Take Back the Bonuses!

because they didn't break any laws...

"because they didn't break any laws"

Fraud is illegal.

Yes, good idea steve. We would need a new governmental agency to track it all down, maybe we can call it the "Department of Claw Back and Re-Recognition of Past Wrongful Performance Bonuses Program". We could hire a big time PWC auditor to head it and hire a bunch of $100k/yr governmental workers at full pension and maximum 30 hour work weeks to do all the work.

If you do the cost-benefit analysis of that JuiceMan, you'll find it quite reasonable: think it'll cost the $2 trillion of TARP and the bailout?

Nope.

If you want to do the cost-benefit of building a governmental agency to chase past compensation (not to mention the lawyer fees involved) and factor in the small % (if any) that you would be successful in recovering, I think you would determine this isn't a very good idea. To your point, the government may want to state some specific regarding what TARP money can be used for, but hey, I'm just a guy posting on a real estate forum.

there should be a Nurembourg like effort to not only claw back the bonus money, but also to look into the past 8 years at each bank who had to be bailed out. They should look for who knew what, who abused the system etc. If your bank had to be bailed out then the government should have the right to look into who caused the need for the bail outs. This info should be made public and if any laws were broken all should be prosecuted. Also remember in Nuremnbourg - following orders was not an excuse.......

steve, I agree.

These financial institutions with their 30-40 X balance sheet leverage were escalating risk that they must have known they could not internally absorb if the environment abruptly changed for the worse. The higher the leverage, the higher the bonuses and IMO, that borders on wreckless management & payouts specially for institutions with FDIC insured deposits.

The final tab to the tax payer for this fiasco may reach $3 trillion. To place this amount in perspective, it took the Federal government well over 200 years to reach an accumulated deficit of this magnitude.

In the real world, I could care less how much WS earns as long as their actions do not cost a dime to the 99.99% of the American people whose living has nothing to do with their activities.

JuiceMan, it's all about moral hazard: no one would willingly take risks like those if they knew they could go bankrupt personally because of it. It is fraudulent to issue bonuses on the short-term performance of long-term assets.

Same thing with allowing bankruptcy protection for primary residences: it sure would make the bank think twice about whom they lent to.

Same thing about no liability for ratings agencies.

"But hey, I'm just a guy posting on a real estate forum."

I agree with serge.

I don't disagree steve, but I'm pessimistic that anything can be done to right the past and we will compensate through over-regulation in the future.

"over-regulation"

That's a value judgment. Yes there will be more regulation, but how much is enough? We now have multiple financial institutions that are "too big to fail." Therefore, regulations will be defined to ensure they don't. That WILL mean lower profit, but also much less risk. We're going to see lots of what our Depression forefathers did come back. True Sean Hannity thinks that what caused these current problems was overregulation, and George W. blames it on Bill Clinton, and Sarah Palin blames it on Tina Fey, but someone must be held accountable.

Steve - how funny is it that in an interview the other day, Bush was aksed if there as anything he feels he has not been given enough credit for during his 8 years as POTUS. He furrows his brow, thinks for a momeent and then says, "Yeah, there is. I don;t think I was given enough credit for my idea to privatize social security."

hahahahaha!!!!

I guess he never left the bubble at all during the past 8 years...even now.

The sad part is no one seems to care. Yet more stories today on AIG retention bonuses and more money being thrown at banks. Ho hum.

"privatize social security"

What a good idea! They did that in Chile, and had to undo it. No one contributed voluntarily (meaning the state had to take responsibility for them) and when the stock market crashed there, no one - as here today - had any money left.

"AIG retention bonuses"

What a laugh! Where the hell else are they going to go?

Lots of people made money over the past 8 years, not just wall street folks. And a lot of their comp was tied up in stock, so they also lost a lot of the huge bonuses they made. If they committed real fraud then sure, go after them, but the reality is that they took large risks that, for a long time, paid off. And we, the american people, demanded that they take those risks. We didn't want to get a 5-6% return on our money, we wanted to get a 10-15% return. We wanted big houses, lux cars, nice vacations, etc. Bottom line is that people didn't act conservatively with their money and got burned. The moral hazard was bailing out the banks without forcing out the top management. If the decision makers know that when they f--k up they are going to get publicaly bouced, they might think twice. Rule for accepted TARP money should be that upper management should have to resign.

"Rule for accepted TARP money should be that upper management should have to resign."

this makes zero sense:
1) none of the CEO's would ever "accept" TARP funds if they knew it would mean their job, they would rather see the company go bankrupt.
2) not every bank that received TARP funds wanted them. It was widely reported that Paulson forced Wells Fargo to take TARP funds - should wfc's CEO get fired?
3) Vikram Pandit didn't create Citi's problems, Check Prince and Bob Rubin did, for better or worse he is trying to clean Citi up. Citi "accepted" TARP funds - should he be fired?

"they took large risks that, for a long time, paid off. "

2 years is a long time?

"we, the american people, demanded that they take those risks. "

Where's that nonsense in writing?

"The moral hazard was bailing out the banks without forcing out the top management."

Million-dollar secretaries are just as guilty.

"people didn't act conservatively with their money and got burned"

Most people did act conservatively, and still got burned.

Sorry - can't bear apologists.

cpalms is right. TARP I was to protect Citi & Merrill. & BofA is now posturing for more money, to get rid of Thain, & to tame the bonus expectations of Merrill staff.