Goldman Sachs executives have decided to return the TARP money the company received, thinking they can be free and engage in their own risk-taking without involving taxpayers. Hence, they can pay themselves bonuses galore with their "private" money. Given the fungibility of funds and taxpayer support, this is a masquerade. So long as Goldman Sachs may need us again in the future, whatever bonus they are paying today is a bonus that may be covered by the taxpayer tomorrow. They need to vow to never accept taxpayer money and never take advantage of society's implicit stop-loss order if they want to continue paying themselves the way they did in the past. Otherwise, it should be made clear that every penny they pay their hotshots now is liable to be clawed back at the next round of bailouts.
But they get to keep the securities, and the money too. That's a scam I want to participate in.
Before Jan 20, we could demonize bush and paulson and lionize Obama. If the recovery fails it will be because Obama followed the path of putting the foxes in charge of the hen house.
So, all you Obama supporters out there, please explain to me why Obama isn't squarely responsible for Goldman et al's greedy behavior? Why are we focusing on Goldman when it is Obama's policies we should be decrying?
If "blaming" is your point - a bit of research should be your aim, however, it seems you already have & have decided to twist whatever facts you've found.
Decry away... but your attempt to make a point about this article & Goldman - predates Obama. And we're suffering the consequences of a 2/TERM bad choice.
What I was trying to get across was the concept that Obama - and no one else - is responsible for the policies currently in place that seem to be benefiting the big banks in general and goldman in particular.
Summers was one of the masterminds of deregulation under Clinton - and Geithner failed in his job to effectively regulate anyone while head of the fed bank in NY. Aren't you concerned that he and Larry Summers are now Obama's chief strategists? And not to mention the goldman guy who is now CEO of AIG? Goldman is all over this so-called recovery effort and why? Because Obama chose to put them there.
I know we are suffering from 8 long years of Bush (and Clinton's corrupt deregulation tactics before that), but I fear we will be suffering from 4 more years of bad consequences due to Obama's poor choices, vis a vis Summers and Geithner. And as Obama likes to say - the buck stops here. Well, that was my point. Whatever happens now it is on Obama's watch.
Our political system is controlled by lobbyists. Until that changes nothing will.
And here we thought Obama meant what he said about no lobbyists in his administration. He was beholden to no one but the small contributors who deluged him with millions throughout his campaign. Boy, were we duped.
But why be surprised, Obama is a politician after all.
Now we are told to provide a governmental stop loss on the damage done by these villains but not to worry that it will benefit them directly. How is that possible, exactly?
Will they care if their companies cause a depression? Most of the financial executives of this era would rather do what Chrysler has done - turn down TARP money to keep their salaries and bonuses overinflated, lead their companies into bankruptcy, shed hundreds of thousands of worker's jobs, destroy the retirement income of their bondholders, shred the hard earned savings of their shareholders.
Add savvy Goldman Sachs to the list of corporations that would rather lose shareholder's money than have to put limits on themselves and their beloved compensation packages. Such people are beyond contempt. They are the very definition of sociopathology at work in our dying capitalist culture.
Give them a choice - either you cut yourself to pieces or "We the People" take you over. If one thinks there are other choices one hasn't learned much from the current crisis.
http://www.washingtonpost.com/wp-dyn/content/article/2009/04/16/AR2009041601275.html?wprss=rss_nation
The system is rotten and is designed to support that very small special group of people who live in a different economic universe from the rest of us. The only thing special is the ability to maintain their own power.
1)No problems in playing with other people's money .
2)Nobody is willing to challenge accepted wisdom(if we may call it that).
3)Extreme moral hazard due to the knowledge that if they make some returns in short term, a lot of that will go into their pocket, if they fail government will bail them out.
In a related topic what is the problem in nationalization of banks? I do not understand why this is so unpalatable. Why is transparency so unpalatable? In India, we have public sector banks and private banks and mostly the lending practices are much better (less predatory) ,capital reserves are much higher for these banks. Majority of our population (mostly office workers and blue collar workers) have deposits with them and even then, these banks did not have much risk appetite for SIVs and escaped the brunt of the crash.
Excellent point.
"Financial companies that received multibillion-dollar payments owed by A.I.G. include Goldman Sachs ($12.9 billion)," - New York Times - 12-15-2009
How does this clawback work? I for one think it CAN'T. Companies which society cannot afford to let fail must be heavily regulated by the government to prevent failure. Their executives must agree to settle for modest salaries, or otherwise personally guarantee the company's survival, at least to the total extent of their bonuses, i.e. agree to contribute that amount to any bailout, out of their personal funds.
Also, tell them that investigations into the behavior of their execs and employees shall continue, even increase and speed up, since how could they be in such dire need of a bailout and then report record profits just months later? They were either lying then or lying now or both.
How about the foreign governments and banks....
I dont like this any better than anyone. And U.S. execs are paid 15 times more than anywhere else in the world.
However pls note that besides that problem... individuals in these companies have clients they have often managed for years.. sometimes they are written into the contract personally. So these guys can leave and take business with them if they think they can make more that way.. no i dont like it... but its the way it works.
Thats a reason this companies fear loss of the retention bonus.. it can be very expensive... and can mean a loss of business such that we dont get paid back...
These businesses were born out of partnerships, going public in many cases only in recent years which accounts for their methods of compensation that need to be changed.
Regards
That is bogus. Yes, clients were often the result of personal relationships. But clients now need money. They will go where the money is, irrespective of personal relationships. The clients need the banks as much as the banks need the client.
And by the way, no investment banker is named into a contract with a client. Ever.