Wall Street Pay Cuts Stoke Debate About Washington’s Reach

I am 100% behind this. Those complaining about it are the same group that begged for TARP funds to "save the economy". You cry for public funds, and now decry public input. Get bent.

 

I'm not talking about the stupid people who are stuck at Citi. I am talking about smart people at JPMorgan and others who avoided the crisis and would have no interest in going to Citi or BofA.

 

I'm not referring to those people who took dumb risks. I'm referring to the smart people who DIDNT take dumb risks. What companies are they going to go to?

 

Would you "invest" your career in BofA or Citi at this point? Avoiding those banks isn't chasing anything, it's making a smart career decision.

 

The people who are already there will stay where they are.

The "hotshot" young guys, they guys who invented idea like derivatives in order to circumvent existing rules can go to the banks that weren't destroyed the first time around which offer them huge compensation packages. Once there, they can "invent" millions of brilliant new ways to leverage the banks to hell and back, and those previously unaffected banks can come begging for a government handout when they, in turn, go belly up thanks to all the geniuses they've hired.

The second tier guys, who don't believe they are God's gift to mankind will go to places where they are offered jobs, like BofA. Once there they will do just fine. They won't be boy geniuses. They won't create new, risky ways to earn higher short term returns. They won't be smart enough to game the system. Instead, they will plod along earning a nice rate of return, they won't try to reinvent the wheel, and BofA will be better off for it.

 

The compensation requirements only cover the top 25 executives at 7 major TARP recipients. People at JPM would have no reason to leave JPM.

 

Besides this these top guys are often time slick bs'ers and they still have the talent to bs regardless of whether their firms failed. It is really not about them being so much smarter than anyone else, though their publicists got flattering articles about their unbelievable brilliance written that biz school fan boys devour.

 

Oh I see - yes I'm sure among the milllions and millions of candidates there's nobody nearly as comparably smart as the JPMorgan smart people who would have saved Citi/BOA by taking one of their top 5-25 positions - who will now not, due to this unfortunate rule.

Underlying the rationale for your argument is that executive compensation on wall street a fair, rational, market based outcome exactly in line with performance, ability and value delivered. hahahahahahahaha.

 

I just hope Steele and the Repubs have a press conference to denounce this pay cut on those unfortunate Wall Streeters.

 

Matt Taibbi's latest should make everybody feel less sorry for these folks.

http://www.rollingstone.com/politics/story/30481512/wall_streets_naked_swindle

Long, but excellent. An exerpt.

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Watch Matt Taibbi break down short-selling vs. naked short-selling on his blog, Taibblog.

On Tuesday, March 11th, 2008, somebody — nobody knows who — made one of the craziest bets Wall Street has ever seen. The mystery figure spent $1.7 million on a series of options, gambling that shares in the venerable investment bank Bear Stearns would lose more than half their value in nine days or less. It was madness — "like buying 1.7 million lottery tickets," according to one financial analyst.

But what's even crazier is that the bet paid.

At the close of business that afternoon, Bear Stearns was trading at $62.97. At that point, whoever made the gamble owned the right to sell huge bundles of Bear stock, at $30 and $25, on or before March 20th. In order for the bet to pay, Bear would have to fall harder and faster than any Wall Street brokerage in history.

The very next day, March 12th, Bear went into free fall. By the end of the week, the firm had lost virtually all of its cash and was clinging to promises of state aid; by the weekend, it was being knocked to its knees by the Fed and the Treasury, and forced at the barrel of a shotgun to sell itself to JPMorgan Chase (which had been given $29 billion in public money to marry its hunchbacked new bride) at the humiliating price of … $2 a share. Whoever bought those options on March 11th woke up on the morning of March 17th having made 159 times his money, or roughly $270 million. This trader was either the luckiest guy in the world, the smartest son of a b**** ever or…

Or what? That this was a brazen case of insider manipulation was so obvious that even Sen. Chris Dodd, chairman of the pillow-soft-touch Senate Banking Committee, couldn't help but remark on it a few weeks later, when questioning Christopher Cox, the then-chief of the Securities and Exchange Commission. "I would hope that you're looking at this," Dodd said. "This kind of spike must have triggered some sort of bells and whistles at the SEC. This goes beyond rumors."

 

Its either a private company or a company fully owned by the government. Pick one.

If you choose to say its a private company, then let them waste the bailout money on however they choose and leave them alone.

If you choose to say the government owns it, then let it officially be taken over by the government.

Don't pretend you can have both.