Why is nobody talking about the AIG bonuses?!?!

[lsiberian]

Apparently these people actual didn't get a salary in 2008 and opted for their bonuses instead of getting a salary. So maybe this isn't as bad as we think. Most of them probably have bills to pay and if their houses get foreclosed on it's not gonna help all the people they employ to keep it up.

I think this is an example of overblown sensationalism.

 

[aberkowitz]

Wall Street is over regulated. I can't even make a website for my brother's financial company because only 5 companies are approved to make them.

The regulations are overkill and unreasonable like most government regulation.

As somebody who used to work on Wall Street (still work in the financial world) and who generally hates govt regulation, there is no way that Wall Street is over regulated. Does it need more regulation? That's up for debate. What's more important is that the regulations that do exist need to be better enforced and we need smarter people in the regulatory positions. If the regulators paid even a reasonable percentage of what the banks paid, you'd end up with smart people who could think ahead of the financial innovators (or at least catch up pretty quickly) as opposed to institutions that are years behind the marketplace.

 

[Starmax]

Apparently these people actual didn't get a salary in 2008 and opted for their bonuses instead of getting a salary. So maybe this isn't as bad as we think. Most of them probably have bills to pay and if their houses get foreclosed on it's not gonna help all the people they employ to keep it up.

I think this is an example of overblown sensationalism.

You betcha it's overblown sensationalism... politicians are slithering out the woodpiles to denounce corporate greed with well-rehearsed populist indignation. I don't know which makes me sicker...AIG's all-you-can-eat buffet at the expense of us taxpayers, or the diversionary tactic of focusing our attention on the squandering of a few millions, while TRILLIONS of bailout dollars are being thrown down dark, stinky corporate holes. To get an idea of the difference between millions and trillions, here ya go:

"If counted out in $1,000 bills, a million dollars would be a stack 4 inches high. To reach a billion dollars, that same stack of $1,000 bills would have to be 358 feet tall. To reach a trillion dollars, the stack would stand 67.9 miles high." - The Washington Post.

We're picking up clubs and pitchforks and storming the castle over chump change - $165 million - while the real robbery is taking place right under our noses. What to do about it? Vote the rascals out and elect a new set of rascals. Some things never change.

 

[rnatalli]

We're picking up clubs and pitchforks and storming the castle over chump change - $165 million - while the real robbery is taking place right under our noses. What to do about it? Vote the rascals out and elect a new set of rascals. Some things never change.

I've said it before; if someone isn't in the top 2%, they will always be robbed by someone.

 

[Starmax]

I've said it before; if someone isn't in the top 2%, they will always be robbed by someone.

You're right. It sucks and it won't change until the human species evolves several notches up.

 

[Starmax]

As somebody who used to work on Wall Street (still work in the financial world) and who generally hates govt regulation, there is no way that Wall Street is over regulated. Does it need more regulation? That's up for debate. What's more important is that the regulations that do exist need to be better enforced and we need smarter people in the regulatory positions. If the regulators paid even a reasonable percentage of what the banks paid, you'd end up with smart people who could think ahead of the financial innovators (or at least catch up pretty quickly) as opposed to institutions that are years behind the marketplace.

Yeah maybe, but a lot of the time offering more money attracts not just the smart people, but the smart and dishonest people. Money attracts those who love it.

 

[markw]

what, exactly, is a "bonus"

Apparently these people actual didn't get a salary in 2008 and opted for their bonuses instead of getting a salary. So maybe this isn't as bad as we think. Most of them probably have bills to pay and if their houses get foreclosed on it's not gonna help all the people they employ to keep it up.

I think this is an example of overblown sensationalism.

In all the jobs I've worked, bonus's are directly related to profits. So, what profits did these guys generate to warrant such bonus'?

 

[Starmax]

In all the jobs I've worked, bonus's are directly related to profits. So, what profits did these guys generate to warrant such bonus'?

you weren't working at the right kind of places.

 

[Davemcc]

There are two separate but related sides to the mortgage issue. The first was what you're referring to- the loosening of standards around lending to increase home ownership. Since the 1980s there has been a huge push in the US to make sure everybody could buy a home, even if they couldn't necessarily afford one. On this issue everybody involved is at fault- Congress, regulators, banks, mortgage brokers, real estate agents (who were in bed with the mortgage companies), and of course the good old people of this country.

This is exactly the issue and it all starts in Congress with Pelosi, Reid, Frank, et al. The decision to raise the percentage of home ownership in the US was entirely political and the instruments used to make that happen suffered what may be considered their inevitable failure, considering the incompatibility of the political decisions with economic reality.

I would argue that the executives that got the bonuses are being unduly victimized by Congress, considering that they were fulfilling Congress' direction for making the loans that ultimately turned bad. It's like telling my kid to dig up my lawn to earn his allowance then yelling at him for digging up the lawn and taking his allowance away.

I mean, what the heck are banks supposed to do...put people with risky credit in homes like Congress wants or deny people with risky credit mortgages like they did when Congress complained that banks made it too difficult for average American's to attain home ownership? Your Congressional leaders are playing the field both ways and blaming everybody and anybody that can deflect the blame from themselves.

 

[craigsub]

Community reinvestment act

Picture you are a banker, trying to make decisions on loans. What would your criteria be for making a loan to a person ?

