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Maverick Alert: Claire McCaskill Rides Tough
Criticizing fatcat CEO bailout-baby bonuses ("these people are idiots") and the direction of the stimulus bill ("all we did was just tee up ammunition for the other side to tear this thing down"), Claire McCaskill steps out of the pack to become hero of the day - not by jabbering but introducing legislation.
http://www.huffingtonpost.com/2009/01/30/mccaskill-lays-down-law-o_n_162662.html
We'll see who follows. It's one thing for politicians to express continual dismay while taking ineffective measures. It's another to actually try to change the behavior.
http://www.huffingtonpost.com/2009/01/30/mccaskill-lays-down-law-o_n_162662.html
We'll see who follows. It's one thing for politicians to express continual dismay while taking ineffective measures. It's another to actually try to change the behavior.
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She's a moron. She's quoting compensation figures that are misleading (or she just didn't do her homework) - the 113 banks that paid their top execs $2mm per year - that was money paid in Jan 2008 for the 2007 year performance. That was paid before the meltdown and before the TARP. And the $18bn - alot of that $ went to people and firms that didn't receive any TARP funds. She's getting a lot of people angry at her - when she should just be focused on Merrill and Citi since they're the biggest problems right now.
January 31, 2009 1:52 PM | Reply | Permalink
And was Obama an idiot when he criticized the excess compensation the other day?
January 31, 2009 2:00 PM | Reply | Permalink
Right before he slapped down the new corporate jet.
January 31, 2009 3:20 PM | Reply | Permalink
No, Obama criticized 2008 bonuses. McCaskill is just grandstanding. This legislation is pratically the definition of reactionary thinking, it's poorly thought out and it does nothing to solve the underlying problem. She's a blue dog and she's earning points with "angry" people without proposing anything that could solve the underlying problems because it would never pass. I actually posted a blog about this and if you agree you can recommend it and fight back against this pointless reactionary showboating.
We need real solutions, not unhinged tirades and vanity bills.
January 31, 2009 6:59 PM | Reply | Permalink
I'm pretty sure you are off base on this. Everything I'm reading indicates that even if dispersed in early 2008, those are still reported as 2007 bonuses. Do you have any links to show otherwise?
I tend to agree, attacking bonuses is a knee-jerk reaction. That is the current vehicle for compensation in the industry - you can't just tell people who worked all year: "sorry you aren't getting your pay this year ... see you at work tomorrow". Here's an AP piece that looks at the bonus situation in a non-hysterical fashion:
http://www.google.com/hostednews/ap/article/ALeqM5hMFjDMotZFWhs5tkZ6dj17a43TngD961ON900
At the same time, I welcome McCaskill's outrage in general. I don't really think the system in place should be duplicated in 2009 and part of fixing that will be critical assessment of what just happened. Creating impetus for change at times takes a bit of hyperbole. Since these are contracts that the government can't really mess with anyhow, the histrionics don't bug me that much.
January 31, 2009 2:27 PM | Reply | Permalink
"You could absolutely make an argument that we shouldn't be getting any bonuses this year," said the worker, who also requested anonymity because of his company's restrictions on talking to the media.
"If you are going to have a pay-for-performance system, you have to take the lows with the highs," he said. "This just happened to be a really low year."
January 31, 2009 2:50 PM | Reply | Permalink
Yeah ... I liked that quote too. But I feel obligated to put the rest of it:
January 31, 2009 3:28 PM | Reply | Permalink
I'll be happy to work as a clerk for $50,000/year and no bonus. Are they hiring?
January 31, 2009 3:57 PM | Reply | Permalink
By all means, pay them the minimum wage for sure.
January 31, 2009 4:40 PM | Reply | Permalink
Yes the $18.4 billion was the total bonus pool. But once you back the TARP recipients out, there isn't much left to build a case on.
Either way, her argument couldn't be simpler. If you take public money, you can't make more than $400K. Whether that's the right number or not, to argue that the banks don't need adult supervision is apparently naive.
