Financial Industry Needs to Spend 70 Billion to Keep the “Good People” Who Crashed the World Economy

The Financial Industry

So ok, the NYTimes has out an article on Wall Street spending billions in bonuses.

Goldman Sachs Group Inc. and Morgan Stanley, both still on track for profitable years, have set aside about $13 billion for bonuses after three quarters, down 28 percent from a year ago. Even some employees at Lehman Brothers Holdings Inc., which declared the biggest bankruptcy in U.S. history last month, will get the same bonus they received a year ago.

And what Wall Street types will tell you is "you don’t want to lose good people."

Ookay. Sort of default, the entire finanical industry is filled with lousy people on aggregate, since they made no money for the last, what 4 years? And it’s going to turn out to be more than that.

Some sort of law is going to have to be figured out to reign in salaries in financial firms or hard core progressive taxation with no breaks or loopholes has to come back for people making more than about 200,000 a year. It’s not acceptable to accept hundreds of billions in hand outs then pay yourself tens of billions of bonuses. Ordinary folks aren’t going to see why they should be paying someone’s multi-hundred thousand dollar (or multi-million) salary and bonuses, when they screwed up so badly that the combined cost is now in the trillions. Of course, any firm that wants no bailout money and will not use any of the Fed’s special facilities, can continue to pay what they want. Those on the take can suck it up and live on salaries that are still larger than most Americans will ever see.

The industry is overpaid for the value it brings to the economy. It’d be one thing if they’d made real profits, not engaged in wholesale fraud and not screwed up so badly that their overleveraged mistakes threatened to bring down the entire world economy, but they did all those things. Their standard bonuses are based on financial numbers which were not just fraudulent, but based on out and out lying and crookedness.

The gravy train needs to end. And if the entire industry is forced to cut wages in 1/4, well, folks like this can leave:

A Morgan Stanley investment banker in Europe, speaking on the condition that he wouldn’t be identified, said his bonus last year was five times his salary and that he would quit if he didn’t get a bonus this year, unless his salary was doubled.

And join the real economy and find out that jobs that pay multi-hundred thousand dollar (or multi-million dollar) bonuses, pretty much don’t exist outside a few sheltered enclaves.

Again, the financial industry as a whole has created no value, no profits, for about 4 years now—the last three years profits have all been wiped out and they aren’t making a profit this year, either. They have destroyed trillions of dollars of wealth with their leveraged insanity. They are a net negative to the economy. They may be smart, but as the saying goes, it takes genius to really really screw something up beyond belief.

Enough with the sense of entitlement. Enough with the "best" people. Let’s get some second raters in, it’s hard to imagine they could blow it any worse than the self-congratulatory imbeciles who call themselves "the best". As for the "best", they should be grateful no one is seriously talking about clawing back their previous bonuses; bonuses based on systematic fraud and overstatement of profits through financial chicanery.

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