Gov't Salary Controls for Banks

[BigPapaVol]

Fed plans to approve banking salaries: report - Yahoo! Canada Finance


This is sure to be a boon for private companies. There is no possible way that the government can mess this one up.

Seriously, they can't set pay but can disapprove pay? What's the freaking difference? They can disallow incentive pay because it might have a risk element?

Holy shizz. DC sounds hideously Euro in its approach to the world.

 

[MontereyVol]

Help me out here, salaries aren't the issue the bonuses are. This would do nothing to limit bonuses?

 

[BigPapaVol]

Help me out here, salaries aren't the issue the bonuses are. This would do nothing to limit bonuses?

It's essentially free reign to limit anything. The language is perfectly nebulous so that anything labeled "too risky" could be justification for scaling back compensation.

 

[MontereyVol]

It's essentially free reign to limit anything. The language is perfectly nebulous so that anything labeled "too risky" could be justification for scaling back compensation.

But loose wording can lead to advantages for the bankers too.

 

[BigPapaVol]

But loose wording can lead to advantages for the bankers too.

not when the final say resides with the regulators, who are passing rules for socializing an industry without any elected official casting a vote.

We toss about socialism as hyperbole a lot here, but this is the real freaking thing. Power over pay is absolute power, period.

 

[MontereyVol]

Could this not be challenged in the Supreme Court? Or possibly certain states declining?

 

[rjd970]

Explain to me how the banking system over the last 2 years has been capitalism. Banks should have failed, but they got socialism for companies that are "too big to fail".

They loved euro rules when they were on the brink of sinking.

 

[BigPapaVol]

Explain to me how the banking system over the last 2 years has been capitalism. Banks should have failed, but they got socialism for companies that are "too big to fail".

They loved euro rules when they were on the brink of sinking.

What banks, besides huge ones making big bets, should have failed, but didn't?

You do realize that we were saving them from insolvency. We were saving them from regulatory capital ratio failure. Totally different animals. The ones that were going to become insolvent, did.

In my mind, the last two years and TARP funds were garbage. The idea was right, but poorly practiced. Youdo know that Tarp funding really didn't happen to the degree that the press has you believe. The banks that took it did so as defensive measure and much of the money was never spent. Banking is at the heart of our system. The goveremt needs to limit its intervention, period.
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[droski]

the real distubing part of this is them saying they can take back any money. in other words i could retire or something and obama could say i have to give back my last 5 years salary.

 

[rjd970]

What banks, besides huge ones making big bets, should have failed, but didn't?

You do realize that we were saving them from insolvency. We were saving them from regulatory capital ratio failure. Totally different animals. The ones that were going to become insolvent, did.

In my mind, the last two years and TARP funds were garbage. The idea was right, but poorly practiced. Youdo know that Tarp funding really didn't happen to the degree that the press has you believe. The banks that took it did so as defensive measure and much of the money was never spent. Banking is at the heart of our system. The goveremt needs to limit its intervention, period.
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This is where we disagree. I don't even think the idea was right. Maybe it is just because I am not as well versed as you in this, but I don't understand how you can say the idea was right and then say government needs to limit its intervention. Even if it was just a defensive measure and money wasn't totally spent, it still deosn't change the fact that the government shouldn't have stepped in and these banks should have been left to their own accord.

I'm in the Ron Paul camp on this one. Let them fail, no matter how big. If it destroys our financial system and we delve into a depression then so be it. Even in the short term this would have been preferable because the a short, hard depression is better than a prolonged recession or a delayed worse recession. It's the same as in the 30's, the depression would not have been near as long if the market would have been allowed to correct itself and FDR would have stayed out of it.

Has any lesson been learned? Do we still have large banks that are "too big to fail" and is risk and short term gains overly compensated over sound, safe investments? I don't know, but from my seat the game hasn't changed and we are heading back into the same practices. At the very least, these megabanks are still in business.

I am just being consistent. If the government should stay out of it, that should include when these institutions should fail as well. The idea isn't right no matter the circumstances.

