By Grant McCool of Reuters, Jul 30, 2009 7:22pm the reporter makes the comment,
..."bonuses for Goldman Sachs Group Inc, Morgan Stanley and JPMorgan Chase & Co were "substantially greater" than the banks' net income."
Goldman earned $2.3 billion, paid out $4.8 billion in bonuses and received $10 billion in TARP funding,...
The article begins:
NEW YORK (Reuters) - Bonuses paid to executives at nine banks that received U.S. government bailout money in 2008 were greater than net income at some of the banks, the office of New York Attorney General Andrew Cuomo said on Thursday.
Cuomo, in a report on months of investigation into compensation paid by the banks, said employee pay "has become unmoored from the banks' financial performance."
How is it any company can pay out more in bonuses then they earn? One way is to use taxpayer money. New York's AG, Cuomo is on the right path in this investigation but the outcome of his efforts are yet to be seen or heard.
But Goldman Sachs is not alone in this. Yet it is very possible from reading Michael Lewis' book "Liars Poker" that they may have invented the concept of overpaying people and then found ways to justify it which in turn they possibly shared with the others in their "club".
Is it a coincidence that Paulson was appointed as Secretary of the Treasury? And is it a coincidense that under his watch the system collapsed yet they are unscathed?
Here are some statistics from his report:(Bold emphasis mine not reporters)
...at least 4,793 bankers and traders received more than $1 million in bonus payments, according to the report.While Cuomo is a proponent of nationalizing compensation and bonuses, I am not. To set this standard would, in my estimation, destroy the very fiber of a capitalist system and destroy our economic system forever.
...nine banks received a total of $125 billion last October in taxpayer money under the Troubled Asset Relief Program (TARP) to help them survive the financial crisis, Cuomo has pressed them for details on billions of dollars paid to executives amid huge losses.
Morgan Stanley earned $1.7 billion, paid $4.475 billion in bonuses and received $10 billion in TARP funding, while JP Morgan Chase earned $5.6 billion, paid $8.69 billion in bonuses and received $25 billion in TARP funding.
The latter bank paid out 1,626 bonuses of $1 million or more, the most of all the banks studied in the report, while Goldman, which had the highest average compensation per employee, paid out 953 bonuses of $1 million or more.
We do not need more Federal regulation or interference - especially from the Executive or Legislative branches - we do need more involvement from our Judicial branch and our law enforcement.
What we have here is "white collar" crime the proportion of which has never been seen in the history of the world. Multi billion dollar scams by people in expensive designer clothing, sitting in multi million dollar offices enjoying a world class lifestyle even many monarch's and heads of state don't enjoy.
What is really interesting here is that the retail and envestment banking industries are suppoesed to be very heavily regulated and monitored but have not been. The question still remains, how did Madoff get away with his venture for so many years without ever being noticed or investigated by the regulatory agencies? Could it be that there is a conspiracy amongst all of them?
"Thus, when the banks did well, their employees were paid well. When the banks did poorly, their employees were paid well. And when the banks did very poorly, they were bailed out by taxpayers and their employees were still paid well."Bonuses and overall compensation did not vary significantly as profits diminished."
If you throw enough money out there for people to put their hands on they tend to look the other way. No, I am not saying there were bribes (but ...). What I am saying is that given a lot of inside information, many people could have and probablly did increase their investment portfolio's and as such would certainlly not want to change things.
Of course, as always, this is just my opinion. It is however still difficult to understand how losing companies can thrive, multiply and survive.
While Citigroup Inc and Merrill Lynch, bought by Bank of America Corp, lost more than $27 billion each, Citigroup paid $5.33 billion in bonuses and Merrill paid $3.6 billion, the report said. The two banks received a combined $55 billion of TARP money.
A spokesman for Bank of America said bonuses were paid to 200,000 bank employees and 30,000 Merrill legacy employees.
How does this work and why does it not work for any other business in this country. 230,000 employees receiving bonuses from BROKE companies and even more confusing is how "broke" companies buy other "broke" companies creating an even large "broke" entity that pays out even more in bonuses.
Wait a minute, I and many of my friends have "broke" companies. How do we buy some other "broke" companies and pay ourselves billions of dollar?.
This, if it can be done, certainly seems like a solution to much of our economic problems.
Mr. Cuomo, nationalization is not the answer, sir. Law enforcement is. We certainly have all the laws we need in place - and even then some - that would have avoided and will avoid much of what has happened and is continuing to happen. But I do congratulate you for your efforts in exposing "the truth". You, sir, have the legal power to do something about this injustice. Many of us are just as outraged and would stand behind you.
What this new breed of highly honored "banksters" have done is to destroy the American economy and the American way of life for ever. They have betrayed not only their own countrymen but people and nations around the globe. I believe there is a word for this type of action.