The sky is NOT falling - 2008: 6th best year for bonuses

exactly. i don't see all the doom and gloom unless the bonus pool stays around $10-$15 BL for the next 5 years. that's the same level that there was from 1997-2003 (although 2000 almost reached $20Bl) when wall street was run without taxpayers bailouts. even if that happens it will be mostly thanks to layoffs i think (less people working in wall street).

yes, but what were real estate prices in 2003?

Do you guys really not get it?

- Many fewer financial professionals
- Who lost their nest eggs (which were in the form of company equity) and are therefore starting from scratch
- Whose bonuses now (i) are largely equity, (ii) include clawback provisions on the equity, or (iii) include clawback provisions on the cash!
- Whose bonuses in the future will be nothing like the past because of (i) reduced leverage, (ii) greater governmental governance/scrutiny, (iii) availability of other unemployed financial professionals.

Please tell me you understand what's going on. If not, just say so and we'll all ignore your comments in the future.

The hypocrisy in this is so sweet, I can taste it. I really, really like to give the public a better shake than accepting the statement:

"The state comptroller, Thomas P. DiNapoli, said it was unclear if banks had used taxpayer money for the bonuses, a possibility that strikes corporate governance experts, and indeed many ordinary Americans, as outrageous. He urged the Obama administration to examine the issue closely."

What does it matter whether "taxpayer funds" were used or not? If a company is accepting taxpayer funds because they are struggling financially, what the hell is the difference if they use "their money" or "taxpayer funds."

I never though I would actually use the statement, "robbing from Peter to pay Paul," but this seems like a pretty good situation.

Especially when you hear daily about tens of thousands of jobs being lost, from companies that are NOT accepting bailout money, because their businesses are struggling due to banks being unable or unwilling to lend because they are cash-strapped.

Am I the only one that finds this ridiculous?

InvestorMan, you ain't alone. It's worse than ridiculous. It's criminal. After bringing on the economic collapse with rapacious preadatory lending and other unconscionable shenanigans, these jokers continue to fleece the public.

Of course the banks are using taxpayers' money to pay themselves outrageous bonuses. And to reward themselves for what? Undermining the economy? That's the kind of top notch work taht the top quality workers who deserve these bonuses did for us? We shoudl reward them generously with our tax dollars - even as our kids' college funds and our retirment savings are shrinking to nothign and we're losign our jobs? Sorry.

The hubris of the financial sector dwarfs that of the Greek tragic hero. And all of us are left crying. Oh, except the folks who are collecting the bonuses w'eve paid for.

Get real.

Another thing: What about top quality employees in other industries, industries that haven't brouht down the economy, indsturies that might actually contribute to the wellbeing of others? Why aren't they getting taxpayer-funded bonuses averagign $110,000 this year? Don't we need to retain these people, who actually contribute something? Who came up with the oft-repeated song and dance taht WAll STreet talent needs to be showered with money, no matter how it performs, lest it go elswhere? If it goes elsewhere, why shoudl we care? Look at the mess this talent has made. And where might this talent go, anyway? To other industries taht dont' reward incompetence? That's jsut about every other industry out there. Don't let the door hit 'ya....

Enough is enough. Time for clawback.

Anohter thing : NYC real estate prices aren't sustainable, even if Wall STreeters are still robbing the rest of us to further enrich themselves. There jsut aren't enough Wall STreeters to keep prices up. The phrase "house of cards" comes to mind.

The kind of weath inequity we see today is not sustainable. It never has been. It can't be.

So the sky is not falling because why?
We should ignore that it appears that prices have fallen 20% in NY (i mean people who close on their apt, not people who have it listed)
and all those layoffs? i should ignore them?
what about the fact that i could lose my job (along with all these other people) for the first time in a while?
Ignore that?

How about this...SUCK IT

Fuming too.

Wall Street is doing its damndest to incite the masses to raise arms. Stupid and short-sighted, if you ask me. The arrogance is appalling.

As Steve noted earlier, most of the bonus pool was collected in the first 6 months. AND Merrill was 22% of the pool and under investigation. AND record amounts were paid in stock. AND Wall Street is off to an even worse start.

So, in short, this is just the beginning.

And "only" a 44% cut.... so, folks will be saying "only" with 44% decline in Manhattan apartment prices, too?