January 31, 2009 3:01 PM | Reply | Permalink
The problem is they all take money from taxpayers who pay into 401(k)s and have for years. Freaking out about this now and proposing radical cuts that will never be enacted is just grandstanding in order to get all the "populists" out there riled up without ever doing anything. It's BS.
January 31, 2009 7:03 PM | Reply | Permalink
Blue - Some banks (like JPM and GS and Northern Trust to name a few) were forced to take TARP funds even if they didn't want them. So it's hard to draw the line and say if you took TARP you can't pay bonuses.
February 1, 2009 12:04 AM | Reply | Permalink
Point taken. But if compensation were actually tied to performance we wouldn't be having this conversation.
February 1, 2009 12:54 AM | Reply | Permalink
The problem is that these companies are so big and you have a bunch of employees outside the mortgage/leverage finace/trading side of the business that actually produced positive revenues for the firm. Even if you goose-egg the people who were "responsible" for the losses, what do you pay bonuses for the people that didn't create the mess? At Merrill, that's probably still 20,000 of their 50,000 employees
February 1, 2009 8:26 AM | Reply | Permalink
Change the compensation structure so it is not bonus-dependent in the lower tiers.
I don't know how it works in the investment banks, but I know how lower-level professionals get paid in regular banks because I am one. I have a salary and a short-term incentive. STI is a combination of individual and business performance. My 2008 bonus was 35 percent less than in '07, even though the company made a healthy profit. In fact it was something like third-highest in its history. We just didn't hit our earnings and ROI targets.
So I don't have a whole lot of sympathy for companies that post enormous losses (or go belly up and come to the government hat in hand) and then pay out giant incentive pay packages -- for that it what the "bonus" is supposed to be.
February 1, 2009 11:10 AM | Reply | Permalink
It's tough because if the pay packages aren't tied to performance, it's hard to get the lower level analysts that are right out of college to work 100 hour weeks and pull all-nighters if they don't have the hope of getting a decent bonus at the end of the year.
And I'm sure you're aware that at investment banks the base salaries are kept very low. Much lower than what that analyst right out of college would get as a base if they worked a similar function outside of the investment banking industry.
February 1, 2009 11:50 AM | Reply | Permalink
My point exactly.
"One hundred hour weeks." You've nailed the problem right there. Life is way too short to spend 70 percent of your time doing any one thing. Kids go into that business for one reason and one reason only: because they think they can grow fabulously rich.
Well, ok. That's why a lot of working stiffs plow unconscionable amounts of their hard-earned dollars into the lottery. Makes just about as much sense, in my opinion.
I won't go into my "money for money's sake" rant because I'm afraid it would draw the rats out of the woodwork. I'm just saying.
February 1, 2009 12:09 PM | Reply | Permalink
I know I was going to shut up but I can't.
Wasn't the original mission of investment banks to raise capital for business? I know it's kind of boring, but that's just the point. In fairly rapid order we went from raising money for investment in activities that create economic value, to raising money for the sole purpose of making more money.
There's no better illustration of this than the mortgage fiasco. Bid up the price of an asset to obscene multiples of its real value using insanely complex financial instruments nobody can understand. Create a shell game that not only hides the original asset, but by endlessly putting more shells in play ultimately makes the asset disappear.
Each time a shell is added someone gets paid. Not for adding value to the asset, but for diluting it. At the end of the day, the who purpose of the exercise is not creating value, but creating transactions and charging princely sums for each one.
Man, I'm way out of my league here which is why I should have said my peace and shut up. But that's the gist of it.
Here's the sorry truth. If you opted into this game and signed on to the 100 hour weeks, you were playing a big game of powerball. Well, this time the bottom fell out and nobody's number came up. I feel sorry for the kids, but they should have known what they were getting into.
February 1, 2009 12:34 PM | Reply | Permalink
And the bonuses Merrill Lynch paid out in December 2008? Those were for ...???
