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Wall Street bonuses: Hello, anybody home?

January 31, 2009

I’ve seen a lot but even this turns my stomach.

Even after receiving bailouts, US companies are still going on junkets (“business retreats” that look and feel like holidays), buying executive jets, and paying a $400 million bonus to people who lost them $34 billion. All on the taxpayers’ dime.

Excuse #1

“If we don’t pay, our star employees will all run off and that will be bad for us.”

Really? And where exactly can they run to in these times, Mr. Wall Street President?

Since that excuse didn’t fly, they came out with….

Excuse #2

“In Wall Street terms, a bonus is actually part of salary. As a high-end broker, your salary might be $3.1 million a year. We advance you part of it, say $100k a year and if you deliver, you get the rest of your salary – the outstanding $3 million. So its not really a bonus. Its back salary.”

Right. And iphones grow on trees. If it was salary, then why call it a bonus, Mr. Wall Street President? And what’s wrong with salary cuts in hard times? Everyone’s doing it so what’s so special about you that you can’t?

So that brings it to three things I’d like to see change in Wall Street when this is all over. One, a draconian enforcement of brand new regulations designed to head off bubbles and predatory financial practices.

Two, that the world economy disengages itself from a single point of failure be it currency, system of brokerages, or transactions center.

And three, the realization that even in Wall Street, you do not give bonuses when you’re teetering on bankruptcy. Especially not with taxpayer money. And all your compensation clauses had better include that caveat from now on.

In all fairness, no one will dispute how companies use their own money but if its taxpayers money, then taxpayers will expect to see some changes. Companies must appreciate that a bailout is not a commercial loan. Its a whole lot more than that. Obviously business-as-usual doesn’t work any more (that’s what ran them into the ground in the first place, duh) and whatever moves they make must now be subject to a new level of accountability.

Senator McCaskill is right in that only an idiot would reward disaster with million-dollar bonuses. What she forgot to mention was that all this while, Washington simply never believed such controls were necessary. Well, not until yesterday.

I hate to say “I told you so” but you saw it coming, I saw it coming. And now the chickens have come home to roost.

One Comment leave one →
  1. LC Teh permalink
    February 2, 2009 10:49 am

    These people sound like habitual gamblers. After getting the money from ‘Ah Longs’ they simply get back to the gambling tables instead of finding ways to earn legitimate money to pay back their creditors. No wonder we still can’t touch bottom yet. Looks like we’re still a long way from there…

    Yeah. Funny how the “medicine” to the crisis was given without a proper all-round diagnosis. They seem to have missed out the human factor. The culprits have been living large all this while and why not, its other people’s money. Simply shoveling more money to them won’t fix the root cause, as they’re beginning to find out.

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