Forbes' et al's answer on why big bonuses are A-OK.

[donco6]

So on Meet the Press, the issues is raised of why bankers are being allowed to continue paying themselves big bonuses. The answer given (very condescendingly, BTW), was that, yes, Banker B went out and made a bunch of mistakes and lost lots of money. Banker A went out and did what he was supposed to do and made money. Therefore, Banker A deserves his "compensation" (with the added note that the new meme for "bonus" is going to be "compensation".)

The problem with this "logic" lies in the strictures we in public education have had to work with for many, many years, and that is governmental fund accounting. In business accounting, revenue is revenue and if you need to shift it from one pot to another, that's fine. In governmental accounting, you have to know which dollar paid for what. Federal dollars pay for Title I. Local dollars pay for the custodian. Never the twain shall meet.

Forbes justifies these huge bonuses basically by telling you "They had the money, and the bank owed it to Banker A". But we would never be able to get away with that. If we'd promised some exhorbitant salary to a teacher (god forbid) who did a great job and raised achievement, we would owe her the money. But if the money wasn't present in that program, we couldn't pay her - EVEN IF THE MONEY WAS AVAILABLE IN ANOTHER PROGRAM. There is no "mix and match" option. And knowing that, we wouldn't promise exhorbitant salaries to people if there were a risk that they couldn't be paid.

What should have happened with the banks was they should have had to book a payable against the bonus they promised. Then if and when the actual BANK started making money, they could have paid off their executive. But the stimulus money should have stayed unavailable for this use in another fund.

Knowing what we have to go through to report every programs' revenue and expenditures in a small public school district, and seeing this type of condescension and greed just makes my fucking blood boil.

[baldguy]

1. Banker A is just a little bit better at stealing than Banker B

[liberalmuse]

2. Fuck Forbes.

If there were justice, that guy would lose his entire fortune and be forced to become a WalMart greeter.

[donco6]

4. Snort!

He would creep me out as a greeter. Ugh. That fake smile thing on his face makes me want to hurl.

[TahitiNut]

3. Cost accounting "stovepipes" the dollars while balance sheet accounting ...

... makes all dollars fungible. At the same time, cost accounting is overrun with fictions and frauds. The many tiers of program offices and project administration assures that overheads are the LAST to be cut and the FIRST to be expanded.

It goes back to the very basic corruption of the very meaning of "incorporation" ... which was once a fairly short term entity formed to achieve a narrow objective and then be dissolved. As corporations became cancers of the economic system, their regulation and control become virtually impossible.

[donco6]

5. Exactly.

And people wonder why they can't get a true picture of an organization's finances?

I have to show an accrual for EVERY SINGLE PROGRAM in my CAFR. These guys would literally cry if they had to even attempt that.

[Aviation Pro]

6. And what has Forbes ever done with his life....

...except be a member of the lucky sperm club?

[donco6]

11. I'm sure he believes he "worked his way to the top."

And he thinks WE'RE stupid . . .

[Aviation Pro]

15. I could respond with several statements here.....

...but I don't want to get banned or have this thread pulled. Suffice to say your quotation marks are sufficient enough commentary.

[global1]

7. Here Are Links To Two Other Threads On These Bonuses.....

as far as I'm concerned this is just criminal.

Links: http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=4950267&mesg_id=4950267

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x4950496

Burnett saying that the bonus money didn't come from the bailout funds is just B.S. Just another way to spin it. Yeah - so they used their money for the bonuses which was replenished by the bailout monies - same difference.

And then I just read this which is further steaming me: Banks Sought Foreign Workers - AP story

Here's the link to this one: http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x3717478

Time for all this to stop folks. There is a new sheriff in town and he better put his foot down.

[donco6]

9. I cannot believe she could say that with a straight face.

I'm not a CPA, just someone who has worked with accounting for more than 20 years. And how she could say that the bonuses did not come from stimulus money is just such a steaming pile . . . I can't even come with the rest of the metaphor.

The bottom line on that is that they could NOT have had the cash available to make the bonus payments without the stimulus money balancing the books. They'd have had to have posted a payable to the executive.

SURELY there are others out there who could see through that performance this morning???

[global1]

8. K & R........nt

[CTyankee]

10. This whole straw man argument that the government would start telling banks which

loans to make, etc, is just false. The banking industry and the government can put their heads together and come up with a definition of what will constitute a program to unfreeze credit, which is the big problem now, with the understanding that the government money is dedicated for that purpose and that purpose only. Set it out in guidelines, have everyone agree and get the thing going.

OK, there, Steve Forbes, I just solved the problem for you (and I was a Fine Arts major, so why do I have to tell you how this can be done?).

[donco6]

12. Oh yeah . . . the "slippery slope" bullshit.

I just yelled at the TV, "How about we START with the most obvious bullshit and start digging from there???!!!"

AAAARRRGHGHGH.

[madmom]

13. Banker A was paid a wage to do his job I presume, so THAT is his compensation, period!

Banker B failed to do his job, so he should be fired. That's the way of the real world. Why should we expect to get a bonus for doing the job we were hired to do and are being paid a wage to do in the first place?:banghead:

[donco6]

14. And then there's THAT trend these days . . .

. . . shifting everything from regular compensation to "performance pay." It's all a trick of course, to hid salaries of the executives in official reports. Only their contract salary will appear - the "bonus" pay only shows on actuals.

[4lbs]

16. Bonuses per se aren't "evil", as long as they are given properly to profitable companies.

Take, for instance an example of two Wall Street banks/financial institutions:

Company A:

Took no bailout money
Made sound financial investments
Didn't take on a lot of risky debt, even though the sky-high promised ROI was tempting.
Laid off few employees

Made $10 billion in profit in 2008.



Company B:

Invested in a lot of risky real estate ventures
Lent large amounts of money to risky credit ventures
Laid off 2,000 employees
Took $10 billion in TARP funds

Lost $5 billion in 2008, while another $10 billion is in high risk



Both companies decide to give their high-level employees $500 million total in bonuses, including $50 million to the CEO.


Almost no one would have a problem with Company A doing it.

Nearly every one not on Wall Street would say "WTF?!?!?!?" that Company B did it.


Do the Wall Street firms not get this?