January 31, 2009 3:22 PM | Reply | Permalink
Respectfully disagree. The whole system is the problem that requires a systemic solution.
January 31, 2009 4:05 PM | Reply | Permalink
The argument is whether the government should be able to regulate what corporations pay, in terms of bonuses or otherwise. The "average" American might see the legislation as a fabulous solution - but in the long term it may prove to be a very slippery slope if passed. IF they receive bail-out / TARP funds is the crutial point. But how much? For how long are bonuses limited? Who ultimately decides?
January 31, 2009 2:10 PM | Reply | Permalink
A slippery slope to what? The Feds didn't seem to have a problem with renegotiating union contracts on behalf of the Big Three. Bailout recipients don't seem to have qualms about using the bailout money to directly lobby the Feds. Banks don't seem to be using the bailout money to create new loans. Treasury managed to get Congress to just write a "spend it any way you think fit" provision. I see more of a mudslide than a slippery slope.
January 31, 2009 2:20 PM | Reply | Permalink
Agreed totally. There are plenty of regulations on all sorts of businesses to ensure they aren't crating incentives to screw people. In the financial sector, they are working with other people's money. More than any other industry, their practices should be regulated to prevent incentives that leave investors holding the bag.
I don't like applying regulations to just TARP recipients. I think if we're going to fix this we need to get a rational system that works and then apply it equally. Even if they don't take TARP funds directly, all of these institutions are benefiting from the government investments.
January 31, 2009 2:43 PM | Reply | Permalink
Agree in spirit if not entirely on substance, kgb.
By the time this is over, it will be tough to find a bank with executive compensation packages this large that isn't a TARP bank.
Back to my earlier point on adult supervision. Until corporate boards stop being members-only clubs and really begin exercising independent oversight they'll they'll continue to look after their own.
January 31, 2009 3:10 PM | Reply | Permalink
Then it's a mudslide. What about this legislation that she's proposing does anything to change your points? So the "fat cats" move to another entity willing to pay them. Until that entity fails. When the management becomes an even larger cesspool with even less qualified people - who's watching the store? Congress? Some newly forged committee? Our money may end up seeping through many smaller drains, but the eventual loss is the same.
January 31, 2009 5:11 PM | Reply | Permalink
barefooted, you are assuming that these multi-bonus people are all geniuses and the system will fold without them. They have made this mess! They rode this wave when many saw it coming years ago, and they did not problem-solve, or change direction, or do anything to protect assets when this was on the way.
I had dinner 3 years ago with a very low-level Wall Street person who told me the sub-prime mortgage issue was going to burst and take the world's financial system with it. I don't think she was the only person who knew it.
The concept of lending institutions accepting any mortgage loan from anyone, bundling them together (good and bad) and then selling that "package" to another took away primary oversight, and kept passing these on until literally the whole world was involved.
If you think that the people who developed this business model are too valuable to lose and that we will lose them to the "highest bidder," I think you are woefully mistaken.
In fact I think just the opposite: I think it is time to start over. Instead of MBA's running businesses that they never worked in in their lives, and have no real knowledge of the day-to-day workings, let the good managers rise up to the top.
I know that Microsoft is also laying people off, but when you look at Bill Gates, T Boone Pickens, Steve Jobs, and others, their companies have consistently done well because the people at the helm know what makes those businesses tick.
Can you give an example of someone whose company was bailed out that you think is too valuable to lose? Can you give an example of one person who re-invested his millions in bonuses back into the business that awarded them? Can you show an example of job creation from any of these bonuses? I just haven't seen it. If you have, I'm ready to be educated.
January 31, 2009 6:00 PM | Reply | Permalink
Your comment is based on the premise that I assume something to be true which I do not. I don't believe I ever suggested anyone to be a genius or that the system would fold without them. I do believe that there are some people who are willing and able to do a job better than others, through education and (hopefully) experience. In every walk of life. It is the responsibility of those who hire them to require they then prove their worth. Monetarily and otherwise. If they do not, they should be terminated from their position and replaced. The amount of money they earn and/or bonuses they receive is irrelevant.
