Selfish, greedy, rude and irresponsible Wall Street
November 21, 2009
Its year-end and just like each year Wall Street is ready to pay big bonuses, may be biggest amount till date. According to some survey and analysis, top 4 (Goldman Sachs, JPMC, Morgan Stanley and Merril Lynch) may pay more then $30 Bn in bonuses..!!! With AIG, Citi, BofA and some other smaller firms, it will surely cross $50 Bn, the amount using which you can buy TCS and Infosys both !!!
This is the same Wall Street which paid almost half of this amount last year also after receiving large amount from US Govt and Fed reserve for their survival..Wall Street firms collapse and recover quickly because of dynamic nature and have access to entire world’s money but what about others?
Recession started because of greedy Wall Street. These firms are so big and influential. World financial market is interconnected. Europe and many Asian financial giants are closely linked with Wall Street and so as Wall Street firms with Europe and Asian financial market. World BFSI firms are among the largest employers and biggest consumer of IT, retail, auto, manufacture, pharma, infrastructure and service products. In fact they drive the world..!!! so when they dived down, they took everyone with them…
Govt or World can not afford bankruptcy beyond Lehman and Bear Stearns and so little strong firms are forced to buy other ones like ML, Wachovia or WaMu.. and saved AIG or Citi..Competing with Wall Street firms, European and few Asian BFSI firms became greedy and so Wall Street fall impacted them severely which in turn impacted Europe and almost world..
US unemployment rate is highest in 40 yrs. Most of the developed countries are still in recession. Even after little improvement in economy, jobs are still going and there is visible pain…Now when Wall Street firms got some money, they will pay bonuses but what about other people, other industries and other countries?
If Govt is helpless then what about common people? Wall Street should pay minimal bonus. Should try to save more jobs and help other industries and economies instead of paying Billion dollar bonuses..
November 22, 2009 at 7:11 AM
I am actually on the fence on this one. I think it is morally wrong to accept a huge bonus when your company is not doing well. It is especially wrong if you have contributed to it being that way.
However bonuses are not decided at the spur of the moment. They are pre-agreed and put down in the contract. Thus the company legally cannot back out unless the person himself allows it or the government draws up some legislation that puts a cap on the bonus amount (which I believe it has done for some companies).
The other point is that these bonus amounts while appearing huge in totality are a teeny weeny % of the actual money involved. By holding them back you are shooing away some of the best talent at that level and therefore might be harming the company and economy more in the long run.
An example is the hunt for the new CEO of Bank of America – http://money.cnn.com/2009/11/17/news/companies/bofa_ceo/
They are finding it difficult to find a successor because of the cap that the government has put on the compensation package.
November 22, 2009 at 4:17 PM
I also do not agree fully here. My opinion is we software engineers also get good enough salary compared to other people. I know we can improve but it is not that bad. But my point is, CEO get that much salary because they have something. They do not get that just for doing nothing. One day, we might also become CEO after working hard and learning things and then at that level, there should be some good salary. I do not expect CEO to get same salary as software engineer even though, it is more than average. On the other side, these firms make money from general public but it is public’s greed to buy stocks and double money soon. There is nothing forcing us to buy stocks, neither anything forcing us to put money in savings account. By giving our money to them without any contract or terms, we are literally giving them right to do whatever with our money. Now, somethings can be done to warn public to not fall into all this but same as cigarette, people will still do whatever they want. Warning does not matter.
November 22, 2009 at 6:43 PM
@Varun. Thanks for comment.
No doubt that bonuses are part of contract and nothing is morally wrong in accepting it. In most of the cases, its higher then annual salary and the contract would also say it is based on company and individual performance.
Companies should also consider this year as part of recession. They are paying more because last year they paid less due to recession. Truly speaking Govt paid last year bonus. Govt paid them last year to save economy which collapsed because of them. Its is a case of Corporate Social Responsibility. Their more bonus greed triggers all issues and the trend is continue.
Managing Talent is issue for every company and I am sure even after paying large bonus it will still be a challenge. It a circle. A person will leave JPMC to join Citi and vice-versa. If all companies will pay more or less same then the talent will still be in same Organization. Best talent will still be in market, may be in some other Organization.
@Samip. Thanks for comment.
Of course CEO have something and they do deserve good salary. They are the best mind in the business and deserve great Salary and bonus. But its not only CEO but many more people also get bonus in Millions. Btw, this all recession started because of few CEOs, their policies, investment and strategies..They are smartest people around.
Just ex. Vikram Pandit sold his old lane hedge fund to Citigroup in $800 and then it was closed in less then a year..Now as Citi CEO that guy gets $1 salary from last 2 yrs..!!! Who cares about getting $10-20 Mn salary and bonus when you already got close to $500 Mn 3 years back..
Well common people will invest in stocks and I do not see anything wrong about it. I do not think normal public can drive the market, its these big people who can double or half your money. This Wall Street companies (including few Asian and Europe firms) want more money (to gain Power and to pay more bonus) and so they started investing in very risky businesses and that has boomeranged…Its their greed..
Most of the Asian companies do good with public money..Asian markets have also doubled..Even old and traditional companies like BlackRock does well is US.
Common people would be very happy in having steady growth instead of having recession or seeing their money getting doubled or half ed in few months..
And when market goes from 20K to 10K its 50% down but to move back to 20K, you need 100% growth..!!
November 23, 2009 at 11:44 PM
Why speak about Wall Street when in TCS the CEO’s salary was hiked when there were no salary hikes for all employees and had their variable pay cut and promotions denied.
Bonuses are something which they deserve. How much and when to take it debatable. If we were in similar position we would also want what we deserve.
November 24, 2009 at 1:15 AM
I agree with you Kunjan, though I do not have that broad of an insight over the world economy, your points seem valid and factual
November 24, 2009 at 10:40 AM
@Santosh, thanks for the comment.
Of course TCS CEO should not have taken/given hike in salary.
Surely CEO deserve good salary and bonus but at the same time when companies make loss do they take cut in regular salary and minimum bonus? No doubt they are best people in the business but at the same time, their own policies, moves and strategies which triggers recession/loss/downturn. CEOs should set example for Organization and other people.
Surely how much and when to take bonus is debatable.
Btw, not only CEO but many more people do get significant bonus.
Thanks @Surbhi.
Even I do not have detailed knowledge of world economy. Just trying to express my view based on what I know.