Posted on 10/25/2009 4:32:50 AM PDT by nickcarraway
The financial crisis is now more than a year old, and Americans are still angry -- angry that the economy tanked, angry that they're out of work. But mostly, people seem outraged by Wall Street bonuses. Seeking to assuage that ire, the Obama administration's "compensation czar," Kenneth Feinberg, last week announced plans to cut the pay of top executives at the seven companies receiving federal support through the Troubled Assets Relief Program. He has suggested that the cuts, which slashed pay for top executives by an average of 50 percent, should be a model for the rest of Wall Street and corporate America. In outlining the change, Feinberg has had to grapple with several misconceptions about Wall Street bonuses -- myths that have circulated since the beginning of the crisis.
1. The Wall Street bonus culture led to the financial crisis.
There is absolutely no evidence to support this. The crisis was caused by a combination of lax monetary policy, loose regulation across the entire financial sector, yield-chasing by institutional investors craving decent returns in a weak market and a vast global banking industry that turbocharged the whole process. The bonus system, which has always been part of the securities industry's DNA, may have encouraged risk-taking by major banks, but it also encouraged risk management and other disciplined forms of corporate governance that are supposed to accompany the incentives. In a number of cases, however, these risk-management systems were totally inadequate in the face of the market tsunami that enveloped mortgage-backed securities
SNIP
2. Wall Street is totally indifferent to Main Street.
For people in the rest of the country to get past their bonus rage, they will have to accept that Wall Street professionals are not out to get them and that they actually do some good for the world.
(Excerpt) Read more at washingtonpost.com ...
“they actually do some good for the world” Their world
Wall Street is an easy target. But the same crap is going on at GM and Chrysler.
It is evidence of just how stupid our politicians, from Congress to the thugs in the White House, really are. The US Federal Government has invested billions in bailing out these auto makers and financial firms. The only way they the bailouts can succeed, and the taxpayers see any return on the investment, is if these firms stay in business. So Barry and the commies in Congress spend their time demonizing the people running them. Yes, morons, tell us how evil the management of those companies is. Then turn around and expect us to buy their cars and have confidence in their financial products. Barry, Peloser, Reid, Dodd, Frank, you're so stupid you don't even appreciate how stupid you are.
These professionals are well educated men who know that many of their investment strategies and new innovative investment products share one common theme, in the long run it will eventually implode. Their strategy is to take advantage of the initial stages of a bubble, pump the sale of the risky products by pressuring rating companies thru their lucrative fees to rate the hazardous products AAA. Sell the mislabled products to unsuspecting investors, collect the fees and bonuses, and just before the whole scheme collapses, quit and retire. For many, the bubble popped too soon and the CEO/CFO/Senior Management were caught so the next scheme was take advantage of the widespread risky behavior and tell the government that Wall Street screwed up, then threaten the government that if they do not get bailed out, the country will get screwed by a major financial collapse. The government then panics and decides to bail them out and guess who gets screwed, taxpayers (Main Street). Net effect, Wall Street bankster who escaped the bubble made money, the ones who were trapped by their own pump and dump scheme got their losses recouped by the bailout and the taxpayer is left holding the bag. So don’t tell me that Wall Street was not out to get Main Street. America had cheap money in the early 1960’s but our bankers did not behave the way current bankers behaved.
All this would be moot if Bush hadn’t bailed them out. Look, they own us and our government. Pure and simple. So it goes.
Very true.
Don’t miss the point that none of the excesses of Wall Street could have taken place on the scale they did had it not been for the cheap money, courtesy of Greenspan and his cronies, the government policies that led to the CRA, Fannie Mae, etc., instruments that these guys were trading in.
Certainly there have always been con men, but they usually con only a certain sector of dreamers, as in the case of Madoff.
The government made it possible to scam the whole world with what looked like safe paper.
Finally, in a truly capitalistic economy where every company must stand on its own, it is no one’s business who gets paid what unless the one complaining owns stock in that company, in which case as a stockholder he has options: Vote at the annual meeting and if the vote does not suit, sell out.
Obviously none of the above is applicable in a financial system where the government creates things like cap and trade, which will be the next scandal making derivatives look like the church raffle.
I’m angry at the fraud of packing crap debt into AAA rated packages.
This subject brings up mixed emotions for me. On the one hand the thought of Odumbo’s crowd setting wages is outrageous.
On the other hand, I have this picture in my mind of these fancy-boy uber-rich investors standing around high-tone cocktail parties in 2008, bitching about Bush and talking about how wonderful The One is.
The thought that Dear Leader bit their hand off actually warms my heart.
Aren't they getting a raise? along with their 'cadillac' health care and retirement plans?
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