Senator proposes cap on Wall street Idiots

Discussion in 'Politics, Religion, Social Issues' started by Dont Hurt Me, Jan 30, 2009.

  1. Dont Hurt Me macrumors 603

    Dont Hurt Me

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    #1
  2. yg17 macrumors G5

    yg17

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    Excellent idea! I love my senator :D

    She had my vote in 2006 and she'll have my vote for as long as she wants it.
     
  3. Schtumple macrumors 601

    Schtumple

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    Sounds like a plan right there, good way to save companies, take the cushion from the executives for once, instead of laying off all the people that actually work hard... Still, even $400,000 is alot, surely after $250,000 a year there isn't that much you can spend it all on... (before you get to the frivolous stage...)
     
  4. jonbravo77 macrumors 6502a

    jonbravo77

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    Wish CEO's could be like Howard Schultz CEO of Starbucks. He is going from $1.2 mil a year down to $10,000 a year.

    But, he has made a buttload of money before this so.... you know... Nice gesture

    Link
     
  5. mgguy macrumors 6502

    mgguy

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    #5
    Is this suppsed to make us feel good about giving away government money to private businesses? If so, I'm not feeling it. Did she vote for the bailout legislation?
     
  6. Thomas Veil macrumors 68020

    Thomas Veil

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    As long as that means total compensation, including bonuses, stock, etc. ABC just did a story on the "other side" -- how Wall Street m/billionaire CEOs feel they're being unfairly portrayed. The prevailing opinion seemed to be, sure, we're taking home money by the planeload while everyone else is losing their incomes, but if you compare us to other m/billionaire CEOs, our compensation really isn't that outrageous.

    That, my friends, is how far divorced they are from reality. They're not worried about comparing themselves to anybody other than other megawealthy people.

    I tell ya, I just shakes my head about how those poor CEOs in the '50s, '60s and '70s were forced to survive on only a few hundred thousand a year. How ever did they manage to do it? It really is to weep. :rolleyes:
     
  7. Sun Baked macrumors G5

    Sun Baked

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    Sounds nice, but it is shooting yourself in the foot.

    As they say using the AIG example with the $1 billion retention bonus pool under fire, without enough pay and bonuses at the struggling companies to retain these employees ... it is a HUGE gift to the competition while severely handicapping the management talent pool responsible for creating the billions needed to repay the government.

    The competition isn't even poaching these employees and scalping them from the companies with their headhunters, they are bailing out for more green across the street.
     
  8. MacNut macrumors Core

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    I want to know why they didn't do this when they first approved the bailout. That should have been a stipulation from the start. Everyone was happy to write blank checks but nobody wanted to be held accountable.

    Why doesn't Obama just make this an executive order?
     
  9. Ugg macrumors 68000

    Ugg

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    Can you point out which financial companies are hiring? Much less those that are offering outrageous bonus packages?

    Are you also inferring that the government shouldn't have any say in the businesses that they've bought into?

    I hope that one thing that comes out of this nightmare is the rights of shareholders to approve of executive compensation. Shareholders have been shafted in favor of prima donna CEOs and boards.
     
  10. Sun Baked macrumors G5

    Sun Baked

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    Zurich Financial, they've poached 100 AIG employees since the govt bailout, there also a bunch of other companies that have been hiring top talent and also been flooded by resumes from the lower level management.

    But if you are going to limit salaries, bonuses, threaten employees with clawback provisions, etc. they will walk.

    Other poaching employees that walk in looking for jobs are Ace Limited, New York-based Allianz Aviation Managers, Ironshore, etc. were also mentioned.

    The retention bonuses were originally for the top 133 execs, and have been increased to cover 4200 people as they started walking away.

    It'll take awhile to recover from the hefty bonus packages aimed at keeping people from going to the hedge funds, but if there is a bigger $ sign job out there people will jump.

    A $400k job with threats of criminal charges if you screw up will have people looking at the $25 million paycheck. There is a reason people take a private job over a govt. job and if they basically say you must earn a govt wage because the govt is invested in the company ... it will hurt the company.
     
  11. Sedulous macrumors 68000

    Sedulous

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    All true, but this is a bizarre reasoning for compensating the people that have failed so miserably. If their work is so great why have they failed so badly? I'm all for performance based compensation, but these corrupt greedy jerks twisted it to the point of plain old fashion thievery. If you hired a plumber and his work floods your house with sewage, do you pay him a bonus? These guys were giving themselves outrageous compensation even while their shoddy work sunk the economy. Screw ups like that have no place at the top.
     
  12. Badandy macrumors 68040

    Badandy

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    This is awful. The reason these companies fell isn't because some executives made a million a year instead of four hundred thousand.

    You must not live in California. And you shouldn't decide what is enough. These executives oftentimes got there for good reason: they worked 16 hour days for 20 years and showed exceptional intelligence and all that good stuff. Just because some people think $5 million per year is excessive doesn't mean that a) it is or that b) it's any of your business. In the case of the bailout, you can make a case for the second one considering that the businesses will get tax money, but I feel a lot of people just say "damn all executives" and don't actually realize that they deserve more than a WalMart employee makes.