>They rode this wave when many saw it coming years ago, and they did not problem-solve, or change direction, or do anything to protect assets when this was on the way.
What laws did they break? What regulations were overlooked? Who told them NO? Oh, sure, there were one or two trophy arrests and big media stirs. But until it hit us across the face noone really cared enough to do anything. Shoot, the average guy in the street knew the housing market was bound to burst. Simple economics. Did that stop him from getting a "too good to be true" mortgage? Not if he needed a home. The Republicans in office preferred to let it happen on it's own than take a chance on regulation. The Congress just blew smoke up Bush's ass.
So, sure. Cut the bonuses, but let them keep their jobs. The ones who really participated in the mess will simply find another way to pad their wallets, just under the radar. The ones who didn't - and I dare say there are more than a few - will walk away.
January 31, 2009 7:30 PM | Reply | Permalink
You say:
Then I say:
and then you say:
I never said they broke laws, or (nonexistent) regulations. I said that they were ineffectual. Your concern that we will lose these great minds to other industries strikes me as wrong.
Who told them "NO?" If these people were worth their salt they should have done something to mitigate this crisis.
"The average guy in the street" did NOT predict this mess -- get real! And what could that average joe have done about it? What power did joe have?
I don't understand what you mean by this. Is this your solution?
Please explain what you mean; I just don't really get your point.
January 31, 2009 8:05 PM | Reply | Permalink
Once again - I no more referred to any "great minds" than I did to "geniuses". As for losing any of them, the ones worth their salt and perhaps capable of righting the ship are the ones I'd hate to see gone. To the others I offer a sincere salute on their way out. 'Cept they're not leaving.
With no laws broken, and no regulations side-stepped, your argument is that they should have been better people and done the right thing. Agreed. But if you give the matches to the ones who start the fire, you can't later decry their clumsiness. My point is to learn not to put the matches in plain sight of the woodpile.
And the average Joe/Jane is no less intelligent than your low-level Wall Street friend. It's a matter of paying attention to a bubble ready to pop at any time. Remember the dotcom days? So now we know. We can all do something about it now. We can use our voices as loudly for enactment of laws and enforceable regulations as we do for cutting their bonuses.
Bad guys don't change if they don't have to, no matter how much the good guys chastise them.
January 31, 2009 10:26 PM | Reply | Permalink
No one is hiring right now, so they have nowhere to go.
But that said, McCaskill's proposal is a joke. It would never pass and it's only purpose is to make her look good for a few minutes without changing anything.
January 31, 2009 7:06 PM | Reply | Permalink
Some are hiring (the Citi/MS brokerage JV is looking for people), hedge funds are hiring (the ones still alive) and lots of boutique firms are forming with ex-bulge bracket bankers (Moelis & Co).
So the good M&A banker that did nothing to cause the mortgage melt-down will leave and go somewhere if they don't get a bonus. Same for the star retail broker who generated positive fees for his/her company last year.
February 1, 2009 8:33 AM | Reply | Permalink
Yup. I'm digging it. People have to start getting the idea that they can DO stuff. Spell issues out. Name names. Make it simple. Set limits. Make laws. And not just wait around & wring hands.
Now, maybe she's just showboating, maybe she'll shut up, but right now, thank GOD somebody's showing some willingness to speak up. My only complaint is with the $400k. I say $150k, and have a nice day. If you wanna whine, your company gets less. We'd see these MANAGERS of firms - not the OWNERS - very quickly get placed in a situation where their greed was driven head-on up against the interests of the owners. Which I think would be a lovely debate. Because myyyyyyyy, hasn't that freeing up of executive compensation just proven its worth?
Kick some ass, Claire.
January 31, 2009 2:28 PM | Reply | Permalink
Q, if we do not pay enough to these genius' on wall street, they will leave and ply their trade elsewhere. Like South American Drug Cartels or bakeries.
