[turtle777]

Big Pay Packages Return to Wall Street
Compensation on Track to Soar as Earnings Recover From Crisis; 'Like It's 2007 Again'

So let's recap the timeline:

• major banks get themselves into deep trouble due to excessive risk taking and bad management
• government bails them out, keeps them in business
• recession hits US, workers across all industries take huge wage cuts (personally, my cut this year is 20%)
• ONLY EXCEPTION: banks propt up by bailout money pass on huge pay increases

WTF ? So the tax payer, financing the bank bailouts with their hard earned money, have to see how those banks just hand out bonuses and pay increases to all these incompetent bankers that almost crashed all those banks.

The Bank's argument: retaining talent.

F****ING BULLSH!T. Those oh so talented bankers had no place to go if all those other competing players weren't kept in business by government bailouts. It's a complete bogus argument.

Is this what you want your government to do ?
Because this is the way Obama is going: more and more government intervention. Every freaking time the government gets busy, things get worse, and worse, and worse.

Note: this has NOTHING to do with free markets or capitalism; the only reason why those banks have money to waste is because the government gave it to them

-t

[ghporter]

The recession was rolling downhill long before the banks wound up needing help. Lack of oversight and lack of a basic rule that says "if you come up with a new 'investment product' you have to have it reviewed by the SEC before you can sell it" were important players in the banking debacle. So was the idea that the stock market couldn't go down. The MARKET itself is what caused the mess in the first place, because the market is made up of individual investors who, whether cravenly greedy or just interested in a reasonable profit, demanded more and "better" investment vehicles. Selling packages of sub-prime mortgages is an "investment?" Only an investment in loss, but to satisfy the market, a lot of people that should have known better rated these packages as "great things" and people bought them. And the bad mortgages swirled down the crapper, and those packages lost almost all their value, and the people that had invested in them lost a lot of money and the people that had LENT THEM MONEY TO INVEST (secondary investors) lost money, and the big players that had invested in the firms that invested in the secondary market lost money.....And that's just one stupid product and its effect.

It's also important to note that the government has revised the cost of these bail-outs. Revised the cost DOWN. A lot. The majority of banks that have accepted funds have managed to fix themselves much more quickly and cheaply than was anticipated, and this has prevented subsequent losses and failures. Basically this means "it worked." We taxpayers will wind up paying something for these losses, but nowhere near the staggering, nearly trillion dollar tag originally suggested. And since this has all happened, I think we'll wind up with a much more robust, much more attentive system of oversight for both banks and investment firms. I still want to see any investment product certified as "not a stupid idea" by the SEC before a single dollar can change hands, but any movement toward validating a product before it's sold will be major progress.

[CRASH HARDDRIVE]

Originally Posted by ghporter 

The recession was rolling downhill long before the banks wound up needing help. Lack of oversight and lack of a basic rule that says "if you come up with a new 'investment product' you have to have it reviewed by the SEC before you can sell it" were important players in the banking debacle.

That's not the role of the SEC, nor should it be. The SEC or any other single entity has no such ability to make such a determination, nor weild so much power over the free market. What is with this belief people have that government always knows best, and isn't itself as corruptible as it gets?

So was the idea that the stock market couldn't go down.

No one with any sense ever had any such idea.

Selling packages of sub-prime mortgages is an "investment?"

First of all, they weren't packages of sub-prime mortgages. Hell, that would actually be a blessing, as it would be easy to clean up. It was packages of legitimate mortgages split into a million pieces along with the sub-primes. It's akin to someone dropping a few gallons of poop into a vat of chocolate pudding, mixing it, and then handing you a spoon.

You need to step back even further to see the problem as a whole. Bankers ALWAYS knew that making risky loans was bad business. What people don't understand, is that banks will always have a certain (sustainable) percentage of bad loans, because it's just the way life works. You do your best to determine if a loan is likely to be paid back based on the borrower's credit and seeming ability to pay it back, but like all things in life, a certain percentage will default on the loan. It's why businesses of all types, selling services, products, or lending money, have to hire collections agencies and repo-men.

What the government did, via it's meddling in trying to turn banking into YET ANOTHER socialist way of redistributing wealth, was REQUIRE banks to make a number of risky and bad loans FAR above and beyond the norm. (This is why apologists are quick to point out that the number of bad loans exceeds the government-required bad loans, failing to take into account that it's not the unavoidable natural percentage of bad loans that's the problem, it's that COMBINED with the forced UNNATURAL, ordinarily avoidable percentage that then becomes completely unsustainable.)

Crooks like Barney Frank knew that what banks were being required to do was unsustainable. He didn't give a damn- he STILL doesn't give a damn. He told lies to the contrary, and worse, set up Freddie and Fannie as the vehicles for offloading many of the bad loans. So now you have the conundrum where on the one hand you're REQUIRING a bank to engage in riskier business than it otherwise would, then YOU, the GOVERNMENT, also giving it a way to put the taxpayer on the hook for those bad loans, with crooks like Frank and Dodd out in front telling everyone that everything is just peachy. There was nothing stopping banks from playing right along with it, after all, the taxpayer was always going to pick up the tab when the bottom fell out.

