Meanwhile, on Wall Street

by: Matt Stoller

Sun Oct 19, 2008 at 14:09


There's amazing work being done all over the sphere, from Josh Marshall's unbelievably important tracking of robocalls and voter suppression to the fundraising against Michelle Bauchman to the work to beat back Prop 8 in California.  On Wall Street, though, it looks like they are gearing up for one last party.  Apparently those executive pay caps the bailout supposedly put on these banks aren't working so well.

Financial workers at Wall Street's top banks are to receive pay deals worth more than $70bn (£40bn), a substantial proportion of which is expected to be paid in discretionary bonuses, for their work so far this year - despite plunging the global financial system into its worst crisis since the 1929 stock market crash, the Guardian has learned.

Staff at six banks including Goldman Sachs and Citigroup are in line to pick up the payouts despite being the beneficiaries of a $700bn bail-out from the US government that has already prompted criticism. The government's cash has been poured in on the condition that excessive executive pay would be curbed...

At one point last week the Morgan Stanley $10.7bn pay pot for the year to date was greater than the entire stock market value of the business. In effect, staff, on receiving their remuneration, could club together and buy the bank...

None of the banks the Guardian contacted wished to comment on the record about their pay plans. But behind the scenes, one source said: "For a normal person the salaries are very high and the bonuses seem even higher. But in this world you get a top bonus for top performance, a medium bonus for mediocre performance and a much smaller bonus if you don't do so well."

Many critics of investment banks have questioned why firms continue to siphon off billions of dollars of bank earnings into bonus pools rather than using the funds to shore up the capital position of the crisis-stricken institutions. One source said: "That's a fair question - and it may well be that by the end of the year the banks start review the situation."

The game here is rigged, of course.  I'm hearing rumors of talent transfers to Dubai, London and Hong Kong.  The fashion world is probably not far behind, since they are tethered to making beautiful status symbols for the hyperwealthy, and those wealthy will no longer be in America.  Next year, banks will dramatically reduce bonuses, I'm sure.  But that's because the real money will be made abroad, and New York City's economy will be devastated.

Matt Stoller :: Meanwhile, on Wall Street

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Meanwhile, on Wall Street | 14 comments
So you mean ... (0.00 / 0)
all these people will get transferred to places where they hopefully won't catch shit for the outrageous sums they make?
We shall see (0.00 / 0)
This will be an interesting experiment of globalization. How many individuals will uproot themselves and go to these other places in return for the cashmoney? How will those migratory patterns influence the further development of the industry?

This stuff is going to happen eventually.

And it could be nice for NYC, Matt. There are upsides to having people from the lower 95% of the income bracket actually able to live in Manhattan.

Me | My Work | Future Majority

[ Parent ]
this is just one example (0.00 / 0)
of why rolling back the bush tax cuts and giving 95% of the nation a tax break is the proper and fair thing to do, not to mention that its obvious the top 5% not only have too much money but too much time on their hands.
Shamelessness (0.00 / 0)
Freddie Mac and DCI killed regulation (0.00 / 0)
A few years ago, so it seems:

WASHINGTON - Freddie Mac secretly paid a Republican consulting firm $2 million to kill legislation that would have regulated and trimmed the mortgage finance giant and its sister company, Fannie Mae, three years before the government took control to prevent their collapse.

In the cross hairs of the campaign carried out by DCI of Washington were Republican senators and a regulatory overhaul bill sponsored by Sen. Chuck Hagel, R-Neb. DCI's chief executive is Doug Goodyear, whom John McCain's campaign later hired to manage the GOP convention in September.

Scumbags, those DCI ratfuckers.

I hope this story has legs.

But Chuck Hagel is such a great guy! (0.00 / 0)
And so moderate, I am sure as a future Sec of State he would aggressively fight for extradition of any guilty exec who flees justice! I am just sure he would! Hagel is a moderate! sure he is!
[ Parent ]
Future SoS? (0.00 / 0)
???

Say it ain't so.

What's really annoying is that circa 2005, the FBI cut way back on prosecuting financial fraud cases, and on money budgeted for that purpose:

[FBI Assistant Director Chip Burrus] acknowledges that the bureau has reduced its efforts to fight fraud. He likened the FBI's current fraud-enforcement policies -- in which losses below $150,000 have little chance of being addressed -- to "triage." Even cases with losses approaching $500,000 are much less likely to be accepted for investigation than before 9/11, he said.

There is "no question" that America's financial losses from frauds below $150,000 amount to billions a year, Burrus said. The top security official for a major American bank agreed, saying unprosecuted fraud losses easily total "multibillions."

Thoughtful writeup on that legislation that DCI lobbied against here.

[ Parent ]
correction (0.00 / 0)
That last link points to legislation in the House crafted by Michael Oxley (R-OH), not Hagel's Senate bill.

In fact, a commenter claims that the Hagel bill was preferred by the Bush administration and AEI, making it surprising (to this simple mind, at least) that DCI killed it.

[ Parent ]
AIG fatcats bag partridge on US taxpayer's expense (0.00 / 0)
i think (4.00 / 1)
These bankers don't believe that they will ever get in trouble; I mean, the kind of literal class-war trouble. They've spent the last fifty years laughing at anyone who took offense at the ways they lived and spent their money -- "what are you going to do? Take it away?"

It is possible that they are vastly underestimating the amount of problems they could generate for themselves. If I was in charge of the Coalition for Continuing Crony Captialism, I'd be like "guys, seriously, calm the fuck down for a bit, this might cause problems for the CCCC."

Sweet! Cheap Condos (0.00 / 0)
Actually, i think you greatly underestimate the NYC economy. It is awe inspiring in its power, and Wall St is not going anywhere - you don't simply pick up tens of thousands of investment bankers and move them to Dubai, and there would be no point - other then to evade Obama's taxes.

To wit, the hyper wealthy don't live in America now, or Dubai, or Hong Kong, or London... they live everywhere all the time. There is no center of being hyper wealthy. All the hyper wealthy industries are already distributed - banking, fashion, real estate, vacation, etc - to the hyper wealthy outposts and they will always be there.

On your other point, Wall St will find new instruments to make money with, even with increased regulation. its why it exists and they do it well.  

Michael Bloomberg, prince of corporate welfare

and London is worse off than NYC (0.00 / 0)
http://www.nakedcapitalism.com...

i think lefty blogs are really good at general social policy ideas and organizing grassroots political disruption caMpaigns. on economic analysis they have a long way to go to be credible.

Michael Bloomberg, prince of corporate welfare

[ Parent ]
well (0.00 / 0)
Shorter Will:  "People who don't agree with me are stupid children."
[ Parent ]
They're the Masters (0.00 / 0)
we're the Slaves.

Deal with it.

Meanwhile, on Wall Street | 14 comments





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