Comments on: Bank CEOs and the infinite pile of cash

By: SotaVol

SotaVol — Tue, 11 Oct 2011 13:16:10 +0000

@weing – Point me to some of these studies and I’ll check them out, but I’m betting that they’re confounded by payments execs receive AFTER being fired (a year’s severance, guaranteed bonus payouts, accelerated vesting of equity, etc.). In other words, failure equals high pay, rather than high pay equals failure. Both are bad, but it’s inaccurate to say that “science” provides proof of your belief.

By: mdavisburchat

mdavisburchat — Sun, 09 Oct 2011 10:04:38 +0000

What a powerful analysis, Roger.

So clearly explained. And so plainly diagnosed for people like me who can’t understand a word about the banking industry as well.

I wonder why do you think that no one has offered this explanation or examination before now? I mean you are describing a cataclysm that is three years old. And an industry pathology that is – at least – a decade old. Why for example, is someone at the WhiteHouse, or the Congress, or the Senate, have provided this service to its citizens? Clearly it is not a problem of political ideology. It is a problem of practical ideology. The way regulation is planned, designed, implemented and amended.

And why is this article not posted on the New York Times, CNN, or FoxNews?

Your recommendation of banning stock compensation for bank employees, is clear about how it would alter incentives. But why stop at bank employees? [which include CEOs].

Would you not agree that this conflict of interest is hollowing out executive leadership at Fortune 500 Companies in all industries? Yahoo, HP, Kodak, all come to mind as misdirected by short term expectations. If you are right about bankers Roger, does your hypothesis apply to the valuations of Facebook, Twitter, GroupOn and the like as well?

By: klbjcb

klbjcb — Sun, 09 Oct 2011 04:20:22 +0000

OK, here’s the scoop – Pres Obama came in and hired the same
guys that put us in this situation – Geithner, Summers, and half of Goldman Sachs. Of course our Government looks after the banks – they ARE the government. That said, what a wonderful article – what a great idea to stop stock based compensation, if only… Always remember with these CEOs and top echelon bankers: it’s nothing personal, they’re just playing “The GAME”: “You 99% rabble should understand, you lost! You are losers. I am a winner. Accept it! It’s nothing personal, it’s JUST BUSINESS!”

By: weing

weing — Sat, 08 Oct 2011 15:34:09 +0000

There are numerous studies studies of compensation and performance and they invariably show that the higher compensation the worse the performance. You can check out the study by Ariely and others commissioned by the Federal Reserve Bank of Boston for a starting point. If we go by the science, then the compensation packages are virtually guaranteeing poor performance. Why are these studies ignored by the Federal Reserve, boards of directors, etc? Possibly, because they don’t jive with their preconceived notions, but more selfish reasons come to mind.

By: SotaVol

SotaVol — Sat, 08 Oct 2011 12:59:56 +0000

This is a good article, but I don’t think it’s accurate to attribute all of the shortsightedness, mismanagement, greed, and undeniable fraud we’ve seen to stock based compensation. Shouldn’t we also be remember the deregulation of the banking industry, and how allowing institutions with massive amounts of cash (from our checking and savings accounts, mortgages, etc.) to experiment with these exotic instruments (derivatives, etc) might have contributed as much or more to the current situation?

I personally would rather see increased effort spent on reinstituting the firewalls that used to exist between these segments of the financial community. Shouldn’t that automatically limit the tools bankers have to increase their compensation, as well as protect main street?

By: OFA7

OFA7 — Thu, 06 Oct 2011 19:55:17 +0000

By all accounts written, I come to the conclusion that the “zero-sum game” is as fraudulent as a Ponzi scheme.

I support the suggestion that stock-based compensation be eliminated in the banking industry. I would further suggest that market makers and insurance companies do not belong in the banking industry and roll-back in our regulations is in order.

By: Raymond1959

Raymond1959 — Thu, 06 Oct 2011 19:38:53 +0000

To the Guillotine!

By: whogotmymoney

whogotmymoney — Thu, 06 Oct 2011 15:38:01 +0000

It seems to me that someone or something got over 2+ trillion of the taxpayer’s money, 196 billion doses not add up. I think the gangsters who made this scam should have to pay the 2+trillion back in full like other criminals have to pay restitution. This will give the taxpayer a break to stimulate the economy. WE THE PEOPLE / TAX PAYER know that interest and inflation are coming so it will be a long road for all of us. No one should get a free lunch or a get out of jail free card. We are in an Economic War and Congress and the President should not take this to lightly.

By: AndrewHall

AndrewHall — Thu, 06 Oct 2011 08:34:33 +0000

GREAT article. In the era of e-funds and shady authorizations to shadier banks, anything and everything goes, and has – and the rest of us have paid for it.

As a former FDIC Chairman’s grandson, I FULLY support the #OccupyWallStreet movement and #OccupyTogether and a full independent audit of the 2008 and 2009 TARP proceedings. There was no oversight on TARP. Four-page applications were approved for multi-billion dollar loans. Criminals were bailed out and given time to shred and destroy whatever evidence they needed.

When this happened to Japan in 1992, such banks quickly gained a proper name – “zombie banks”. The failure of the government to reform these banks in Japan was a major contributor to their Lost Decade.

http://en.wikipedia.org/wiki/Zombie_bank

My grandfather was critical of Paulson’s handling of TARP, as was I, and Obama has not supported the movement to audit the Federal Reserve. We need to get banking back to banking, and end casino capitalism. Please continue to provide wonderful and thoughtful coverage on this issue, Reuters.

By: doggydaddy

doggydaddy — Thu, 06 Oct 2011 03:54:02 +0000

Thank you for a well written, comprehensible explanation of what happened to our banking industry. It makes me seethe to think about what was pulled on us. I’m sure those who profited are still laughing about it.

This gets to the heart of what the Occupy Wall Street protests are about, and why the protests don’t seem to be very focused. There’s no way to protest this complex type of fraud that was perpetrated on the citizens of the US and the world, but it’s imperative that those in power understand that they’ve been put on notice that change has to come one way or another. This isn’t going away. The perpetrators deserve much worse than just protestors marching outside of their castle gates.