WHAT!!!!!
January 31, 2009 2:53 PM | Reply | Permalink
Cosign!
January 31, 2009 3:11 PM | Reply | Permalink
This isn't "as kicking" this is pointless grandstanding. The law would never pass, and frankly writing poorly thought out laws like this when you're angry is the definition of being a reactionary. We need forward thinking laws to deal with inequality in our society not to go around and talk about wanting to hit bankers in the head with bricks when things get really sideways.
If the law passed, I wouldn't cry too much but it's a terrible, ineffective way to legislate.
But of course, everyone knows it won't pass, including Clare McCaskill.
February 1, 2009 12:29 AM | Reply | Permalink
Des I am so glad somebody got on this. I am really getting to enjoy her. She just sneaked into the senate in 2006 and I thought, we need all the Dems we can get, but She is terrific.
It was fun just to hear her chastising the evil ones in the Senate yesterday. Made me proud to be a democrat.
And like you noted, she is backing this rant up with real legislation.
Shame, shame on you, she says.
January 31, 2009 2:40 PM | Reply | Permalink
McCaskill is my new hero for the "These people are idiots" line alone. Someone needed to get that on the record.
January 31, 2009 2:44 PM | Reply | Permalink
Let's hear it for Sanity! The Karma Virus:
http://tpmcafe.talkingpointsmemo.com/talk/blogs/therap/2008/10/october-surprise-its-viral.php
Clearly, with only 5 red states left, and so much sanity across the land, there is no reason to wait to impose sane policies. The vast majority of the population will benefit. And the whiners have had their day and their say. And it's time to pay up!
January 31, 2009 2:47 PM | Reply | Permalink
What is the performance Wall St has been paying bonuses for since 2003? The ability to gin up phony profits by slicing and dicing mortgages, repackaging and reselling them to gullible buyers from here to Omsk? Borrowing vast sums of money to bet 30, 50, 70 times the amount they actually could pay back to place bets on whether or not those mortgage backed securities would ever pay off?
Excuse me but crippling and quite possibly mortally wounding American and international financial markets isn't something that ought to be rewarded. Not in 2007, not in 2008 and not in 2009. We probably can't go back to 2003 and strip these guys of all their ill gotten gains but we sure as hell should make sure these "masters of the universe" don't walk away comfortably, let alone comfortably rich form this debacle.
January 31, 2009 3:30 PM | Reply | Permalink
Well said. In fact, I see no reason why these jerks shouldn't be treated precisely the way they treat their own customers.
NEGATIVE bonuses. Outrageous penalties that accrue compound interest at saaaay, 39%, (since that is what they charge people they have deemed unworthy for 3 late payments in a year) and if they're a hour late paying back the taxpayers, gigantic late fees AND penalties, as well as a systematic lowering of their credit line, so that every month, after the interest is tacked on, they are over their limit, which leads to more fees and penalties.
Whoo hoo!
Why not? They screwed up, after all. Banks feel that this is acceptable behavior, and I have read heartbreaking story after story in the papers of exactly this type of thing happening to people who lose a job, or get ill. They end up owing thousands in fees and penalties and interest which is impossible to pay...
Sauce for the goose, ya think? Nothing is too "good" for the bankers. Maybe if we treat a few of these "executives" to their own inhumane lending practices, they might think twice about screwing everything in sight.
January 31, 2009 5:13 PM | Reply | Permalink
I foresee real estate agents jumping over the railings of $10 million dollar penthouses in NYC Bwak. Who will be able to afford such places if Wall St movers and shakers aren't allowed more than $400,000 a year in compensation? To paraphrase Maud Flanders, "Won't anyone think of the sleazebags?"
January 31, 2009 5:42 PM | Reply | Permalink
The people that aided and abetted the Housing Bubble, who should have warned us to know better, because they did?
