Study: Bank Bonuses Far Exceeded Revenues

[Kadie]

Jul 30, 2009 9:15 am US/Pacific

Study: Bank Bonuses Far Exceeded Revenues
Bailed Out Financial Giants Paid Out Much More Money in Bonuses Than They Took In, According To N.Y. AG's Report

NEW YORK (AP) ― Several financial giants that received federal bailout money in the last year paid out bonuses to employees that greatly exceeding the amount of revenue generated by the banks, according to a study on executive compensation set to be released by New York Attorney General Andrew Cuomo Thursday.

According to a preview of the report:

- Goldman Sachs, which earned $2.3 billion last year and received $10 billion in TARP funding, paid out $4.8 billion in bonuses - more than double what they earned.

- Morgan Stanley, which earned $1.7 billion last year and received $10 billion in bailout funds, handed out $4.47 billion in bonuses, nearly three times what they earned.

- Citigroup and Merrill Lynch lost a combined $54 billion last year. They received a total of $55 billion in bailouts and paid out $9 billion in combined bonuses.

more...
http://cbs13.com/national/bonuses.banks.revenue.2.1107649.html






:freak:

[Hannah Bell]

1. gee, that's funny, isn't it?

[KansDem]

2. Just how much more of this are we going to take?

Really! Just how much more?

I think every CEO and every member of Congress should have this photo on their office wall:



I mean, why fuck with the Ten Commandments? This photo should be on the wall of every public place...

[valerief]

3. WOW!!!!! In a civilized country, those thieves would be torn limb from limb. nt

[Phoebe Loosinhouse]

4. I have a question that is touching in its innocence and simplicity:

Why would anyone own Goldman Sachs* stock given this case?

I looked at their financial statements on Marketwatch. The figure 2.3Bil is exactly that figure that is shown as total net income which is then shown as what is available to be paid out in dividends to both the common and the preferred stock holders. They paid a dividend of $1.40 per share. BUT net income is what exists AFTER the above mentioned expenses such as salaries and bonuses have been paid out. So the stockholders got less than 1/2 of what the insiders got.

How is that not plundering or looting the assets of the company to be dispersed among just a few although it is a publicly traded and publicly owned company? Why is that acceptable? Do stockholders just sit back and take that? Aren't there employee stockholders who own this stock in their 401Ks who are not of the bonusing class that realize how they are being ripped off? That there is money that SHOULD have been paid as dividends into their 401Ks, but their bosses took the money instead?

Hey! laid-off Goldman Sachs employees - WAKE UP!!!!!!


*I use Goldman Sachs just as an example. My comments would pertain to all the companies mentioned.

[loudsue]

7. Great question, and one that the pundits should be asking, and one that

even Obama should ask in a news conference for the justice dept. to investigate. That might make some company big wigs wet themselves. I'm sure it happens far more than stockholders would like, and many state pension plans own a great many stocks. There would be outrage in high places if the public realized what was going on.

[Hannah Bell]

12. It's precisely plundering; US assets are being funneled into financial houses

& moved overseas to be "invested" elsewhere.

Boomer retirees will pay with defunded retirements, their children with diminished life possibilities.

[Ignis]

13. Precisely. So much for the "interest of the stockholders" meme.

:hi:

[havocmom]

5. Thank you for posting

Raise the level of awareness about the lies execs who get paid too much tell to justify their con game. :thumbsup: :thumbsup:

[Kansas Wyatt]

6. Fucking Scum of the Earth Thieves

In spite of their "Ivy League" credentials, they are no better, and in fact worse than the thug on the street corner slamming Granny to the pavement for her purse. At least the thug knows what he is, but these self righteous scum cannot even stomach facing who they steal from, let alone even begin to compete on their own merits.

Where in the Hell is all the 'personal responsibility' rhetoric from Washington, as these thieves run away with the cash? Oh that's right... Those hypocrites are running behind them shoving the leftovers in their pockets.

[SammyWinstonJack]

21. A man with a brief case can steal more money than any man with a gun.

And THANK GOD IT PASSED! :eyes:

[Greyhound]

8. K&R. Isn't this simple enough for even the Sheeple to see?

Seriously, how stupid can we be and still hope to survive?
:kick: & R

[BlooInBloo]

9. Talk about a run on the banks.

[abumbyanyothername]

10. The headline (and by derivation your caption) is misleading

It would be an over the top outrageously shocking story if bonuses exceeded top-line revenue.

As it is, it is just an outrageously shocking story that bonuses exceeded bottom-line net income.

[aint_no_life_nowhere]

11. They are behaving as if they will keep getting bailed out in the future

no matter how much they screw up or manipulate the markets unto disaster. They are acting as though they feel the government and our tax dollars will never allow the whole financial edifice to crash and that they have us over a barrel. Maybe they're right.

[Canuckistanian]

14. The bank robbers now OWN the banks

And the robbing is easy.

[Greyhound]

15. The Banksters have always owned them, they just used to have a few rules they couldn't get around.

:kick:

[TheKentuckian]

18. Right as rain on that.

[redqueen]

25. Shame those laws were repealed. (nt)

[nilram]

16. Senators on both sides of the aisle were heard to say

"I'm beginning to think something fishy is going on...

"Can't put my finger on it yet, tho."

[redqueen]

17. K&R

Pass it on...

[SammyWinstonJack]

19. Damn it all! So we paid for their Bonuses? Well THANK GOD IT PASSED!

:argh:

[Egalitariat]

20. It's hard to pay much credence to a financial writer that doesn't understand the

definition of Revenue. They use it interchangeably with Profit.

I quit reading after the first paragraph.

