Prepare for bank bonus backlash
Image by h.koppdelaney via Flickr
Everybody wants a scapegoat. Especially when bad things happen, like you lose your job, most of your savings, your house, and/or the chance of retiring when you’d always, quite strategically, planned.
So it makes sense that many people are very, very angry at banks, which they blame for some or all of those events.
Banks, however, don’t seem to care that much—or aren’t acting like it. Even though Goldman Sachs made some efforts at public relations with Ice Rink Gate ‘09, for instance, the company is still “expected to pay its employees an average of about $595,000 apiece for 2009, one of the most profitable years in its 141-year history.”
Read all about it: Bank bonus season starts this week, and it has the makings for some serious drama. According to the New York Times, “it looks as if it will be one of the largest and most controversial blowouts the industry has ever seen.”
Those at JPMorgan Chase stand to collect about $463,000 on average. Citigroup’s overall 2009 bonus pool is expected to be about $5.3 billion. And these numbers are after reductions given the current economy and calls from restraint from the government and American public.
Perhaps most disturbingly, “”Few banks are taking immediate steps to reduce bonuses substantially. Instead, Wall Street is confronting a dilemma of riches: How to wrap its eye-popping paychecks in a mantle of moderation.”
So the question is, when the numbers actually come out, what’s going to happen? Have we actually learned anything from the “Great Recession” or will things simply return to the same, give or take a bit of PR wrangling?
All I know is, I’m staying away from Wall Street next week.
via For Wall St., Question on Top Bonuses Is 7 Figures or 8 – NYTimes.com.
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Sorry, I guess I’m just a regular person- but what do these folks do all day to earn this type of money? You know, I do remember that I once got a turkey at Christmas as a bonus…oh and the husband got a $100 gift card to Nordstrom, so what exactly do they do? Do they kill terrorists or cure cancer or something brave? Is there any wonder that there is a grassroots surge to get people to pull what money they have left out of banks and into credit unions and community banks?
But back to my ignorance? What..do…they…do?
http://thankyouforfiringme.org/blog1/
Yes, one time I got an AmEx gift card, half of which had to be paid back in taxes. Oh, and some good tequila, that was nice, but didn’t pay my rent.
In response to another comment. See in context »These banks are gambling with taxpayer money, they haven’t cleared the toxic assets from their books… It seems as if the bankers are simply trying to cash in one last time before the proverbial manure hits the cooling implement.
Perhaps the public will finally begin to understand how the Big Corporate Money Suck works, thanks to this little financial downturn. The corporate boards of directors establish the equations that determine the bonuses. The board members generally do what the corporate executives want them to do; one hand washes the other in that relationship. So frequently, the compensation formula is handed to the board by the Legal Department or the CFO.
When there’s a financial downturn, there’s always an eventual upturn for financial institutions, because the feds won’t let them fail, so they pump new dollars in. Those dollars pump up the balance sheets of the banks, triggering the bonuses. Also, when banks write down or write off all the bad loans, their performance instantly improves.
What needs to be done is that some impartial party designated to protect the public’s (and shareholders’) interests must examine the compensation formulas of the major corporations to determine if they have been created by arms-length (non-conflicted) board members in good faith with the dual intent to attract and retain top executive talent and to preserve corporate assets so that investors get a fair return.
This will probably never happen in America, unless a true shareholders rights movement is created.
Thanks, D.D. – I wonder how mad the people need to get for that to happen. And I hope this “Great Recession” was not all for naught…
In response to another comment. See in context »