File Under: Who Didn't See This Coming

#26
#26
droski said:
you really trust the gov't to set compensation?

No, but that does not seem to be what they are considering. Compensation amounts would not be limited. Compensation formulas based on super-short horizons evidently would be.


you really think they know enough about these industries?

I am not sure who "they" are. If by regulators, I think they know enough to administer a program that would, for example, provide an incentive to companies to tie one-time compensation to results of deals made year over year, as opposed to quarter over quarter.


you do realize this is a meaningless bill which will amount to nothing and it's just postering right?


I'd say that odds are you are right and nothing really meaningful would pass. I also think you may be right that its just posturing. But I am not so sure I have a problem with the administration sending a warning shot across the mortgage industry's bow that if it looks like absurd risks are being taken across an industry so that short term a relative handful can take advantage, then regulation may swiftly follow.
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See above.
 
#28
#28
lawgator1 said:
That would be a fair comparison if my work and compensation were based on meeting some goal of just bringin in clients or cases, as opposed to waiting until payment was made, and if I got bonused for some sort of short-term goal, which I don't. In fact, I don't get paid until my bills are coallated, then sent off, then reivewed, then ok'd.
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The bankers in question aren't getting paid until the loans (for example) are approved. Are you suggesting that bank employees not get paid until a loan they generated is fully repaid? That the shouldn't receive performance bonuses until all loans they generated are repaid?
 
#30
#30
No, but that does not seem to be what they are considering. Compensation amounts would not be limited. Compensation formulas based on super-short horizons evidently would be.

Who the hell says short horizons aren't appropriate? what % of these bonus receivers hold anything over a long period of time at the banks? 5% MAX? What about traders or salesman who book the revenue immediately? shoudl they have to wait to get compensated?

I am not sure who "they" are. If by regulators, I think they know enough to administer a program that would, for example, provide an incentive to companies to tie one-time compensation to results of deals made year over year, as opposed to quarter over quarter.

and why should the government have any say whatsoever in this? do you really believe that the bonus structure had ANYTHIGN to do with the current economy>

I'd say that odds are you are right and nothing really meaningful would pass. I also think you may be right that its just posturing. But I am not so sure I have a problem with the administration sending a warning shot across the mortgage industry's bow that if it looks like absurd risks are being taken across an industry so that short term a relative handful can take advantage, then regulation may swiftly follow

you don't think this has already happened? why do you think no one can get a mortgage without ridiculous mortgage insurance right now? do you really think FURTHER restricting credit is good for consumers?
 
#31
#31
lawgator1 said:
That would be a fair comparison if my work and compensation were based on meeting some goal of just bringin in clients or cases, as opposed to waiting until payment was made, and if I got bonused for some sort of short-term goal, which I don't. In fact, I don't get paid until my bills are coallated, then sent off, then reivewed, then ok'd.

I will agree with you that there is the potential for government over-reaching and over-reacting in a program that will monitor and limit the manner in which compensation is paid if you will agree with me that in theory there isn't much difference between regulating the formula for compensating an individual employee (not in amount, but in terms of time frame for performance standards) and limiting bank fees or interest rates, which we already do.

All I'm saying is that the theory is not necessarily a problem and that the devil is in the details, which we don't see yet.
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the theory of gov't meddling in compensation programs in the private sector is absolute garbage and truly antithetical to everything that made this country a world power. If you think something other than our capitalist system contributed to our rise to greatness, you need to do some serious reading. Many much smarter than you and I have predicated our ultimate demise on the unraveling of that system and I believe them to be absolutely correct.

Any interference that keeps the cream from rising to the top precludes the truly talented and entrepreneurially minded. Doing that is a disaster, whether implemented in healthcare, financial services or college football.
 
#32
#32
volinbham said:
Once again OE cuts through the haze to the crux of the issue.
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Honestly, people want the government to fix everything.

Any one name just one government program and the local, state or federal level that is 1% adequate?