    A lot of people don't realize that what companies classify as executives often don't make strategic decisions for the course of the company. They're not all to blame.



    As other people have said, bonuses are a way to retain top level employees. In many cases, incoming analysts make 60,000 per year starting salary and then another 50-60 thousand in end of the year bonus. You take that away you're basically stripping these companies of their talent and making them even more worthless.

    A big cause of this whole meltdown was Sarbanes Oxley which declared that derivatives be valued at market value. The only problem was that they had to declare the value of them at ZERO which, while technically impossible (because they did have some value), forced companies to write down these as huge losses and they ran into cash flow problems. They couldn't operate with no cash and had to declare bankruptcy. Over-regulation at its finest.

    Also not helping the case were federal laws that *encouraged* banks to lend to people with little hope of repaying. Let's also not forget the people who actually agreed to these mortgages. No matter what the mortgage houses said, these people had to know that the sums of money they were borrowing, on adjustable APR no less, could not be supported forever. Hell, as a college student, even *I* knew that. It just didn't make sense. A family making $50,000 per year shouldn't be buying an expensive house on an adjustable rate mortgage. When the rates went up, people defaulted on their mortgages which triggered the whole Sarbanes Oxley fiasco with the write downs.
     
  13. Sedulous macrumors 68000

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    The point is that A: People were being rewarded even when they performed poorly and B: They were not doing their jobs. Even as you said "A family making $50,000 per year shouldn't be buying an expensive house on an adjustable rate mortgage." It doesn't take the best and brightest banker to figure that out.

    Look, part of the problem (particularly in the U.S.) is that executive salary became disproportionate to the actual value of their work. Last time I looked, in the U.S. the average CEO made 4000x the average salary while in Europe it was around 250x. In order to sustain that disparity, these guys started to cut corners everywhere possible. Offshoring of jobs was just the start. Banks never should have been allowed to sell real estate (nobody saw that conflict of interest?). And the feds should have kept their eye on the ball instead of being complicit in this whole debacle.
     
  14. Badandy macrumors 68040

    Badandy

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    I agree with most of your post except the end. I think it was too much government legislation that caused this. I know it's an unpopular opinion on this forum, but among the accounting world many people realize that the Sarbanes Oxley was a piece of bad legislation that would cause massive economic trouble.
     
  15. Sun Baked macrumors G5

    Sun Baked

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    I agree with the performance issue with one caveat...

    Some of the companies that have tied their CEOs performance to pay have really been mismanaged worse than the companies without it.

    Don't forget the "managed" targets that were met and it turned out there was a really strong incentive to manipulate the numbers to meet the targets.

    Heck even Chainsaw Al got paid for performance and he went in and literally destroyed Scott Paper and Coleman -- plus he manipulated the hell out of Coleman before he was caught. But he did meet quite a few the numbers while he was there.
     
  16. CalBoy macrumors 604

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    So you'd still like to sound the trumpet of deregulation?

    How's your peanut butter been lately?

    Sarbanes Oxley may have increased the cost of compliance for companies, and it may not be the best way to achieve the end result of more transparent corporate accounting, but it can't be blamed for our current problems. Our current economic mess traces itself squarely to unqualified people seeking home loans and banks granting said loans.

    If anything, reduced government standards in the areas of credit caused our current problems. Of course the same was true in 1929, except that the issue wasn't homes, it was stocks.
     
  17. Dont Hurt Me thread starter macrumors 603

    Dont Hurt Me

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    Most of these CEO's are bean counters, with a lot of them that couldnt even do that but still got wheelbarrows full of beans while taking beans away from the workers, the people that make it happen. The CEO's are overpaid and have been for years.
    If we the tax payer have to take over your companys burden because of lack of performance and greed then you should be limited in your compensations because its clear you are way overpaid.

    Obama needs to make this one an executive order.
     
  18. chilipie macrumors 6502a

    chilipie

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    I thought this thread was going to be about an idiot cap - only x idiots per company or something.



    Come to think of it, I quite like that idea.
     
  19. Sedulous macrumors 68000

    Sedulous

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    I know it is a bit off topic, but it is related to the outrage of executive pay for companies being baled out by public tax revenues. One has to wonder what would happen if instead of paying tax into a big pool that can be used at the government's whim, people could dictate what categories their taxes could be used towards. For example, I would not want a cent going towards "fat cat bail out" but would be actually happy to have my taxes go towards education and research.
     
  20. techfreak85 macrumors 68040

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    howz about they get their salary cut to $25 a year, and a lunch at Taco Bell, and the rest is all stock. that gives them motivation to do good.


    but how do u get them to stay at the company?
     
  21. mactastic macrumors 68040

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    No, it's because some executives made some spectacularly poor decisions, and then decided that those decisions justified a "performance based" bonus of outrageous proportion to their actual performance; all while causing layoffs down the line.

