More news about Wall Street bonuses

[Darth Wong]

http://www.theglobeandmail.com/report-o ... le1236810/

In Wall Street's meltdown, 5,000 made a million
Barrie McKenna

Washington — Globe and Mail Update
Last updated on Thursday, Jul. 30, 2009 07:50PM EDT

Even in the darkest days of the financial crisis, Wall Street continued to dole out multimillion-dollar bonuses in what New York Attorney-General Andrew Cuomo calls a “heads I win, tails you lose” pay culture.

Nearly 5,000 Wall Street bankers pocketed bonuses of at least $1-million (U.S.) last year – many of them while their financial institutions were receiving massive taxpayer bailouts, Mr. Cuomo says in a report released Thursday that is reigniting populist anger over executive pay.

The past three years offer “a virtual laboratory” that belies the notion that pay in the financial services industry is tied to performance, Mr. Cuomo said in a 22-page analysis of compensation at the country's major financial institutions.

Pay, the report concluded, has become completely “unmoored” from financial results.

“When the banks did well, their employees were paid well. When the banks did poorly, their employees were paid well.

“And when the banks did very poorly, they were bailed out by taxpayers and their employees were still paid well,” Mr. Cuomo said.

The report is part of an ongoing series of investigations into the causes of last year's economic downturn.

Citigroup Inc., (C-N3.14-0.08-2.48%) Merrill Lynch & Co. and seven other U.S. banks paid $32.6-billion in bonuses in 2008 while receiving $175-billion in taxpayer funds under the U.S. government's Troubled Asset Relief Program (TARP) and racking up massive losses.

Eager to avoid awkward questions and government oversight, a clutch of those institutions have since repaid the loans, including Goldman Sachs Group Inc. (GS-N162.422.981.87%) and JPMorgan Chase & Co. (JPM-N38.470.701.85%)

But Wall Street is poised to get a lot of unwanted scrutiny. The report has already prompted the U.S. House of Representatives' investigative committee to probe the pay practices of the banks that received the largest bailouts.

New York Democrat Edolphus Towns, who chairs the House oversight committee, said the panel will hold a hearing after Congress's August recess featuring Mr. Cuomo and U.S. “pay czar” Kenneth Feinberg.

“Companies that only months ago were facing bankruptcy and sought the help of the federal government are now paying out billions in compensation, and in some cases without reimbursing taxpayers,” Mr. Towns said in a statement.

Spokesmen for most of the major banks declined to comment on Mr. Cuomo's findings.

Melissa Murray, a spokeswoman for Wells Fargo & Co., (BWF-N24.90-0.10-0.40%) pointed out that the bank has a “pay-for-performance” culture where staff are compensated on individual and business performance. “We implemented a say-on-pay policy this year and our shareholders approved the compensation of the company's named executives,” she told Bloomberg News.

Mr. Cuomo's report comes as Congress is already considering a compensation reform bill that includes a mandate for non-binding say-on-pay votes for all public companies, a requirement that compensation committee members be independent from management, and restrictions on pay packages that might push companies to take on too much risk.

Meanwhile, the U.S. administration's compensation czar, Mr. Feinberg, has been meeting with executives of several Wall Street banks.

He also has the final say on pay for the 100 top-paid executives at General Motors Co. and Chrysler Group LLC, in which the U.S. and Canadian governments now hold large stakes.

It's interesting how Wall Street keeps saying that they couldn't lower their bonuses because they were locked in, while also claiming that they are justified because they are "performance-based". They sound more like really bad union CBAs than performance incentives to me.

[aerius]

And like bad union CBAs there's not much we can do about it short of lynching the motherfuckers.

[weemadando]

I'd seen this news story at work and prepped the following post. Sadly I was beaten to it:

More proof that Bankers will be first against the wall


So, the banks pay out more in BONUSES than they made in net profits, AFTER TARP? Seriously, what the hell? I had hoped that these stories would have stopped by now. Sadly they haven't. They just keep rolling in.

Banks paid billions in bonuses amid crisis
By Grant McCool in New York
Reuters
July 31, 2009 09:50am

BONUSES paid to executives at nine banks that received US government bailout money in 2008 were greater than net income at some of the banks, the office of New York Attorney General Andrew Cuomo says.

Mr Cuomo, in a report on months of investigation into compensation paid by the banks, said employee pay "has become unmoored from the banks' financial performance."

Representatives of the banks either declined comment on the report or could not comment immediately.

"There is no clear rhyme or reason to the way banks compensate and reward their employees," said the report by Mr Cuomo, New York's top legal officer, who began his probe last October amid taxpayer complaints about Wall Street pay.

Even in one of Wall Street's worst years on record, at least 4793 bankers and traders received more than $US1 million ($1.2 million) in bonus payments, according to the report.

Mr Cuomo argued that, if firms followed "a more principled" bonus system, they would be less susceptible to poaching of their employees by other firms offering more pay.