In the "old days", loans were made based on criteria such as:

1. Past Credit History
2. Income sufficient to make payments
3. A down payment to help ensure the loan balance was less than the value of the collateral - or at least so the loan balance was not higher than the value of the collateral.

It was a common practice for the first purchase (major) by a recent high school or college graduate with his/her first "real job" to be a new car.

This required an adult (normally mom and/or dad) to cosign on an auto loan. The good credit this young person built by paying the auto loan, plus saving up for a 20% down payment would lead to the purchase of a house a few years later.

In 1977, this started to change.

The Community reinvestment act was passed.

The CRA is a pretty complicated act, and it has been altered several times in its 30 year plus existence.

Here is a link to the examination procedures as detailed by the CRA:

http://www.ffiec.gov/cra/pdf/cra_exlarge9.pdf

And here is an excerpt from the this text:

2. Select assessment areas for full scope review by considering the factors below.

a. The lending, investment, and service opportunities in the different assessment areas, particularly areas where the need for bank credit, investments and services is significant;

b. The level of the institution's lending, investment, and service activity in the different assessment areas, including in low- and moderate-income areas, designated disaster areas, or distressed or underserved nonmetropolitan middle-income geographies designated by the Agencies1 based on (a) rates of poverty, unemployment, and population loss or (b) population size, density, and dispersion;2

So ... You are this loan officer trying to make loans knowing you are going to have the federal government grading you on how well you serve low income areas.

You make loans to these low income areas, only to have the same Congress that passed the CRA now chastise you for "predatory lending".

Feels pretty good, doesn't it ?

 

[lsiberian]

You betcha it's overblown sensationalism... politicians are slithering out the woodpiles to denounce corporate greed with well-rehearsed populist indignation. I don't know which makes me sicker...AIG's all-you-can-eat buffet at the expense of us taxpayers, or the diversionary tactic of focusing our attention on the squandering of a few millions, while TRILLIONS of bailout dollars are being thrown down dark, stinky corporate holes. To get an idea of the difference between millions and trillions, here ya go:

"If counted out in $1,000 bills, a million dollars would be a stack 4 inches high. To reach a billion dollars, that same stack of $1,000 bills would have to be 358 feet tall. To reach a trillion dollars, the stack would stand 67.9 miles high." - The Washington Post.

We're picking up clubs and pitchforks and storming the castle over chump change - $165 million - while the real robbery is taking place right under our noses. What to do about it? Vote the rascals out and elect a new set of rascals. Some things never change.

Couldn't be said better, but as long as I got food I've got no issues. The 2nd the food stops coming.

 

[Starmax]

Couldn't be said better, but as long as I got food I've got no issues. The 2nd the food stops coming.

Don't forget beer.

 

[Starmax]

Picture you are a banker, trying to make decisions on loans. What would your criteria be for making a loan to a person ?

In the "old days", loans were made based on criteria such as:

1. Past Credit History
2. Income sufficient to make payments
3. A down payment to help ensure the loan balance was less than the value of the collateral - or at least so the loan balance was not higher than the value of the collateral.

It was a common practice for the first purchase (major) by a recent high school or college graduate with his/her first "real job" to be a new car.

This required an adult (normally mom and/or dad) to cosign on an auto loan. The good credit this young person built by paying the auto loan, plus saving up for a 20% down payment would lead to the purchase of a house a few years later.

In 1977, this started to change.

The Community reinvestment act was passed.

The CRA is a pretty complicated act, and it has been altered several times in its 30 year plus existence.

Here is a link to the examination procedures as detailed by the CRA:

http://www.ffiec.gov/cra/pdf/cra_exlarge9.pdf

And here is an excerpt from the this text:



So ... You are this loan officer trying to make loans knowing you are going to have the federal government grading you on how well you serve low income areas.

You make loans to these low income areas, only to have the same Congress that passed the CRA now chastise you for "predatory lending".

Feels pretty good, doesn't it ?

The problem is that everyone involved in this Cluster**** forgot the KISS principle: "Keep It Simple Stupid." The transactions and repackaging of loans got so insanely complicated that even recently retired Alan Greenspan admitted he couldn't comprehend the details. If it was beyond his grasp, how would the rest of us schlubs know what was going on? In the meantime the weasels guarding the hen house made away with all our eggs...and they're still laughing at us.

 

[10010011]

 

[Starmax]

Great cartoon!

 

[highfigh]

Apparently these people actual didn't get a salary in 2008 and opted for their bonuses instead of getting a salary. So maybe this isn't as bad as we think. Most of them probably have bills to pay and if their houses get foreclosed on it's not gonna help all the people they employ to keep it up.

I think this is an example of overblown sensationalism.

Depends on the job and the situation. For the ones who didn't contribute to the problems and actually made exceptional positive contributions to the AIG bottom line, I have no problem with them getting and keeping a bonus but from what I have heard/read, the "retention' bonuses were paid to the people who knew a lot about how AIG operated and threatened to leave so they could work for competitors and divulge the info. If AIG's legal beagles are so "astute", why didn't they have specific language in the contracts with these people that called for no-compete/gag provisions (as much as is possible under the existing laws)? That was called 'extortion' by at least one commentator.

 

[darien87]

If AIG's legal beagles are so "astute", why didn't they have specific language in the contracts with these people that called for no-compete/gag provisions (as much as is possible under the existing laws)?

Ah, the Regal Beagle, my favorite bar.