[JHB]

22. If you'd read more you might have realized that "revenue" only appears in the headline...

...so the ignorance is with the headline writer, not necessarily the story writer. To determine that you'd have to read the rest.

[Egalitariat]

23. Do you think the headline writer wrote the first sentence as well?

nm

[redqueen]

24. Whether their bonuses eclipsed their revenues or profits... it's still indefensible. (nt)

[Fumesucker]

27. Very often the headlines are not written by the writer of the article..

Headlines are written to be "catchy" and attract attention, a specific skill.

[Egalitariat]

28. What about the first sentence? Who writes those?

[Telly Savalas]

33. The specific skill of a headline writer should enatil the headline being accurate

in addition to being catchy. Call me old school, but I consider publishing factually incorrect statements to be shitty journalism.

Nevertheless, it is still pretty ridiculous that the bank bonuses exceed net earnings.

[Fumesucker]

34. I certainly don't disagree with that..

But these days when it's a choice between catchy and accurate I strongly suspect that catchy wins.

And yes, bonuses in excess of net earnings does seem a trifle strange.

[Fumesucker]

30. OK, I see your point..

Do you think the facts as laid out in the article are incorrect, that the financial firms didn't pay out more in bonuses than they made in profits?

[dems_rightnow]

31. Yes. I think the facts are incorrect.

Given that profit is after bonunses are subtracted, I suspect the writer doesn't understand that either.

For bonuses to more than profits, they would have had to show a loss.

[Fumesucker]

32. Would the "profit" also be after taxpayer contributions were subtracted as well?

Or were they handing out billions of dollars in taxpayer funds as bonuses to big wheels?

Not trying to be snarky, I'm not sure I understand this stuff.

[Egalitariat]

36. Goldman Sachs paid back the TARP funds in full, plus interest, within a few months of receiving them

I've read in many places that Goldman didn't even want the TARP funds but were pressured into taking them (like many other healthy banks) so that consumers wouldn't be able to identify which banks were healthy and which were not based simply on who got TARP lending. The US taxpayers made out like bandits with the Goldman Sachs deal. And the TARP funds wouldn't show up on the income statement at all -- with the exception of the interest paid -- which would be shown as an expense.

[malletgirl02]

26. "Robbing a bank is no crime compared owning one."

I know I posted this before, but I can't resist posting this.

From Happy End by Kurt Weill and Bertolt Brecht

Hosanna Rockefeller

"Then let me say it for. Our two groups same enemy all along. time to forget our little quarrels, and stand together. blasting open a safe is nothing. We got to blast open the big gang the keeps the safe locked. So, slip on your brass knuckles and learn where to hit.Robbing a bank is no crime compared owning one. The world belongs to all of us. Lets march together and make it our own."

"Praise to the Fords and Rockefellers

Hosanna Hosanna

The buyers and the sellers

Hosanna Hosanna

All power to the great

Hosanna

give them the city and the state

Hosanna

Bless them with bodyguards and tellers

Hosanna Hosanna Hosanna Hosanna Hosanna Hosanna

May God bless Rockefeller May God bless Henry Ford. May God bless JP Morgan too and his great treasure horde. May God bless sex appeal when wealthy men get bored. God keep their faith and profits high and low the poor may starve and die. Make sure no court on earth will trial try rich O Lord

Shower thy mercy on the wealthy

Hosanna Hosanna

To keep them healthy

Hosanna Hosanna

Let all who are blessed

Those who all worldly goods possessed

Grant the contented happiness

Hosanna Hosanna Hosanna Hosanna Hosanna Hosanna

May God bless Rockefeller may God bless Henry Ford. Big Oil and coal and steel send them their just reward.

Help and protect the ruling classes

Hosanna Hosanna

Till hatred of them passes

Hosanna Hosanna

Lord smile on those who smile

Hosanna Hosanna

Grant them the wealth to live in style

Hosanna

Pardon their crimes against the masses

Hosanna Hosanna Hosanna Hosanna Hosanna Hosanna

May God bless Rockefeller, may God bless Henry Ford. God bless Big Oil and coal and steel send them their just reward. May God bless sex appeal when wealthy men get bored. God keep their faith in profits high and low the poor may starve and die. Make sure no court on earth will trial try rich O Lord.

Who rule the earth the way you rule the sky almighty Lord."

[PA Democrat]

29. Ain't interlocking directorates grand?

The wealthy elite do look after their own. I'll approve YOUR obscene, undeserved bonuses if you approve mine!

[HamdenRice]

35. I agree with Egalitariat -- the story completely garbled the accounting

Before the strawman brigade attacks this explanation, I AM NOT defending the bonuses. I am explaining why this story gets it wrong.

The story is not that bonuses exceed revenue. It's that bonuses exceed "earnings" which are profits.

But salaries, bonuses and other employee compensation typically exceeds earnings in banks. That's because banks don't buy raw materials and make stuff; they provide services. So their biggest expense typically is employee compensation.

So we should expect even in normal times that employee compensation exceeds earnings.

Earnings are revenue minus expenses and taxes. It's impossible for bonuses to exceed revenue unless the company is operating at a loss. But they weren't operating at a loss because they reported earnings.

In recent decades, Wall St banks have structured the majority of compensation as bonuses. This is a slightly different issue, but it seems that the outrage over bonuses has to be discussed differently -- namely, in the context of compensation paid to executives being obscenely high, not that they are getting bonuses. In the banking sector, basically most of a person's pay is in the form of bonuses.

You might recall the early scene in the Oliver Stone movie, Wall Street, when Bud is broke and has to borrow money from a fellow trader. That's because he hadn't done anything to earn a bonus, and almost all pay for those guys is in the form of bonuses. This causes Wall St employees from top to bottom to engage in high risk behavior.