 

[droski]

i've never understood why we need to blow up our financial system to teach everyone a lesson. losing their jobs and most of their net worth (due to their company stock tanking) hasn't been enough of a lesson for the finance industry? and let's face it. the next generation will make a similar mistake no matter how badly we screw the current generation. that is the way markets work. bubbles and busts. that's been true for thousands of years. i don't see any reason why we should torpedo everyone else just because we had a once in a lifetime crash in the housing market. unlike the auto industry this isn't a fundamental problem with the banks business model. they screwed up, they got punished, why screw everyone else too?

 

[BigPapaVol]

i've never understood why we need to blow up our financial system to teach everyone a lesson. losing their jobs and most of their net worth (due to their company stock tanking) hasn't been enough of a lesson for the finance industry? and let's face it. the next generation will make a similar mistake no matter how badly we screw the current generation. that is the way markets work. bubbles and busts. that's been true for thousands of years. i don't see any reason why we should torpedo everyone else just because we had a once in a lifetime crash in the housing market. unlike the auto industry this isn't a fundamental problem with the banks business model. they screwed up, they got punished, why screw everyone else too?

I generally agree with this. Imploding the economy vs helping a few, very large and very public national platforms seems to me an easy decision, especially since it makes the government money.
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[rjd970]

i've never understood why we need to blow up our financial system to teach everyone a lesson. losing their jobs and most of their net worth (due to their company stock tanking) hasn't been enough of a lesson for the finance industry? and let's face it. the next generation will make a similar mistake no matter how badly we screw the current generation. that is the way markets work. bubbles and busts. that's been true for thousands of years. i don't see any reason why we should torpedo everyone else just because we had a once in a lifetime crash in the housing market. unlike the auto industry this isn't a fundamental problem with the banks business model. they screwed up, they got punished, why screw everyone else too?

Not enough they didn't get punished. The real market correction should have been allowed to happen and these massive institutions should have been restructured. If we really practiced the capitalism most on here harp about then some of these banks may not (and indeed, should not) be around today.

Don't get me wrong, I am all for free markets and capitalism. However, obviously the way the system was before the housing market crash made it overly-susceptible to the busts in the economic cycle. Has anything changed?

I am not fair weather and only for it when it works...and then ready to abandon its principles when the going gets a little too tough. If this is our system, for good or bad, let it work. Until we really do that, then it is nothing more than psuedo-capitalism with lip service to true free markets.

 

[rjd970]

I generally agree with this. Imploding the economy vs helping a few, very large and very public national platforms seems to me an easy decision, especially since it makes the government money.
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Do you think many, smaller platforms would have cushioned the blow better than having everything rest on a few large ones?

 

[BigPapaVol]

Do you think many, smaller platforms would have cushioned the blow better than having everything rest on a few large ones?

To some degree. I also think the Chinese wall that forever existed between investment banks and commercial banks needs to be reinstituted via repeal of Graham Leach Bliley.
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[rjd970]

To some degree. I also think the Chinese wall that forever existed between investment banks and commercial banks needs to be reinstituted via repeal of Graham Leach Bliley.
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Then why not let the big guys fail, split apart, and start over? Isn't that what the market was forcing?

To me, that is what should have been allowed to happen, even if it meant a sharp (and short) depressive economy. In the long run it is more healthy to purge the economy of susceptible entities.

 

[BigPapaVol]

Then why not let the big guys fail, split apart, and start over? Isn't that what the market was forcing?

To me, that is what should have been allowed to happen, even if it meant a sharp (and short) depressive economy. In the long run it is more healthy to purge the economy of susceptible entities.

Failure of the Citi's and BofAs is too harsh for depositor confidence. A depositor run on banks is death.
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[droski]

Not enough they didn't get punished.

how do you figure that? it's the highest unemployment rate in the financial industry in 20 years. virtually every person responsible for these issues has been fired (let's not forget that 99% of hte workforce had zero to do with subprime lending) and most of those people have lost most of their net worth. what would be a good enough punishment? death? torture? seriously i'd like to know.

 

[J-P]

Those that had the most to do with the subprime lending are still employed and enjoying a luxurious life - Barney Frank, Charlie Rangel, etc.

America elected a socialist President, so no surprise that the fed is moving in socialist directions. What surprised me most was that America elected a socialist President.

