Gothamist: The Wall Street Bonus Bubble

John Kastelic

Fri, 19 Dec 2008 09:50:25 -0500

The looters and unjustified bonus rakers should have their family assets liquidated and returned to where they were taken from - and that everything down to their underwear. Of course, this is just a pipedream. In a corrupt justice system it is not hard to foretell which delict will earn stiffer punishment: embezzling $5,000 or $5 billion. And life goes on.

GM

Fri, 19 Dec 2008 09:38:28 -0500

I wish Spitzer was back. He'd make an example out of a lot of these dickheads. There must have been some slighty shady accounting rules going on, even if these companies were literally pulling in that kind of money as they said, the case could be made that they under-valued all the debt/ liabilities they had also. I don't think the defense "But everyone else was doing it that way too!" works in court.

josephe

Fri, 19 Dec 2008 06:47:10 -0500

Hunt them all down and recover the money. Return it along with the 850 Billion Bailout to the Treasury.

tingo

Thu, 18 Dec 2008 23:44:06 -0500

I hate all those finance c*cksckers. Their greed f*cked the economy, and they've all gone and made off. And they'll still be making millions. They should recall all those bonuses, put it towards the bailout.

NannyState

Thu, 18 Dec 2008 21:34:05 -0500

Bernie Madoff still gets his bonus, right?

Felix Hoenikker

Thu, 18 Dec 2008 16:00:33 -0500

http://www.nytimes.com/2008/12/14/business/14schumer.html?em Another article from the Times describing how ol' Chucky helped make it happen.

JacqueMehoff

Thu, 18 Dec 2008 15:44:56 -0500

who does our mayor say about this?

faprilano

Thu, 18 Dec 2008 15:37:32 -0500

all wall street bonuses should be $0. wall street got us into this mess and nobody should be rewarded for this mess.

edEx

Thu, 18 Dec 2008 15:22:15 -0500

In 1999 when I was one year into the workforce after college at a top ten ad agency, I got a pretty sweet bonus, nothing crazy, but sweet. My buddy Jake, a trader on the floor on Wall Street making about 45K out of college, got a $1,001,999 bonus check. Not bad for a 24-year-old kid. It was ridiculous back then... Money, for a while, was growing on trees. I think the homeless were taking home 35K a year.

rcltrh

Thu, 18 Dec 2008 15:11:56 -0500

Precisely why not a freaking penny should have been given to a single one of these corporate crooks. The bailout was such a crock. AIG is still giving out bonuses using their bailout money to do so. They are just calling them retention incentives. Wake up America - it's time for another revolution.

TK

Thu, 18 Dec 2008 15:10:56 -0500

Sorry for the length but parts of the Nobel Prize winner George Akerlof and Paul Romer's 1993 paper is making the rounds today. Fraudulent conveyance anyone? Our theoretical analysis shows that an economic underground can come to life if firms have an incentive to go broke for profit at society's expense (to loot) instead of to go for broke (to gamble on success). Bankruptcy for profit will occur if poor accounting, lax regulation, or low penalties for abuse give owners an incentive to pay themselves more than their firms are worth and then default on their debt obligations. Bankruptcy for profit occurs most commonly when a government guarantees a firm's debt obligations. The most obvious such guarantee is deposit insurance, but governments also implicitly or explicitly guarantee the policies of insurance companies, the pension obligations of private firms, virtually all the obligations of large or influential firms. These arrangements can create a web of companies that operate under soft budget constraints. To enforce discipline and to limit opportunism by shareholders, governments make continued access to the guarantees contingent on meeting specific targets for an accounting measure of net worth. However, because net worth is typically a small fraction of total assets for the insured institutions (this, after all, is why they demand and receive the government guarantees), bankruptcy for profit can easily become a more attractive strategy for the owners than maximizing true economic values... Unfortunately, firms covered by government guarantees are not the only ones that face severely distorted incentives. Looting can spread symbiotically to other markets, bringing to life a whole economic underworld with perverse incentives. The looters in the sector covered by the government guarantees will make trades with unaffiliated firms outside this sector, causing them to produce in a way that helps maximize the looters' current extractions with no regard for future losses."