Bush and others DID warn that this was going to collapse if Freddy and Fannie weren't reigned in, but of course the usual suspects lied and said everything was just fine, and accused Bush and others of just making up the impending crisis.

Yes, Wall Street charlatans were quick to get in on the act too. There are plenty of crooks to go around, all of them knowing that they could ride it out so long as the inevitable losses were going to offloaded to the sucker taxpayer. Again, why the hell not? You may be the biggest crook on Wallstreet, but if you can look out and see that you've got an even bigger bunch of crooks in Washington D.C. holding the door open for you, what the hell is stopping you? Your good manners? Your conscience? Karma?

It's impossible to overlook the government's role in all this. REAL regulation that would have put up walls between all the players and Freddy and Fannie that was set up like a dummy corp- and the taxpayers, IE: 'suckers who'll eventually get stuck holding the bag" was rejected and blocked by the very government crooks who set the ball rolling in the first place. So once again, just yelling "We needed more regulation" doesn't mean jack squat. Giving the SEC ridiculous and unconstitutional powers isn't any solution either. We already have rule of law to control the markets- the problem is, government and their business cronies set themselves outside of it routinely.

What is needed is more ACTUAL regulation over the crooks in Washington every bit as much as any crooks on Wall Street- actually more so, since one should reasonably expect that their government isn't this recklessly corrupt in the first place. That so many people expect corrupt officials to regulate everyone else AND themselves, is insanity.

[ghporter]

Originally Posted by CRASH HARDDRIVE 

That's not the role of the SEC, nor should it be. The SEC or any other single entity has no such ability to make such a determination, nor weild so much power over the free market. What is with this belief people have that government always knows best, and isn't itself as corruptible as it gets?

Gee, I thought the organization that regulated the securities industry would indeed be the right choice to vet investment products-they're securities, right?

Originally Posted by CRASH HARDDRIVE 

No one with any sense ever had any such idea.

Obviously a LOT of investors, professional and amateur, had very little sense these past few years.

Originally Posted by CRASH HARDDRIVE 

First of all, they weren't packages of sub-prime mortgages. Hell, that would actually be a blessing, as it would be easy to clean up. It was packages of legitimate mortgages split into a million pieces along with the sub-primes. It's akin to someone dropping a few gallons of poop into a vat of chocolate pudding, mixing it, and then handing you a spoon.

But it WAS the subprimes that made these packages toxic. And the people that added them to the mix knew it or should have.

Originally Posted by CRASH HARDDRIVE 

You need to step back even further to see the problem as a whole. Bankers ALWAYS knew that making risky loans was bad business. What people don't understand, is that banks will always have a certain (sustainable) percentage of bad loans, because it's just the way life works. You do your best to determine if a loan is likely to be paid back based on the borrower's credit and seeming ability to pay it back, but like all things in life, a certain percentage will default on the loan. It's why businesses of all types, selling services, products, or lending money, have to hire collections agencies and repo-men.

If bankers had been making the decisions on this sort of thing, the mess would have been avoided and we'd never have known about it. But for the last 10 years or so, "banking" has been turned into a retail enterprise-even "good" banks refer to their locations as 'stores' rather than 'branches.' Bad idea. Today, "banking" is run by marketing, which is why the bankers were overruled and TOLD to make loans they shouldn't have.

Originally Posted by CRASH HARDDRIVE 

What the government did, via it's meddling in trying to turn banking into YET ANOTHER socialist way of redistributing wealth, was REQUIRE banks to make a number of risky and bad loans FAR above and beyond the norm. (This is why apologists are quick to point out that the number of bad loans exceeds the government-required bad loans, failing to take into account that it's not the unavoidable natural percentage of bad loans that's the problem, it's that COMBINED with the forced UNNATURAL, ordinarily avoidable percentage that then becomes completely unsustainable.)

Banks were never required to make "bad" loans. They were required to make loans that were potentially problematic, but it was up to the banks to protect themselves on those loans. Protect themselves by increasing their reserves, for example, so that when (not if) a higher percentage of this kind of loan went bad, the bank would not be caught in a fiscal trap. But the marketing folks that ran things seemed to think that this wasn't necessary. Think of Washington Mutual-their management intentionally got into the sub-prime market AFTER it had peaked, and did nothing to guard against expected losses. The result was that this company has basically ceased to exist and a lot of people lost their jobs. Because of the marketing guys.

There's also nothing "unnatural" about managing and controlling a market. There are minimum wage and maximum work hour controls on the labor market. There are (supposedly anyway) controls on how much interest a lender can charge on a loan. There are lots of other such controls. The point of these is to prevent unrestrained capitalism and put the consumer on a relatively even footing with the producer. Failing to manage things in this way is seen as worse than managing too much, because then we're ALL at the mercy of the big companies. Read "The Jungle" for a look (muck-racking though it is) at this sort of "unrestrained capitalism."