Don't bother trying, cause you can't!
 
#33
#33
BigPapaVol said:
the theory of gov't meddling in compensation programs in the private sector is absolute garbage and truly antithetical to everything that made this country a world power. If you think something other than our capitalist system contributed to our rise to greatness, you need to do some serious reading. Many much smarter than you and I have predicated our ultimate demise on the unraveling of that system and I believe them to be absolutely correct.

Any interference that keeps the cream from rising to the top precludes the truly talented and entrepreneurially minded. Doing that is a disaster, whether implemented in healthcare, financial services or college football.
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If business and the economy were as slow moving and independent now as they were in the middle of the 19th century you would probably be right. But our economy is now so evolved, and so interrelated, that I think a good argument can be made that ignoring how abusive these bonuses were in 2002-2005 was irresponsible and that not calling attention to it now would be irrational.
 
#34
#34
OrangeEmpire said:
Honestly, people want the government to fix everything.

Any one name just one government program and the local, state or federal level that is 1% adequate?

Don't bother trying, cause you can't!
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The military? Air traffic controllers? The student loan program? Medicare?
 
#35
#35
lawgator1 said:
If business and the economy were as slow moving and independent now as they were in the middle of the 19th century you would probably be right. But our economy is now so evolved, and so interrelated, that I think a good argument can be made that ignoring how abusive these bonuses were in 2002-2005 was irresponsible and that not calling attention to it now would be irrational.
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pointing at the bonuses as the problem says a lot about how you approach this issue and how little you know about finance and the greater economy. The opening excuses of pace of business and interrelatedness are some of the lamest garbage I've ever heard for government intervention.

Just keep with the bourgeois and proletariat theme for everything and eventually the issues will go away.
 
#36
#36
lawgator1 said:
If business and the economy were as slow moving and independent now as they were in the middle of the 19th century you would probably be right. But our economy is now so evolved, and so interrelated, that I think a good argument can be made that ignoring how abusive these bonuses were in 2002-2005 was irresponsible and that not calling attention to it now would be irrational.
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Regulation in and of itself in financial markets is fine. That regulation should be focused on making risk transparent and regulating financial products. If lending criteria weren't relaxed via legislation, reserve rules weren't relaxed, lines between banking and investing blurred, etc. the bonuses would be irrelevant.

The Fed, the Treasury, the SEC and possibly Congress can look at financial markets regulation to address the issues that partially led to the problem. Focusing on compensation is dumb and potentially destructive to the system.
 
#37
#37
lawgator1 said:
If business and the economy were as slow moving and independent now as they were in the middle of the 19th century you would probably be right. But our economy is now so evolved, and so interrelated, that I think a good argument can be made that ignoring how abusive these bonuses were in 2002-2005 was irresponsible and that not calling attention to it now would be irrational.
Click to expand...

What about congressional bonuses at the state and federal level?

:question:
 
#38
#38
volinbham said:
Regulation in and of itself in financial markets is fine. That regulation should be focused on making risk transparent and regulating financial products. If lending criteria weren't relaxed via legislation, reserve rules weren't relaxed, lines between banking and investing blurred, etc. the bonuses would be irrelevant.

The Fed, the Treasury, the SEC and possibly Congress can look at financial markets regulation to address the issues that partially led to the problem. Focusing on compensation is dumb and potentially destructive to the system.
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exactly. Regulation should be about clarity and letting investors make their own informed decisions. Never should it be about protecting the stupid or uninformed from themselves. Protecting them from liars and quibblers is absolutely justified.

Pretending that those making investment decisions that hammered this market were duped is absolutely stupid. They were well informed, but never expected a broad market real estate pounding. They paid for it.
 
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#41
#41
lawgator1 said:
I think a good argument can be made that ignoring how abusive these bonuses were in 2002-2005 was irresponsible and that not calling attention to it now would be irrational.
Click to expand...

what bonuses are you talking about? all of them? or the 5% that were related to the mortgage industry? btw the overwelming majority of mortgages issued in 2002-2005 are still valid. the problem has come from 2007 to 2008. so i can't see how any bonuses based off of those years were irresponsible in the slightest.
 