"This rationalisation of the compensation and bonus system must be accomplished now," said the report, which was sent to Edolphus Towns, chairman of the US House of Representatives Oversight and Government Reform Committee Chairman.

Since nine banks received a total of $US125 billion last October in taxpayer money under the Troubled Asset Relief Program (TARP) to help them survive the financial crisis, Mr Cuomo has pressed them for details on billions of dollars paid to executives amid huge losses.

The report said bonuses for Goldman Sachs Group, Morgan Stanley and JPMorgan Chase & Co were "substantially greater" than the banks' net income.

Goldman earned $US2.3 billion, paid out $US4.8 billion in bonuses and received $US10 billion in TARP funding, the report said.

Morgan Stanley earned $US1.7 billion, paid $US4.475 billion in bonuses and received $US10 billion in TARP funding, while JP Morgan Chase earned $US5.6 billion, paid $8.69 billion in bonuses and received $25 billion in TARP funding.

The latter bank paid out 1626 bonuses of $US1 million or more, the most of all the banks studied in the report, while Goldman, which had the highest average compensation per employee, paid out 953 bonuses of $US1 million or more.

Mr Cuomo said his office studied historical financial filings and found that at many banks compensation increased in the 2003-2006 bull market years, but stayed at those levels as the mortgage crisis and recession hit.

"Thus, when the banks did well, their employees were paid well. When the banks did poorly, their employees were paid well. And when the banks did very poorly, they were bailed out by taxpayers and their employees were still paid well.

"Bonuses and overall compensation did not vary significantly as profits diminished."

While Citigroup and Merrill Lynch, bought by Bank of America, lost more than $US27 billion each, Citigroup paid $US5.33 billion in bonuses and Merrill paid $US3.6 billion, the report said. The two banks received a combined $US55 billion of TARP money.

A spokesman for Bank of America said bonuses were paid to 200,000 bank employees and 30,000 Merrill legacy employees.

"The repeated explanation from bank executives that bonuses are tied to performance in a manner designed to promote (national economic) growth does not appear to be accurate," Mr Cuomo said.

Much of Mr Cuomo's investigation and publicity had been focused on Merrill Lynch, but the report covered all nine banks that received initial TARP money. The office has also investigated bonuses paid by giant insurer American International Group Inc, but it was not included here.

Wells Fargo & Co paid bonuses of $US977,500, while losing $US42.93 billion according to the report.

It said State Street Corp's State Street Bank and Bank of New York Mellon Corp "paid bonuses that were more in line with their net income, which is certainly what one would expect in a difficult year like 2008."

State Street earned $US1.8 billion, paid bonuses totalling about $US470 million and received $US2 billion in TARP funding. Bank of New York Mellon earned $US1.4 billion, paid out $US945,000 and received $US3 billion from TARP.

[PeZook]

There's 1626 people employed by Morgan Chase who get 1 million $$$ every year?

Why do I get the feeling that they could fire 90% of those people and not suffer one bit for it?

[The Kernel]

Earlier this week I had a meeting with some people at roughly my level (Senior Manager) at a major US bank that has received a massive amount of bailouts. We were chatting idly before the meeting began about how their flight was and where they were staying. The two bankers proceeded to complain that the local Four Seasons (which runs at $500 a night) was full and they were forced to check into a competing five star hotel, but at least they got to fly first class.

I nearly had a heart attack upon listening to this as my company (which did not receive government assistance in the form of a taxpayer bailout) makes all employees except the CEO/CFO/COO fly coach (and even the three higher ups fly business class only) and we all stay in the equivalent of the Holiday Inn. It all belies an attitude of entitlement despite the fact that their bank lost billions and is continuing to hemorrhage huge amounts of money, while begging the government for financial assistance.

[Axis Kast]

Sour grapes.

Companies pay huge salaries because the individuals responsible manage portfolios worth tens and hundreds of millions of dollars. These are the people who can put on their resumes, "Managed project worth X million," not once or twice over the course of a year, but several times over. In many cases, companies are also paying these people large salaries because they are communicators -- walking Rolodexes who can woo valuable clients. It's become a vicious circle: the firms that try to cut costs by reducing employee benefits risk losing their staff to headhunters from rival organizations.

The only logical thing to do, based on the complaints here, is to introduce a salary cap. But who decides what's "enough" compensation, and where would this kind of referreeing stop?

If you're upset, maybe you should have gone into finance.

[lazerus]

Sour grapes.

Yeah. A negative reaction to someone with the IQ of a glass of water making millions as an investment broker while bank employees get paid huge bonuses not tied to performance, all in a sector of the economy that produces nothing is just unreasonable jealousy from people who worked hard to contribute to society.

That'll teach 'em to think high!

If you're upset, maybe you should have gone into finance.

I'm a traditionalist. I'd prefer to just open one of those rigged mafia casinos.

[ArmorPierce]

The thing about the financial industry is that it is all based on who you know. You can't get in unless you have connections. Good ol' boy club, which is why a lot of people are able to get these kind of jobs with a high school diploma.