Originally Posted by CRASH HARDDRIVE 

Crooks like Barney Frank knew that what banks were being required to do was unsustainable. He didn't give a damn- he STILL doesn't give a damn. He told lies to the contrary, and worse, set up Freddie and Fannie as the vehicles for offloading many of the bad loans. So now you have the conundrum where on the one hand you're REQUIRING a bank to engage in riskier business than it otherwise would, then YOU, the GOVERNMENT, also giving it a way to put the taxpayer on the hook for those bad loans, with crooks like Frank and Dodd out in front telling everyone that everything is just peachy. There was nothing stopping banks from playing right along with it, after all, the taxpayer was always going to pick up the tab when the bottom fell out.

Barney's a politician. When his mouth moves, you can expect the truth level in the room to fall. Doesn't everyone know this? Using "spin" or even intentional distortions is what politicians do. Frank and company were apparently trying to make the banking industry "less encumbered" because in MOST industries less direct regulation makes for more nimble business practices. But in banking, "nimble" is not a good thing. But then again, the people running many banks and pushing for less oversight weren't bankers and apparently did not understand what a "bank" was all about.

Originally Posted by CRASH HARDDRIVE 

Bush and others DID warn that this was going to collapse if Freddy and Fannie weren't reigned in, but of course the usual suspects lied and said everything was just fine, and accused Bush and others of just making up the impending crisis.

Yes they did. But it was up to Congress, who by law oversaw federally chartered corporations, to take action. And unfortunately, because of his other actions, Mr. Bush didn't have a lot of pull with Congress so they did nothing.

Originally Posted by CRASH HARDDRIVE 

Yes, Wall Street charlatans were quick to get in on the act too. There are plenty of crooks to go around, all of them knowing that they could ride it out so long as the inevitable losses were going to offloaded to the sucker taxpayer. Again, why the hell not? You may be the biggest crook on Wallstreet, but if you can look out and see that you've got an even bigger bunch of crooks in Washington D.C. holding the door open for you, what the hell is stopping you? Your good manners? Your conscience? Karma?

The "official" crooks and those who took advantage of the obvious opportunities are not the only ones involved here. "Mortgage brokers" used to be respectable middle-men who found loans for people on a competitive basis. Over the last 5 years this business has become an opportunity for shady operators to racketeer their way into big bucks through fraud and corrupt practices-probably even involving organized crime. Lack of oversight in all portions of the mortgage business led to lots of foxes in the henhouse.

Originally Posted by CRASH HARDDRIVE 

It's impossible to overlook the government's role in all this. REAL regulation that would have put up walls between all the players and Freddy and Fannie that was set up like a dummy corp- and the taxpayers, IE: 'suckers who'll eventually get stuck holding the bag" was rejected and blocked by the very government crooks who set the ball rolling in the first place. So once again, just yelling "We needed more regulation" doesn't mean jack squat. Giving the SEC ridiculous and unconstitutional powers isn't any solution either. We already have rule of law to control the markets- the problem is, government and their business cronies set themselves outside of it routinely.

I've said this before: "regulation" is not as much an issue as oversight. Regulations tend to be written by people who don't know beans about whatever they're regulating (usually Congress), and thus become burdensome and an impediment to getting anything done. Oversight, which can simply be making sure that a firm is doing what it says it is and following basic business rules, is not only simpler and more able to detect and prevent problems, it can do so long before any real problem arises, while regulation by itself does absolutely nothing, because there is no enforcement in JUST a regulation. And since enforcement always means "cost" to Congress, they put as little as possible into their regulations. A combination of basic regulations outlining specific "you must" and "you must not" actions for an industry and solid oversight (regular and random inspections of the books, business plans, contracts, etc.) to ensure that those two sets of actions are adhered to can do worlds more than a thick stack of regulations could. But Congress doesn't get credit for smart stuff. They get credit for the volume of verbiage they eventually produce in the form of laws. So smart management-oversight-loses out to more and more waste paper covered with legalese that doesn't do what it's supposed to do in the first place.

Originally Posted by CRASH HARDDRIVE 

What is needed is more ACTUAL regulation over the crooks in Washington every bit as much as any crooks on Wall Street- actually more so, since one should reasonably expect that their government isn't this recklessly corrupt in the first place. That so many people expect corrupt officials to regulate everyone else AND themselves, is insanity.

When either the House or Senate ethics committees actually do anything that they aren't forced into by the outraged public, THEN we may actually see some movement on "regulating the crooks in Washington." Until then, we can't hope for a lot of control over Wall Street that isn't driven by the public's outcry for Congress to do something and do it NOW. We really need to hold OUR ELECTED REPRESENTATIVES (our employees!) accountable to get something right in this whole mess, and to do it now. However, it seems that most people think the president can do this by sheer force of personality-indicating that most people don't know doo-doo about what it is the different parts of our government do in the first place.