~~~~~~~~Worlds Tiniest Violin~~~~~~~~
January 31, 2009 6:06 PM | Reply | Permalink
Sometimes I have dreams that seem to come so close to realization. Oh to see the penthouse jumpers.
THE PENTHOUSE JUMPERS
A great book idea. What do you think?
January 31, 2009 6:29 PM | Reply | Permalink
Sounds like a great title.
January 31, 2009 6:50 PM | Reply | Permalink
How about 'The Penthouse Fluffers'? They're gonna need some new carreer to tide them over, (assuming they don't jump).
January 31, 2009 9:49 PM | Reply | Permalink
Curly Tail, what kind of thing is that to say.
January 31, 2009 9:53 PM | Reply | Permalink
The WSJ reports that some banks are rejecting TARP funds because of the restrictions that may be placed on the money. I don't know whether the banks are threatening or promising with this announcement, but if they don't need the funds, why are they even being considered. I would be thrilled if they all refused to be bailed out.
January 31, 2009 4:06 PM | Reply | Permalink
For some reason Paulson back in October said taking the bailout money wasn't just an option it was mandatory whether any particular bank thought they needed it or not. I still don't know what that was about.
February 1, 2009 12:25 PM | Reply | Permalink
"called for compensation for employees of bailout recipients to be capped at $400,000 a year"
If that's all it does it's silly grandstanding.
If the bill has more meat to it, maybe that's good.
If it inspires people or Congress to get serious, that's good.
January 31, 2009 4:34 PM | Reply | Permalink
A bill reducing financial sector CEO pay to a max of $400k from the current norm has enough 'meat' in it to make a decent sandwich. Right on Claire!
January 31, 2009 4:59 PM | Reply | Permalink
A better bill would require that bonuses be based on net real results down the road. Defer bonuses don't kill them. You need to leave room for competition even near the top.
January 31, 2009 5:13 PM | Reply | Permalink
The thing is eds, my dog could have done a better job than these bozos. They get where they get because of nepotism and cronyism. Talent? Funny word for unabated incompetence.
They ain't worth the money. I'm sure there are plenty of "talented" people that would be willing to play golf and sleep through shareholder meetings for one third the compensation.
January 31, 2009 5:17 PM | Reply | Permalink
So you're happy to pay layabouts $400K but not give any incentives at all. Great. :(
January 31, 2009 6:51 PM | Reply | Permalink
400K is plenty of an in centive for most, eds.
Anyone on this thread object to making $400K? For ANY job? What is you you need that you can't get with $400K?
Whatever, eds. The average salary in this country is about a tenth of that. You think 10 men can't do a better job?
Like I said, my dog could. Got another argument?
January 31, 2009 7:30 PM | Reply | Permalink
I don't need another one, that one works fine so far.
January 31, 2009 9:21 PM | Reply | Permalink
Aside from being kind of ridiculous, I suppose so. No one is going to cry because that sort of "talent" is subject to a market correction. A Long overdue one, too. Market corrections are GOOD things. Or so I have been told.
=D
January 31, 2009 9:39 PM | Reply | Permalink
But you're not talking about a market correction, you're talking about wages caps for high income folks, imposed by the reps. of whiny have-nots, not that you personally are whiny.
Wall St. (in this sense) having committed virtual suicide or at least tried to, has been saved by the Right To Lifers embodied by Paulson, Bernanke, and Bush, with willing if bamboozled assistance from Congress. But WS remains on the critical list, in a coma according to some.
This proposal is inhumane. If it proposed removing the ventilator, I might approve as "assisted suicide". But this merely removes the catheter from the urinary tract.
If you believe in torture, I can see why you'd like this bill.
January 31, 2009 10:47 PM | Reply | Permalink
Oh good grief. Hyperbole much? The point is, eds, that if one royally screws up at ones job, they usually get dismissed. They certainly don't get 7 figure bonuses. Get Real.
