Obama to Cut Bonuses, Banks Raise Fixed Salary
Crisis sharpens ingenuity. And on Wall Street, managers, especially those in the financial sector, have a lot of ingenuity to spare, as the reaction to the American president's latest moves demonstrates.
The president, burned by the growing criticisms for his expensive bailout plan, decided to put a stop to the super-bonuses at AIG. A clear message, not only for the insurance giant headed by Edward Liddy, but directed at the leaders of all companies that were saved with public money: Those who use the taxpayers' money cannot bring home, in a time of extreme crisis, millionaire bonuses. It would be an “outrage,” said Obama.
Does everyone agree? Absolutely not. According to the Wall Street Journal, Citigroup, Morgan Stanley and other financial institutions that the government helped are thinking about increased the fixed salaries for top managers and positions with greater responsibility, as if to say: "The government is trying to cut the variable part of the salary (the bonus), so I will increase the fixed part." A position that – in these times- leaves us dumbfounded.
For free market fundamentalists, having the variable part of the salary tied to the results achieved by the company under the guidance of its managers has its own logic. It is right that the managers' salaries are, in part, comprised of a variable element. Paradoxically, it could happen that an incapable manager is paid the same even in the absence of good results.
For the cases in question, however, the bonuses would go to managers of financial companies who are only still standing because of money from Mr. and Mrs. Smith. That is, money from the American taxpayer who, by means of the TARP (Troubled Asset Relief Program) plan, is propping up banks and other failed companies. It is obvious that other companies should not be involved in such considerations. But here, rules and limits, although temporary, are absolutely necessary.
Again, we are not talking about “minimal” sums. In the case of AIG, for example the figure in question is 165 million dollars in bonuses for the leaders of the financial products division. It was precisely “that division” - said the attorney general of New York, Andrea Cuomo - “that caused the collapse.” And don't think that figures this high are the exception: On Wall Street, a large number of the brokers and bankers start at a minimum salary of 200,000 dollars (managing director) up to figures of 1.5 million dollars (top executive). Or, in terms of the old lira, over two billion.
At a time when many dependents on these financial institutions are losing their jobs, such high amounts in the salaries of the top executives taste of greed. That the financial firms are trying to “bypass” the problem by increasing the fixed part of the salary appears predictable, but also very questionable.
On the other hand: “Greed, for lack of a better word, is good. Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit.” And then, “it’s all about bucks, kid. The rest is conversation.” The words of Gordon Gekko, the pirate of finance wonderfully interpreted by Michael Douglas in the film “Wall Street.” It was the year 1987...
The president, burned by the growing criticisms for his expensive bailout plan, decided to put a stop to the super-bonuses at AIG. A clear message, not only for the insurance giant headed by Edward Liddy, but directed at the leaders of all companies that were saved with public money: Those who use the taxpayers' money cannot bring home, in a time of extreme crisis, millionaire bonuses. It would be an “outrage,” said Obama.
Does everyone agree? Absolutely not. According to the Wall Street Journal, Citigroup, Morgan Stanley and other financial institutions that the government helped are thinking about increased the fixed salaries for top managers and positions with greater responsibility, as if to say: "The government is trying to cut the variable part of the salary (the bonus), so I will increase the fixed part." A position that – in these times- leaves us dumbfounded.
For free market fundamentalists, having the variable part of the salary tied to the results achieved by the company under the guidance of its managers has its own logic. It is right that the managers' salaries are, in part, comprised of a variable element. Paradoxically, it could happen that an incapable manager is paid the same even in the absence of good results.
For the cases in question, however, the bonuses would go to managers of financial companies who are only still standing because of money from Mr. and Mrs. Smith. That is, money from the American taxpayer who, by means of the TARP (Troubled Asset Relief Program) plan, is propping up banks and other failed companies. It is obvious that other companies should not be involved in such considerations. But here, rules and limits, although temporary, are absolutely necessary.
Again, we are not talking about “minimal” sums. In the case of AIG, for example the figure in question is 165 million dollars in bonuses for the leaders of the financial products division. It was precisely “that division” - said the attorney general of New York, Andrea Cuomo - “that caused the collapse.” And don't think that figures this high are the exception: On Wall Street, a large number of the brokers and bankers start at a minimum salary of 200,000 dollars (managing director) up to figures of 1.5 million dollars (top executive). Or, in terms of the old lira, over two billion.
At a time when many dependents on these financial institutions are losing their jobs, such high amounts in the salaries of the top executives taste of greed. That the financial firms are trying to “bypass” the problem by increasing the fixed part of the salary appears predictable, but also very questionable.
On the other hand: “Greed, for lack of a better word, is good. Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit.” And then, “it’s all about bucks, kid. The rest is conversation.” The words of Gordon Gekko, the pirate of finance wonderfully interpreted by Michael Douglas in the film “Wall Street.” It was the year 1987...
humans can always figure out a way to beat the system.
we americans think we can buy or spend our way out of anything.
examples. obama’s merit pay for teachers. will be a huge failure.
buy off the iraqis not to kill one another and then state the surge is working.
next we will offer those in afghan not to kill one another. and then claim victory until we leave of course. ie vietnam.
bonuses for mangement to reward them even if they have brought the company to failure.
bonuses for management even while they are laying off workers.
the list is almost endless of using rewards as pay for performace.
how few in the world understand the negative side affects of pay for performance.
wall street is a classic example of the negative effects of pay for performace instead we just call them greedy and dont look at the system that helped they become that greedy.
few will understand my words very few.
now the american taxpayer will get to watch bankers and wall street give themselves huge raises with taxpayers money.
and americans love capitalism. suckers for a con job.
we are creating a society of have nots and have mores. brainwashing works.