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Bailout Bonuses

There seems to be a concensus that large bonuses should not be paid out within companies that recieved a bailout.

Now, I have no problem with gov’t envolvement since tax payer money is involved.

What I do have a problem with is the attitude that no bonuses should be paid or there will be some arbitrary limit. This is a perfect example of gov’t not knowing how to run a business.

Do you want your tax dollars invested in a company that is planning to run off thier best employees?

Here is what happens when you blindly cut bonuses or pay. Bad employees that can’t get a job elsewhere stay. Good employees that can go somewhere else, go somewhere else. It’s bad enough that we are now investors in companies that have already proven to be failures. Now we are going to drive off good employees?

If the company sucked so bad that they need the Fed to step in and bail them out, then they don’t deserve a bonus.

I don’t want my tax dollars lining the pocket of some greedy bastard who got us into this mess in the first place.

I have no problem with strings being attached to the bailout money.

If a company is doing well, then they have every right to pay bonuses out the ass.

But - that is not who is taking the money. It is crooked banks who “need” my money.

But I could be wrong.

I have spent time at two different companies that drove out really good employees.

If I am going to invest in a company, forced or not, I want the best employees to stay and I want them to be able to attract new stars.

I just don’t see any point in investing in a failed company and then driving out good employees.

What type of employees are they going to be able to attract with caps on bonuses? What type of CEO or executive is going to take a job at one of these companies without serious upside?

I understand you arguement as a tax payer. I am trying to think of this as an investor. As an investor would you look at this differently?

Money is fungible. There are also banks that got an “injection” that didn’t fail. These banks should be able to do whatever they want with the money. Frankly, the last thing they should do is listen to Sec. Paulson, et al.

It would be an awesome thing if those banks sent the money back and gave the gov’t the finger but that cannot happen for the obvious reason that they would disadvantage themselves to their competitors.

Time for solvent banks to start thinking about competing with Fed Reserve currency. If every bank at the same time decided to send back fed reserve notes and issue their own money there is nothing the government could do about it. Getting consumers and business owners to accept it is an other story.

[quote]LIFTICVSMAXIMVS wrote:
Money is fungible. There are also banks that got an “injection” that didn’t fail. These banks should be able to do whatever they want with the money. Frankly, the last thing they should do is listen to Sec. Paulson, et al.

It would be an awesome thing if those banks sent the money back and gave the gov’t the finger but that cannot happen for the obvious reason that they would disadvantage themselves to their competitors.

Time for solvent banks to start thinking about competing with Fed Reserve currency. If every bank at the same time decided to send back fed reserve notes and issue their own money there is nothing the government could do about it. Getting consumers and business owners to accept it is an other story.[/quote]

They are already doing this. Credit cards.

[quote]dhickey wrote:
They are already doing this. Credit cards.[/quote]

Credit is a great tools for competition between banks but ultimately it does not compete with the Fed. Banks should use all the dollars they have to buy hard assets and then base their reserves on that.

The more trustful and honest a bank is the better it will do and the more people will want to use their currency. Other banks would then have to sell some their assets (which could be dollars until there are none left) to hold the stronger bank’s currency as a reserve to back their credit.

Technology could make it easier for businesses so they do not need to think about exchange rates. They could decide which currency they are accepting – which would most likely be the most stable. As competing banks’ “stock” grows or shrinks it will force consumers to change.

Ideally, we would need to use a neutral payment method that allows us to transfer one currency to another as easily as possible. I have been thinking about this idea for a while and how it could work.

No exec bonuses funded w/ tax payer dollars.

They weren’t very good to begin with or they wouldn’t need bailout money.

One of the biggest failings with our current system is the way CEO’s come in, rob the place blind and flee.

[quote]dhickey wrote:
I understand you arguement as a tax payer. I am trying to think of this as an investor. As an investor would you look at this differently?[/quote]

As an investor, I would be giving the company my money in expectation of receiving future gains from that investment.

As a taxpayer being forced to give these companies my money, I don’t expect to ever see a return on whatever amount they take from me.

If there was a promise that I would personally see a return on the forced investment, maybe I would look at it a different way. There’s not.

My hope is that the banks fail anyway, and all the government folks involved get to do a perp walk.

Isn’t the point of a bonus to reward an employee for doing a better than average job and to reward employees when their company is doing well?

What have the employees at these failed companies done to deserve a bonus? A person isn’t guaranteed a bonus even if they did do a stellar job if the company is losing money.

I don’t understand how these companies, that would have collapsed had they not received taxpayer money, can justify giving bonuses this year.

Bonuses are [b]earned[/b].

[quote]rainjack wrote:
If the company sucked so bad that they need the Fed to step in and bail them out, then they don’t deserve a bonus.

I don’t want my tax dollars lining the pocket of some greedy bastard who got us into this mess in the first place.

I have no problem with strings being attached to the bailout money.

If a company is doing well, then they have every right to pay bonuses out the ass.

But - that is not who is taking the money. It is crooked banks who “need” my money.

But I could be wrong. [/quote]

Welp, that sums it up. If you fucked up your company, you should actually be fired because you suck, much less get a bonus.

Why wouldn’t they get a bonus?

[quote]Christine wrote:
Bonuses are [b]earned[/b].
[/quote]

No they are not necessarily. They are given. They are used to keep valued employees. If you deny a company the right to give a bonus then you are essentially asking them to “fire” their best employees. I cannot imagine a middle manager in a “failing” bank taking a promotion without a hefty bonus too. No one worth big bucks wants to stay in a position that disadvantages them in their future career.

Just because a bank fails does not mean there are not valued employees that need to be held onto – especially in these circumstance.

Bonuses are not just going to executive staff members. And not all executive staff members are worthless crooks. Though I imagine majority stockholders will exercise more oversight over their board members in the future.