 

[rjd970]

how do you figure that? it's the highest unemployment rate in the financial industry in 20 years. virtually every person responsible for these issues has been fired (let's not forget that 99% of hte workforce had zero to do with subprime lending) and most of those people have lost most of their net worth. what would be a good enough punishment? death? torture? seriously i'd like to know.

Death, torture? Spare us the dramatics.

The banks go under, split apart, and restructure should have been punishment. Cry me a river with the unemployment rate in the financial industry. It is like that across the board with many other people who are just as innocent as the one you claim are, probably more so because they don't work in the industry of derivatives and credit default swaps.

I know I felt the sting...I bought a house I could more than afford, made my payments on time, and did everything I was told was responsible. What happened? I was trasferred for my job right as the housing market went to sh*t and took a huge loss on my house, because I was in the position where I had to sell it.

I'm not b*tching, and I am still getting back on my feet from it...it is an investment and I took the risk when I bought it. I actually accept that, even though I had ABSOLUTELY nothing to do with the price falling through the bottom of my property. Woulnd't it be nice if those in the financial industry also had this attitude? I just wish I had the government socialize my risk and come bail me out when it didn't workout like I planned.

Bottom line, these banks should have been allowed to fail if that was what was going to happen to them.

 

[rjd970]

Failure of the Citi's and BofAs is too harsh for depositor confidence. A depositor run on banks is death.
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Then they shouldn't have been that big in the first place, and certainly shouldn't be that big now.

 

[MontereyVol]

Ma Bell comes to mind.

 

[VolByBirth]

To some degree. I also think the Chinese wall that forever existed between investment banks and commercial banks needs to be reinstituted via repeal of Graham Leach Bliley.
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YES.

Failure of the Citi's and BofAs is too harsh for depositor confidence. A depositor run on banks is death.
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YES. I hate the "too big to fail doctrine", but the fact remains that in this crisis -- they simply were too big to fail. See above on how to start solving. Regulation is a necessity and shouldn't be confused with the overuse of the term Socialism. Not to the degree this admin is doing it -- but regulation on some level is a must.

how do you figure that? it's the highest unemployment rate in the financial industry in 20 years. virtually every person responsible for these issues has been fired (let's not forget that 99% of hte workforce had zero to do with subprime lending) and most of those people have lost most of their net worth. what would be a good enough punishment? death? torture? seriously i'd like to know.

The subprime lending wasn't the issue -- it was an awful by product of demand. Subprime lending came about because of MBS's, CDO's and credit default swaps. The "risk" was so convoluted that Wall Street basically told bankers they would buy any mortgage product they could get their hands on.

Those that had the most to do with the subprime lending are still employed and enjoying a luxurious life - Barney Frank, Charlie Rangel, etc.

America elected a socialist President, so no surprise that the fed is moving in socialist directions. What surprised me most was that America elected a socialist President.

I assume this is directed at the CRA and Fannie and Freddie. These are not the issue.

 

[pejp]

Regulation is a necessity and shouldn't be confused with the overuse of the term Socialism. Not to the degree this admin is doing it -- but regulation on some level is a must.


.

This is what people on here completely fail to understand. The idea that market forces are infallible is wrong. I've heard so many people who have literally no idea what they are talking about claiming that 'they should have been allowed to fail because that's what the market wanted'. A failure would have been absolutely catastrophic.

I think people need to realise that while capitalism is by far the best system that we have, to suggest that it is perfect and can work without any outside intervention is incorrect and will simply lead us back into the situation we now find ourselves in.

 

[BigPapaVol]

This is what people on here completely fail to understand. The idea that market forces are infallible is wrong. I've heard so many people who have literally no idea what they are talking about claiming that 'they should have been allowed to fail because that's what the market wanted'. A failure would have been absolutely catastrophic.

I think people need to realise that while capitalism is by far the best system that we have, to suggest that it is perfect and can work without any outside intervention is incorrect and will simply lead us back into the situation we now find ourselves in.

You clearly don't understand the difference between regulation for the sake of everyone's clarity and salary controls. Salary controls being pure socialism and regulatory control being necessary.
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