking nickel of profit back into the banks to begin to restore some semblance of sanity to proper balance sheet management.
Always appreciate your posts dh. Two comments:
All wages are controlled by someone or some entity. The degree to which they are controlled varies.
Agreed that banksters should improve the balance sheets rather than give a substantial portion of proceeds to themselves. However, that is not the way of our shortsighted quarter to quarter profit thinking. Get it while you can is the modus operandi.
market wages are fundamentally different from government wages.
Yeah, Gov wages, on average, are 1.5x higher. Government, and to any degree of its excesses, is funded on the back of private capital. This is modern slavery.
http://www.cato-at-liberty.org/2009/08/24/federal-pay-continues-rapid-as...
Just fire the fuckers, DH.
Then when the companies pay us back, they can pay each other as they like. If they break the laws, fire them too.
I agree,
Only don't pay back the government and say you paid back the taxpayer. I'm not falling for that shit. The government will just spend the money on white house pajama parties. Fuck that...IN MY BANK ACCOUNT ASSHOLE,,IN MY BANK ACCOUNT...
Now on to the next project
Wait a sec. So the Fed and Treasury are buying Mortgage backed securities?
Doesn't that prop up real estate values throughout the entire country? So in a sense, any institution that owns real estate is benefitting from taxpayer dollars.
Is that a stretch? I know several hedge funds which have invested heavily in Commercial Real Estate - they are not subject to pay restrictions even though they benefit from the government purchase of mortgage backed securities. I don't mean to seem naive here, but is that the way it works?
The truth is that GS, MS and JPM have all benefitted tremendously by even receiving TARP in the first place. It is almost like getting a bullet proof vest right before you catch a bullet. And the fact that they are not "subject" to Pay Czar says what a publicity stunt this really is. Nothing has materially changed. AIG traders have twiddle their thumbs to pretend to liquidate their book. *ALL* of the banks would have failed or suffered if it wasn't for the government.
Socialized Risk and Private Payout has never been so true.
I really wonder who really runs this country.
This shit is way out of hand. Pump it out while you can ZH. Pump it as fast and furious as possible.
(1) you appear woefully ignorant of the history of the "czar" title. It's a republican talking point to make hay out of that label for the current administration. Educate yourself here:
http://en.wikipedia.org/wiki/List_of_U.S._executive_branch_%27czars%27
(2) in my opinion the U.S. Government is not doing enough to prevent bailout funds from being used for executive pay bonuses. The U.S. taxpayer is the de facto owner of these institutions now, and it is absurd to expect the U.S. taxpayer to have no say in the management of these zombie-banks. In case you haven't noticed, there's a shitstorm about public funds going into private pockets, and limiting executive pay for these failed bank-zombies is wildly popular with the American people.
(3) you can talk all you want to about the parallel universe where the U.S. Government did the right thing and let these institutions fail, but most of us are stuck in the real universe where that didn't happen. Therefore, this move a tiny step in the right direction for what should have been the only other alternative to letting them fail: nationalization. Since we did neither extreme, this is merely a much needed band aid on a deep gash. But it was needed.
we should take a shortcut back to that so-called parallel universe - revoke TARP and the bailouts, bury the failed banks & companies, and get out of the moral hazard business.
+100
absurd to expect the U.S. taxpayer to have no say in the management of these zombie-banks
Through what conduit?? The congress,, ha, good luck with that.
The executive branch has been corrupted. And you use wikipedia as your source??
(1) Once again you appear to be an anarchist.
(2) The wikipedia article lists the use of the "czar" term for executive branch officials back many administrations. If you'd like to refute any of the data on that page, go ahead. Otherwise your argument is all form and no substance.
Your tiring me out, you just don't seem to get it.
Here's the deal. No one in the financial services should gets a bonus for the next 3 years. Not only would that be fair it would take care of to big to fail problem. Since some would leave and start their on firm with their own financing. Then change the accounting rules and we wont have this big of a problem again.
It will end as follows:
i. After whatever health care bill is passed they will move on to the issue of new taxes.
ii. They will propose a VAT but with vague promises (i.e. lies) of spending cuts/savings so a low initial VAT rate will suffice, they will say.
iii. Fed will print right through 2010 on promises of the VAT.
iv. USD will continue decline in 2010 as it all plays out.
v. Political bloodletting in 2010 leading up to elections will ultimately rival the late 60s.
vi. US economy will suck through 2010.
vii. Dems' hubris will be rewarded by losing sway in the Senate in midterms.
viii. Stalemate on neg CF will drag into 2011; VAT will eventually pass with promises and lies; US will slide relentlessly deeper into the socialist abyss...and the rest of the world marches on.
It's already over. The hyenas are just dividing up the carcass.
There's more to that simple statement than you know.
+++
There's a Russian journalist predicting the breakup of the USA. Is that what you're referring to?
Nice image.
I like to think of the image of a foreclosed and abandoned house that's on fire, with various local thugs trying to pull out all the copper pipe and wiring before it comes crashing down.
Banks and Wall Street proper responsibility is to steward finances for the greatest good of the entire United States, not bring the financial system to collapse and put bonuses in the hands of "talent" who can easily be replaced by a couple of MBAs from India with spreadsheets with equal talent and probably higher scruples. Suddenly, the Olympic bid, the Nobel Prize, and the birther nonsense has taken on a diminished perspective :D
Obama's policies are populist through and through.
He needs to score somewhere, somehow and BAD.
You dance with who brung ya! We're all going to be on a GS schedule before long. That said, it's hard to really give two fucks what happens to these organized thieves.
P. 89
"Most, but not all, of the major banking crises were associated with sharp drops in the deposit-currency ratio; the most important exception is in 1931 in Italy, where the government was able to keep secret much of the banking system's problems until a government takeover was affected."
Bernanke - Essays on the Great Depression
Seriously, they're getting paid *WHILE* they are running ships about to crash.
And this complaint that "They came for the bankers"
Uhhhhh.... am I the only one who thinks it's fucking stupid *NOT* to go for the bankers? After all, it was excess speculation by the very people who are trained to make speculation as safe as possible.
I agree with an earlier comment, take back the fucking money and collapse these bitch ass ponzi scemes. Anyways, don't hate the player, hate the game.
Yup, now that the economy is "recovering", surely we can liquidate AIG and Citi. After all, wasn't AIG waiting for a "recovery" to sell its assets? Everyone keeps telling me the economy has recovered, so start selling.
Employees who work for divisions which are sold to competitors are no longer subject to pay caps. Problem solved for them.
Otherwise, take the government pay grade.
Yup, now that the economy is "recovering", surely we can liquidate AIG and Citi. After all, wasn't AIG waiting for a "recovery" to sell its assets? Everyone keeps telling me the economy has recovered, so start selling.
Fucking brilliant.
+1000