Thursday, 30 July 2009

The taxpayer put money in, and the bankers take it out

I think I am going to become a communist.

While taxpayers were pumping in uncountable billions into the US financial system, bankers took out multi-million dollar bonuses. How on earth could that be justified? If it wasn't for taxpayers, these banks would have been forced into bankruptcy.

At least in the US there is sufficient transparency to ensure that taxpayers know they have been ripped off. How many UK bankers in loss making banks received multi-million pound bonuses, generously financed by UK taxpayers?

From the Financial Times.

Citigroup and Merrill Lynch, which together lost $55bn in 2008, paid bonuses of more than $1m to a total of 1,400 employees, according to a New York state report on Thursday on bonus payments by banks propped up with taxpayer funds.

The study, compiled by Andrew Cuomo, New York attorney-general, showed that JPMorgan Chase and Goldman Sachs, which both finished in the black last year, paid the most million-dollar bonuses - 1,626 and 953, respectively.

However, the totals at a profitable bank like Goldman were nearly matched by two of the year’s biggest losers on Wall Street. Citi, which suffered a $27.7bn loss, paid million-dollar bonuses to 738 employees. Merrill, which lost $27.6bn, paid 696 bonuses of $1m or more.

9 comments:

Mitch said...

So basically we have been robbed and there aint a damn thing we can do about it.

Seaorsa said...

Yup Mitch, like you say, there's not a thing we can do about it. But when you get a chance to vote, make sure you do, and vote for any party thats not in the big 3. Stop paying taxes on time. Stop paying bills on time to governments and banks. You can get months of TV free before you have to pay the license tax, so seize that. When you get an invoice from a supplier which is factored, delay payment. When the beaurocracy demands your assistance with any matter, delay it, or don't cooperate at all. Why not spend a day now and then throwing parking tickets in the bin as you stroll the streets. Hassle for everyone. Yup, civil disobedience. What can any other readers suggest? I don't want a revolution, I dont want commies or fascists running the country, but I don't want parasitic MPs and their banker buddies lining their pockets with my money either. So lets all do our little bit to fuck them up. Civil disobedience. I'm in!

Anonymous said...

Alice,

returning to your chart of bank lending in an earlier post, I did a quick google and found this:

Most New Credit is from Traditional Bank
Lending, as Non-Bank Credit Has Shut Down

While banks have been lending, they cannot offset the
dramatic fall off of credit outside the banking industry.
Thirty years ago, banks provided about 60 percent of
all credit – today traditional bank lending provides
less than 30 percent.

It also occurs to me that some of this extra "lending" is people failing to pay the interest on outstanding loans....

TimG

electro-kevin said...
This comment has been removed by the author.
Anonymous said...

I bet we can figure out something to do about it...anyone know where these people live?

Name Executive Position
Alan M. Cohen Executive VP/Other Corporate Officer at Goldman Sachs Group, Incorporated
Claes Dahlback Director at Goldman Sachs Group, Incorporated
David A. Viniar Executive VP/CFO/Other Corporate Officer at Goldman Sachs Group, Incorporated
Edward C. Forst Executive VP/Chief Administrative Officer at Goldman Sachs Group, Incorporated
Esta E. Stecher Executive VP/General Counsel/Other Corporate Officer at Goldman Sachs Group, Incorporated
Gary D. Cohn President/COO/Director at Goldman Sachs Group, Incorporated
Gregory K. Palm Executive VP/General Counsel/Other Corporate Officer at Goldman Sachs Group, Incorporated
J. Michael Evans Vice Chairman at Goldman Sachs Group, Incorporated
James A. Johnson Director at Goldman Sachs Group, Incorporated
James J. Schiro Director Nominee at Goldman Sachs Group, Incorporated
John H. Bryan Director at Goldman Sachs Group, Incorporated
John S. Weinberg Vice Chairman/Other Corporate Officer at Goldman Sachs Group, Incorporated
Kevin W. Kennedy Divisional Executive VP at Goldman Sachs Group, Incorporated
Lakshmi N. Mittal Director at Goldman Sachs Group, Incorporated
Lloyd C. Blankfein CEO/Chairman of the Board/Director at Goldman Sachs Group, Incorporated
Lois D. Juliber Director at Goldman Sachs Group, Incorporated
Michael S. Sherwood Vice Chairman/CEO, Subsidiary at Goldman Sachs Group, Incorporated
Rajat Kumar Gupta Director at Goldman Sachs Group, Incorporated
Ruth J. Simmons Director at Goldman Sachs Group, Incorporated
Sarah E. Smith Chief Accounting Officer at Goldman Sachs Group, Incorporated
Stephen Friedman Director at Goldman Sachs Group, Incorporated
William W. George Director at Goldman Sachs Group, Incorporated

Anonymous said...

Alice handily ignores the increased quality of life brought to everyone in the UK over the past decade through the substantial contribution to the countrys GDP by the financial services industry.

Net-net, this effect dwarves the amount the Government will have spent re-capitalising the banks... it wouldn't surprise me if the UK taxpayer actually turned a profit when Northern Rock and RBS are sold off.

But don't let facts stand in the way of your vitriol Alice!

OldSouth said...

Utterly amazing.

The behavior indicates that the management of firms like AIG, Citi, and BOA are certain the fix is in.

No matter how egregiously they act, no one at FDIC, or the SEC, or the Fed, or the White House, or in Congress will ever call them to account.

And, on a more cheery note from across the pond. The Obama administration came up with the bright idea 'Cash for Clunkers', to stimulate auto sales. Easy-peasy!

Chaos ensued after one day in operation. It's Obama's version of Terminal 5.

http://www.usatoday.com/money/autos/2009-07-30-cash-for-clunkers-program-suspended_N.htm

Anonymous said...

"I think I am going to become a communist."

- Welcome Comrade! Were both pretty much already there.

Anonymous said...

@Anon 01:34, I don't eat GDP, and I suspect neither do you. It can be a bit of a red herring in estimating increases in wealth.

When it comes to the financial sector's contribution to GDP, bigger isn't better. Finance is more of a neccessary evil to help connect those who have capital to invest with those who have (hopefully) gainful investments.

Like management or marketing, finance isn't actually producing anything, and it's only useful to the extent that it facilitates production.

When finance grows out of proportion with the economy at large, this is almost guaranteed to be counterproductive. But you're right in that it will make GDP numbers look better.