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#42
#42
OrangeEmpire said:
It is amazing people demonize business as satan but then look to politicians to fix the problem.

I mean really, the slut on the corner wiping her mouth would have a better shot at straigtening out the economy than our elected fools.
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The slut on the corner has "straightened out" many of those elected fools.
 
#43
#43
droski said:
what bonuses are you talking about? all of them? or the 5% that were related to the mortgage industry? btw the overwelming majority of mortgages issues in 2002-2005 are still valid. the problem has come from 2007 to 2008. so i can't see how any bonuses based off of those years were irresponsible in the slightest.
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Yeah, blame the evil business person! Barney had nothing to do with it!

barney-frank-chutzpah.jpg
 
#44
#44
BigPapaVol said:
exactly. Regulation should be about clarity and letting investors make their own informed decisions.

Pretending that those making investment decisions that hammered this market were duped is absolutely stupid. They were well informed, but never expected a broad market real estate pounding. They paid for it.
Click to expand...


Mmmmm ... the companies paid for it, as did their investors. And then as it reverberated so did the entire economy. The individual executives and salespeople (whatever their title might have been) did pretty well for themselves at everyone else's expense.

I think where a lot of our argument is not matching up is our view of who decides who gets what and how much. And then who polices that.

You seem to think transparency for the investors would do the trick. But my impression -- and I think it is shared by many -- is that the governing boards and decision-makers at these companies justify bonusing each other in ways that short term benefit they and their colleagues, but at the expense of the investors and, in some cases, depositors.
 
#46
#46
OrangeEmpire said:
Federal raises were 300% and Florida doesn't have a House and a Senate?

:banghead2:
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That's just a really, really bad analogy.



droski said:
what bonuses are you talking about? all of them? or the 5% that were related to the mortgage industry? btw the overwelming majority of mortgages issued in 2002-2005 are still valid. the problem has come from 2007 to 2008. so i can't see how any bonuses based off of those years were irresponsible in the slightest.
Click to expand...


The 5 % related to the morgtage industry. Isn't that what the article is about -- regulating bonus formulas for the mortgage industry?
 
#47
#47
lawgator1 said:
The 5 % related to the morgtage industry. Isn't that what the article is about -- regulating bonus formulas for the mortgage industry?
Click to expand...

No it's about regulating bonus formulas for anyone at the banks. you are high if you think frank is just talking about the mortgage industry.
 
#48
#48
lawgator1 said:
The 5 % related to the morgtage industry. Isn't that what the article is about -- regulating bonus formulas for the mortgage industry?
Click to expand...

Well I was wrong when I suggested you could read. The article is about the banking industry. It also mentions that the mortgage industry might be included.
 
#49
#49
The Obama administration has begun serious talks about how it can change compensation practices across the financial-services industry, including at companies that did not receive federal bailout money, according to people familiar with the matter.
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The first quote in the first post and the beginning of the article. :crazy:
 
#50
#50
lawgator1 said:
Mmmmm ... the companies paid for it, as did their investors. And then as it reverberated so did the entire economy. The individual executives and salespeople (whatever their title might have been) did pretty well for themselves at everyone else's expense.

I think where a lot of our argument is not matching up is our view of who decides who gets what and how much. And then who polices that.

You seem to think transparency for the investors would do the trick. But my impression -- and I think it is shared by many -- is that the governing boards and decision-makers at these companies justify bonusing each other in ways that short term benefit they and their colleagues, but at the expense of the investors and, in some cases, depositors.
Click to expand...
this is a pile of senseless babble. Compensation schemes had nothing to do with the issues at hand. Poor underwriting and overvalued real estate are at the heart of the matter. All market bubbles tend to work this way. Remember the tech bubble? Who's fault was that? Regulators?
 
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