Wall street bonuses: some know no shame

The motivation for this piece: 18 billion dollars in bonuses for the same thugs who have caused this meltdown.

In the past, I have argued that the reason for financial failures is the asymmetric compensation of bankers: big payoffs for profits, and no haircuts for losses; In the process the tax payer should step in and save the system from collapse. However, this set of bonuses beats even that: almost antisymmetric rather asymmetric in a sense. When was the last time you were rewarded for bankruptcy? Well, it seems Merryl Lynch gave $ 4 billion dollars in bonuses. I can only say "No use hanging your head in shame, since clearly they have none of it".

To be sure, some people do deserve the bonuses and the entire amount is not unjustified. Even the concept of bonuses is ok,(maybe they should change the name). But this type of extravagance is uncalled for. When you grovel in front of the govt. for a bailout, dont increase lending, dont even disclose how capital infusions are being used, pad up your balance sheets and then pay obscene salaries and bonuses you must be bonkers. In the nationalisation piece, this was precisely the reason I wanted top management to be fired and bonuses frozen. Some people had legitimate concerns that operations would be affected. But it can be done quick and have business minded people running the show. As for high salaries govt. need not mandate it and only impose caps. If people still feel they are insufficiently compensated, then they can quit. On a different argument, I believe that compensation independently is unjustified anyway, but that is an argument for another day.

Just an example of the pernicious disregard for money in these organisations: I saved 10000 USD during my 2 month internship. Assuming I spent nothing (close enough), this was my stipend. Add 80 usd/day as approximate housing cost in a fairly upscale hotel in Hong Kong. Hence a total of 15000 USD which would be around 90K USD per annum. This for doing no brilliant work.

Finally, the worst bit of this episode is that these hot shots crib that bonuses have been cut or not paid. And they crib about limits on pay, and being dragged to Congress. I think they should be subjected to water-boarding. Ok, maybe that was overboard. I oppose torture personally. An exception could be made I guess.

UPDATE: Since this post, new evidence of "no shame" profligacy: BoA spends millions on Super Bowl promotions, and MS has a private retreat for people in Florida

UPDATE 2: Add JP Morgan, American Express and Wells Fargo to the list...amazing...