Yes, these jerks are overpaid by every definition of that word. It is hardly whining to point that out since their inflated salaries cost all of us money in terms of bloated fees, as well as other employees, clerks and things being UNDER compensated.
The only whining I see going on is by spoiled rotten elitists who think that they are somehow more clever, worthy, and entitled to ridiculous compensation.
Now that it is clear they were at best, incompetent, they are whining for bonuses?
Want some cheese with your sour grapes?
=D
February 1, 2009 9:53 AM | Reply | Permalink
Also, I think it worth reiterating that we are talking about banks receiving public assistance.
Now the rest of us, if we were to ask for public assistance are certainly subject to caps on income. Why should these banks be different?
February 1, 2009 11:06 AM | Reply | Permalink
You could try not painting with such a broad brush, B! And from reading your two replies, you seem to be the one drinking bad wine, no sour grapes over here.
You really do seem to want to torture Wall St. and the people who worked there, B.
February 1, 2009 5:36 PM | Reply | Permalink
Stick to your guns Bwak!!!
January 31, 2009 7:09 PM | Reply | Permalink
Please, it's cynical grandstanding. This law will never pass, so it doesn't threaten anyone or anything. It makes Clare look good while accomplishing nothing at all.
January 31, 2009 8:51 PM | Reply | Permalink
I understand your position. Read your post. I'd go back and add some 'meat' to it were I you. Your pontifications aren't convincing.
January 31, 2009 9:58 PM | Reply | Permalink
Who cares if you found it 'unconvincing' If you have a specific criticism, you can leave it as a comment in that thread. Your comment here is as enlightening as a 3rd grader saying "I know you are but what am I?" It's entirely content free.
February 1, 2009 12:23 AM | Reply | Permalink
I'll stand by all my comments I've made here. If I don't feel like commenting on a post, I generally don't. I notice you beefed up your argument nonetheless.
February 1, 2009 12:54 AM | Reply | Permalink
They want to fix this? Slap a 60 or 70% tax on bonuses over x dollars and/or over y% of base compensation. Problem solved.
And, please. a) No one needs a bonus to be convinced not to go to the compensation for the foreseeable future, and, b) research shows that for whatever reason, small bonuses relative to salary actually work better than large ones in terms of improving performance.
January 31, 2009 6:49 PM | Reply | Permalink
I think the average bonus at Merrill was around $50,000. There were plenty of people at Merrill who made money. Unfortunately the massive losses were caused by a couple groups (ie the CMBS and leverage finance groups). Even if you pay those people zero, it's hard to stiff every single retail stock broker that Merrill has when those guys generated positive revenues for the firm.
These retail stock brokers at Merrill can easily go somewhere else. The new Citi/MS JV is hiring right now. Plus lots of new boutiques are sprouting up
January 31, 2009 11:58 PM | Reply | Permalink
The specifics of her proposal may not be exactly the right thing, but DAMN! I am so glad she stood up and said what she did.
Somebody has to tell these people they're idiots.
We've had so many years of so many people refusing to state that the emperor has no clothes. Those days are gone, and those petty emperors of Wall Street are nekkid as can be. Good on McCaskill for pointing it out.
February 1, 2009 12:44 AM | Reply | Permalink
I agree. Anytime a Senator can be as blunt and uninhibited as she was on the Senate floor, I'm all for it.
February 1, 2009 11:13 AM | Reply | Permalink
I think McCaskill's concern and outrage is appropriate, but it's only punitive at the top without thinking through how we can change the whole compensation model so we don't end up back int his position. Why not push them to move to a profit sharing structure rather than a personal bonus structure? Profit sharing does not necessarily mean everyone gets equal percentages. An employee's share can be dependent upon their individual performance. Yes, that would mean changing base salary structure as many of these positions (particularly the lower level ones) assume bonus payouts as part of the compensation package.
This would also help employees to not try to boost their own salary by fabricating gains and risky strategies, but to the long-term strategic health of the company.
February 1, 2009 12:59 PM | Reply | Permalink