"The arrogance is appalling." exactly. many are not unemployed thanks to us, the taxpayer. they don't really get that i guess.

to "where is my bonus?" CEOs of banks that receive taxpayers money should have to answer by law: "be grateful you have a job".

nyc10022, Wall Street has shown itself to be of negative value recently. At least real estate still provides shelter, no small intrinsic value.

nyc10022, I'm pretty sure they will be screaming bloody murder. But, 44% off of MASSIVE increases isn't much. Bonus rates (obviously) and NYC apartments have both been to ridiculous levels, so taking that % off those levels still leaves them far above what they were in the other countless decades the banks were profitable outside of the last one.

Shortsightedness of values beyond the previous 7-10 years is what is blindsiding so many people in both of these situations. I'm sure if you looked at bank bonuses, and I'm sure if you look at NYC prices, over a long term chart, you'd see quite a spike from roughly 10 years ago that put both WAY above the trend line.

this is getting a little ridiculous. it's very easy to vilify wall street and every crisis demands a scapegoat, but there is plenty of blame to spread around. don't misunderstand me, this crisis could not have occurred without wall street and alot of the blame certainly belongs there. but the reality is, this "taxpayer" who is getting the shaft is hardly innocent of any wrongdoing. and not every banker is directly responsible for the actions of their employers, it would be akin to blaming a Hasbro accountant for lead in their toys. the underpinnings of this crisis was the subprime mortgage market which, while i won't bore you with specifics you've probably have already heard now, was predicated on people trying to buy more than they can afford.

american culture has evolved into demanding bigger, better, and more, whether we deserve it or not. we have, as a country, one of the lowest savings rates in the developed world. we spend what we have and even what we don't have. we want higher yields on our investments, bigger homes with shinier appliances, and cars with more power and gadgets. do not think that wall street is anything more but a reflection (perhaps magnified) of our society as a whole. we are bailing ourselves out.

Deuce, I agree with you 100% and do not, in any way, mean to be putting all of this blame on Wall Street. They are no more complicit than the government for allowing FNE and FRE to buy crappy mortgages and keep rates low; the mortgage and property brokers for selling anything they can, just so they got their commission; or any individual that purchased a home they couldn't rationally afford, for speculative or personal reasons, on shaky fundamentals.

I think the point most are making is that Wall St. is the only one still making out like a bandit and receiving help from everyone else. The individual is suffering from their own poor decision making without any assistance. When's the last time you saw more than 2 mortgage brokers, smiling, in the same place?

Wall Street is the only one getting massive taxpayer infusions; without many taxpayers approving or backing the fact they're doing so. They're also the most visible and easy to vilify, since they choose to not help themselves by paying out bonuses after a year of massive losses and putting in orders for new jets.

Deuce and InvestorMan, good points. Although there is blame all around, let's remember that the JOB of Wall Streeters relates to money and finance, whereas a homeowner who took out a loan that he/she can't afford might be a teacher, pilot, mechanic, or blue collar/retail worker. They may have made a bad financial decision, but the Wall Street screwed up their very function, akin to a mechanic who didn't correctly repair a vehicle. This is the point that these Wall Street guys always miss.... this field is their JOB.

If a teacher fixed his own car improperly, and his mechanic did the same thing to the teacher's second car, would the mechanic rightly claim, "Hey, we BOTH screwed up, it's not only my fault".

So, wouldn't the 6th best year for Manhattan RE be a more than 50% decline? I think that gets us to 2000-2

http://www.urbandigs.com/2009/01/bonus_bummer.html

UD also noted that we had HIGHER bonuses in 2000!

1999, here we come!

nyc10022 not everyone is hit the same. e.g bonuses in my firm were the second highest ever, but will go down again this year.

Regarding the comment, "bonus pool stays around $10-$15 BL for the next 5 years" - I really disagree. Bonus pools will NOT stay around that. Wall Street is severely contracting & it's not coming back. Do you really think the Democrats are going to allow the bailout money go towards bonuses for the 2nd year in a row???

jjh3d, everyone should be held accountable for the decisions they make. the reality is if people did not take the loans (predatory or not) and investors weren't clamoring for additional yield and buying the securities, wall street couldn't have produced this mess. we gave them the ammunition even if they ultimately pulled the trigger.

an analogy might be a motorcycle, a beginner rider can purchase a 1000cc ducati which they most certainly will crash and potentially hurt themselves. one would hope they have the sound judgement to purchase something less potent. the moral is just because something is available doesn't mean that you should take it.

investorman i appreciate the input. there is a degree of sensationalism attached to the reporting of corporate excess. most bankers will probably not see the bonuses being thrown around in the press and will definitely not see the inside of the private corporate jet. the amount of layoffs on the financial side is also staggering. these aren't the people who pulled down hundred of thousands or even precipitated this debacle. remember, we are bailing out the banks because without them, our economic system would collapse. this assistance is not motivated out of good will but out of self-preservation.