    Sure, it's not gonna blow the budget if we let convicted felons have filet mignon every night, but we just don't DO that because of how bad it looks, and how completely unjustifiable it is. If a warden somewhere decided that they *deserved* good steak, are you going to say "well, hey... that's ok, he *said* they deserve it, so they truly must"?

    What good is intelligence, if it isn't coupled with good sense? These companies didn't fail because a bunch of dummies took over; no one is claiming these guys aren't among the brightest. But there is no denying that they made poor decisions. Yeah, a lot of people who took out mortgages they couldn't afford made poor decisions too; but these guys, as you point out, are the smart ones. They looked the other way while it happened.

    And now that I'm a part-owner in these firms, I damn well oughta have a say in deciding what's enough.

    No one is saying that they don't deserve to be paid more than a WalMart employee makes. But they don't necessarily deserve 400 times that either, particularly when they are making poor business decisions.

    Of course not all executives are to blame for this, and no one has ever made that claim. Again with the red herrings. "Oh liberals hate all executives". Spare us. :rolleyes:

    This is the talent? The guys who said "hey, we don't need to actually *verify* that these people can afford a $750,000 mortgage"? The ones who said "it's perfectly safe to create and invest in securities backed by mortgages whose worth and chance of being fully repaid we can only roughly guess at"; and "if that shadow market happens to be worth multiples of GDP even though it's based on rankings by the bright guys at the bond rating agencies as A or higher, that's all ok -- just as long as I continue to get my bonuses"?

    Let them go. If other companies want to pay these people, let them. Surely there are talented up-and-comers who could do no worse. And maybe then they'd learn some lessons.

    Also, I fundamentally disagree with the idea of depending on a bonus. That's just stupid, and should not be accepted as an excuse. If your company tells you that your salary is $60,000/year, with the potential to make another $60,000/year in bonuses, and you plan your finances around an income of $120,000/year, you're an idiot. You obviously make poor financial decisions.

    No, the problem is that the derivatives were there and given good ratings despite their value being essentially unknown.

    You can't blame one of the rules of the game for your failure. Everyone know what they would have to declare under Sarbanes-Oxley, should these derivatives happen to turn out to be worth far less than the value they were *claiming* they had -- so that they could keep their bonuses coming.

    Federal law permits credit card companies to *encourage* college students to take out cards that they know the kids often abuse; so should we forgive the people who get a credit card and use it to live beyond their means?

    Encouragement means you still have to make the decision yourself, and be responsible for it once made. Even if there is easy money to be made, that doesn't mean you have to do it if you don't think it's right.

    I'm always greatly suspicious of people who get more money from bonuses than from salary. They are highly incentivized to do *anything* to get that money.

    General rule of thumb I've seen at most companies I've been involved with is that performance bonuses are not more than 20-25% of salary. Good encouragement, without the insane drive to do anything to get it.

    Again, the problems associated with the costs of underperforming mortgages is tiny compared to the real size of this thing. Bad loans were the trigger, and they get a lot of the focus, but the real underlying problem was the way these loans were allowed to be packaged, resold, and used to inflate the value of investment vehicles to ridiculous proportions. Again, we're talking a market who's value totaled several times our GDP. Do you honestly think there are enough defaulted mortgages out there to be worth even equal to our GDP, let alone multiples of it?
     
  22. Badandy macrumors 68040

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    Yes, and I explained why.


    Increased the cost of compliance?! It made financial institutions write down billions of dollars because of some BS technicality that derivatives on mortgages should go to 0 if the house is foreclosed upon. Foreclosure or not, houses STILL HAVE EQUITY. They had to write them down as having 0 value.

    I agree.


    Spare me.


    Agreed

    Look above you (in the thread).

    It looks like we agree on a lot of things on this issue; If companies choose to accept bailout money, we should have that percentage of a say in some of their decisions.

    No red herrings here, claims of "Wall Street Executives are greedy" abound, even in this thread. It's not so cut and dry, like you recognize.


    SA was passed after derivatives were created and traded.
     
  23. MacNut macrumors Core

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    #23
    People should be paid based on the job they do. If you do a good job you get paid more. Bankrupt the company and you get less. CEO's should not be allowed to tank a company and walk away with millions.
     
  24. mactastic macrumors 68040

    mactastic

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    #24
    Yes but the rules change all the time in the business world. SA passed in 2002. Don't tell me these smart guys didn't know the risks they were taking.

    They knew they would be writing these values down to zero if the house was foreclosed on, but the still allowed "no doc" loans to proliferate -- accelerating in use actually -- long after this law was passed.

    These guys are all smart. They knew this was coming, but with so much money tied up in the bonus pool, they turned a blind eye to it.
     
  25. Sun Baked macrumors G5

    Sun Baked

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    #25
    Nice to know the lawyers are helping the CEOs maintain their position...

     

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