[quote]LIFTICVSMAXIMVS wrote:
Christine wrote:
Bonuses are [b]earned[/b].

No they are not necessarily. They are given. They are used to keep valued employees. If you deny a company the right to give a bonus then you are essentially asking them to “fire” their best employees. I cannot imagine a middle manager in a “failing” bank taking a promotion without a hefty bonus too. No one worth big bucks wants to stay in a position that disadvantages them in their future career.

Just because a bank fails does not mean there are not valued employees that need to be held onto – especially in these circumstance.

Bonuses are not just going to executive staff members. And not all executive staff members are worthless crooks. Though I imagine majority stockholders will exercise more oversight over their board members in the future.[/quote]

Where are all these super employees going to go?

[quote]Zap Branigan wrote:
Where are all these super employees going to go?[/quote]

Higher paying jobs.

[quote]LIFTICVSMAXIMVS wrote:
Zap Branigan wrote:
Where are all these super employees going to go?

Higher paying jobs.[/quote]

Where?

Is it really that easy to get another job when you are already making a large amount of money?

If the employees are so fantastic, why then is the company failing?

If the only money you have to give out to keep these great employees is taxpayers money, then you are doing something wrong.

[quote]Christine wrote:
Isn’t the point of a bonus to reward an employee for doing a better than average job and to reward employees when their company is doing well?

What have the employees at these failed companies done to deserve a bonus? A person isn’t guaranteed a bonus even if they did do a stellar job if the company is losing money.

I don’t understand how these companies, that would have collapsed had they not received taxpayer money, can justify giving bonuses this year.

Bonuses are [b]earned[/b].
[/quote]

Agreed. Just because a company is failing doesn’t mean there aren’t some great employees. I have experienced this first had two different times.

If there are employees the company wants to retain, they should be able to retain them. Call it a retension bonus if you would like. I have seen this done successfully as well. Unfortunately in one case it was far too late.

We are all investors in these complanies whether we like it or not. I personally hate the idea but that is where we are at. If there is any chance of getting even a portion of the money back, I would like to see this done.

If you think the money is lost and we will get none of it back, then who cares if they pay bonuses? We are not just talking about executives here. Base plus bonus is a very commone practice in the finanacial markets.

I definately got what I wanted out of this thread and you all have provided very valid points. My point is that I trust a failed bank to make better decisions than Waxman and the rest of the intelligencia in Washington. Sad really, but I think gov’t involvement in how the money is spent will almost insure further catastrophy.

[quote]Christine wrote:
LIFTICVSMAXIMVS wrote:
Zap Branigan wrote:
Where are all these super employees going to go?

Higher paying jobs.

Where?

Is it really that easy to get another job when you are already making a large amount of money?

If the employees are so fantastic, why then is the company failing?

If the only money you have to give out to keep these great employees is taxpayers money, then you are doing something wrong.
[/quote]
I don’t know. Employees will find employers who will meet their demands if they exist. Not every bank has failed and there is certainly always a need to improve one’s condition. Many highly payed and skilled professionals can move across industries because their skills are not limited to the industry they are currently in. That is why they are highly paid to begin with. They are in high demand already.

The point is that you must be willing to accept the consequences if you force the banking industry’s hand. As a taxpayer you already have spent the money so it is prudent to give banks the opportunity to improve themselves and turn a profit; as an investor you do not want banks losing their best and brightest for the same reason.

Basically, both are fucked if government gets anymore involved and tries to intervene.

[quote]Christine wrote:
LIFTICVSMAXIMVS wrote:
Zap Branigan wrote:
Where are all these super employees going to go?

Higher paying jobs.

Where?

Is it really that easy to get another job when you are already making a large amount of money?
[/quote]
Supprisingly, yes it is. The job market for higher paying jobs seems to be very strong at the moment. The other problem is that many employees in the financial market get a very large portion of their overall compensation in bonus. At least the few that I know do and claim it is standard practice. Much like sales where your base is often half or less of your take home pay.

I have worked for two failing companies. Both had great middle management and not so great executive management. The middle management at both places kept the company afloat despite bad decisions and leadership from exectutive management. I suspect there are more than a few good employees at these companies. If they haven’t alread bailed, I think our best interests as investors would be server by trying to retail them.

Exactly, but I beleive we now have to move beyond this. I beleive we have to now look at this as investment capital, not tax dollars. The money is going to be spent anyway. why not make the best use of it and try and resurect these companies to esure we get as much of our money back as possible.

Again, drawing from my own small-scale experience, this reminds me of original investors having to re-up investments to keep the company whole.

If they don’t invest, one of two things happens. Somebody else does and their share of the company shrinks considerable or they don’t and the company fails, taking the original investment with them.

I would never invest in a company and then say “fuck’em, let’em fail”. We have been forced into investing in these companies, but we are now investors whether we like it or not.

[quote]LIFTICVSMAXIMVS wrote:
Zap Branigan wrote:
Where are all these super employees going to go?

Higher paying jobs.[/quote]

Let them go. They are easily replaced.

[quote]LIFTICVSMAXIMVS wrote:
Christine wrote:
Bonuses are [b]earned[/b].

No they are not necessarily. They are given. They are used to keep valued employees. If you deny a company the right to give a bonus then you are essentially asking them to “fire” their best employees. I cannot imagine a middle manager in a “failing” bank taking a promotion without a hefty bonus too. No one worth big bucks wants to stay in a position that disadvantages them in their future career.

Just because a bank fails does not mean there are not valued employees that need to be held onto – especially in these circumstance.

Bonuses are not just going to executive staff members. And not all executive staff members are worthless crooks. Though I imagine majority stockholders will exercise more oversight over their board members in the future.[/quote]

They can give bonuses from the money they earned not stole from the tax payers.