I also agree with the sensationalism and, in principle, the self-preservation. However, aren't we fighting to preserve a ridiculously flawed system that got us here in the first place?

I mean, the whole premise of our salvation is based on the continuance of ridiculous, debt-fueled spending. Consumers need access to MORE credit when, as a society, we are already at a negative savings rate? Home prices that have gone up based on fundamentally unsound mortgages, cheap credit, unsavory tactics, and astronomical price appreciation should continue to do so, just to keep this economic farce going?

We've gone way off track in all aspects financial; no savings, too much spending, created wealth out of thin air, etc. The government hopes to throw new rail down by tossing money around like they can just print it aimlessly (oh, wait, they can) to keep us going in this direction.

I dunno. I think it's time we take our lumps and get back on the right track. Sure, the pain will be great, but it makes more sense, to me, to get back in the right place so we can build off of a much, much, stronger foundation instead of trying to build on a shoddy one.

Just my .02

Deuce, so if you were on a 3rd floor balcony and you fell off the balcony because the railing broke and you because a quadriplegic, is that your fault? No. The railing was there to prevent you from falling, just like LENDING STANDARDS were supposed to prevent people from falling into financial insolvency. Wall Street effectively removed the barrier to financial insolvency in the interest of short-term gain and greed. In a sane, rational world, there would be an investigation into the railing incident and the culprit (the installer, the manufacturer, the inspector, etc.) would be held accountable and punished accordingly; we would not be giving the culprits bonuses since you were only crippled, not killed.

guys i do appreciate all the input, it was constructive especially given some of the conversations i've seen on marketwatch or finance boards. i suppose people who take the time to thoroughly research what is usually the single largest investment a person makes would indeed be more rational and objective.

hejiranyc, that is a ridiculous analogy. i really have no desire to engage you, but just ask yourself if a person has a choice if a railing breaks versus buying a home/taking a mortgage they cannot afford.

best of luck to all.

Sometimes I scratch my head and think WTF are these people doing?

If the banks took the TARP money and used it to help the overall health of their institution they would be able to lend money, the economy would start to recover a bit sooner and the banks would ultimately make much more money in the long term. Instead, they take the short-cut and screw everyone over again.

It is like a doctor prescribing a cure for a man with a disease who, instead of using the cure, sells it to someone else for a large amount of money that he wants to spend on a boat. Unfortunately, he will be dead from his disease without the cure, so he never gets to spend the money anyway. D'oh!

Hey, banks, I'm talking to you!

do not confuse bonuses that are blended as severence -- as bonuses.

NYTimes just did a big piece on how Wall Street bonus cuts aren't just for this year, they'll get worse and basically be permanent...

http://www.streeteasy.com/nyc/talk/discussion/8096-ny-times-wall-street-pay-differential-to-disappear

People are culpable. BUT when your bank or mortgage broker tells you that you can afford something based on industry-accepted standards, especially if you haven't tried to do so previously, and all around you people seem to be doing the same, is it any wonder you might swallow a bit of anxiety and take out the mortgage, particularly as you are also being told that it is a no-risk proposition because the housing market is "insanely" healthy so you'll be able to sell easily if something goes wrong with your personal situation? And you are constantly being told by the media and everyone from your dentist to the person sweating next to you at the gym that prices will only go up?

How quickly we forget the rhetoric with which we lived only a short time ago. I didn't buy, but I know many very intelligent people who overextended, many of whom honestly felt that prices would only continue to rise and it would only become more difficult and expensive to buy in the future. I don't feel smug for not being among them, just lucky that I am inherently so cautious.

Waverly, banks make money by lending money. There are very few people to whom they want to lend, or to whom they should lend, right now. Whitney Meredith came out with a pithy smack-down of the TARP bad-bank concept today. There is no good solution.

I'd actually heard from Merrill that folks were not happy with their bonuses (even given a $4B payout). Does anybody else have any interesting firsthand/secondhand bonus data points or anecdotes?

Step to the back of the elevator ladies and gentelmen, make room for everyone, we're going down.

Going?

We're already down 20%. I think this is more "hey look, the cable snapped".

Uh oh. The brakes don't appear to be working, either...

I didn't know the sky had brakes...