[Stark]

Sour grapes.

Companies pay huge salaries because the individuals responsible manage portfolios worth tens and hundreds of millions of dollars. These are the people who can put on their resumes, "Managed project worth X million," not once or twice over the course of a year, but several times over. In many cases, companies are also paying these people large salaries because they are communicators -- walking Rolodexes who can woo valuable clients. It's become a vicious circle: the firms that try to cut costs by reducing employee benefits risk losing their staff to headhunters from rival organizations.

The only logical thing to do, based on the complaints here, is to introduce a salary cap. But who decides what's "enough" compensation, and where would this kind of referreeing stop?

If you're upset, maybe you should have gone into finance.

Fucking hilarious. What is 'class warfare'? SOUR GRAPES LOL.

[Fingolfin_Noldor]

Sour grapes.

Companies pay huge salaries because the individuals responsible manage portfolios worth tens and hundreds of millions of dollars. These are the people who can put on their resumes, "Managed project worth X million," not once or twice over the course of a year, but several times over. In many cases, companies are also paying these people large salaries because they are communicators -- walking Rolodexes who can woo valuable clients. It's become a vicious circle: the firms that try to cut costs by reducing employee benefits risk losing their staff to headhunters from rival organizations.

The only logical thing to do, based on the complaints here, is to introduce a salary cap. But who decides what's "enough" compensation, and where would this kind of referreeing stop?

If you're upset, maybe you should have gone into finance.

I suppose I ought to pay myself a huge sum of cash if I spent my day gambling money...

[aerius]

Companies pay huge salaries because the individuals responsible manage portfolios worth tens and hundreds of millions of dollars. These are the people who can put on their resumes, "Managed project worth X million," not once or twice over the course of a year, but several times over. In many cases, companies are also paying these people large salaries because they are communicators -- walking Rolodexes who can woo valuable clients. It's become a vicious circle: the firms that try to cut costs by reducing employee benefits risk losing their staff to headhunters from rival organizations.

Yeah, and they managed them right into the dirt. Most of these funds lost more in the last couple years than a simple index fund linked to the S&P 500 or any one of the other major indices. Why should these useless leechfucks be paid a single fucking penny when anyone can outperform them simply by investing their money in a index fund such as the Vanguard 500?

The only logical thing to do, based on the complaints here, is to introduce a salary cap. But who decides what's "enough" compensation, and where would this kind of referreeing stop?

Wrong. You tie pay to results. If the results are shit, which they are, they don't get paid. Period. Furthermore, since the government owns the damn companies via various Treasury and Fed backed bailouts, everyone working in those companies should be put on a GS payscale. If they don't like that they're free to refuse the government funds and get closed down by the FDIC.

[Simon_Jester]

The thing about the financial industry is that it is all based on who you know. You can't get in unless you have connections. Good ol' boy club, which is why a lot of people are able to get these kind of jobs with a high school diploma.

Which might also explain why the system crashed and burned. A good ol' boy club can actually function if the ol' boys are in fact good and the situation doesn't get too complicated, but it's liable to fall apart at the first crisis. Endemic incompetence and a strong tendency to cover your peers' asses do not work together well.

Wrong. You tie pay to results. If the results are shit, which they are, they don't get paid. Period. Furthermore, since the government owns the damn companies via various Treasury and Fed backed bailouts, everyone working in those companies should be put on a GS payscale. If they don't like that they're free to refuse the government funds and get closed down by the FDIC.

So... nationalize the banks? Heck, I'd vote for it at this point, if only so we can try something different from what we have now.

[Axis Kast]

Yeah. A negative reaction to someone with the IQ of a glass of water making millions as an investment broker while bank employees get paid huge bonuses not tied to performance, all in a sector of the economy that produces nothing is just unreasonable jealousy from people who worked hard to contribute to society.

Stereotypical tripe. Pay isn't based on innate intelligence; it's based either on outcomes or expected outcomes. Bonuses not tied to performance are expected compensation in the trade. They reflect a desperate search for talent, often defined as charisma - and one which you did nothing to address.

Prove to us now that makers of "widgets" produce more value for the economy than those who render financial services. By what strange math have you proven that everyone who makes something tangible is doing me a favor?

[Colonel Olrik]

Prove to us now that makers of "widgets" produce more value for the economy than those who render financial services. By what strange math have you proven that everyone who makes something tangible is doing me a favor?

For myself, I develop weapons that hopefully prevent the Russians and the aliens from killing you and your loved ones. When shit happens, would you rather throw bankers against enemy aircraft or a couple BVRAAMs?

[Darth Wong]

Prove to us now that makers of "widgets" produce more value for the economy than those who render financial services. By what strange math have you proven that everyone who makes something tangible is doing me a favor?

It's pretty ironic to use "strange math" to defend the financial industry, when the financial industry depends on strange math to justify its outrageous service fees and compensation schemes. Just look at the ATM networks for example: are the software engineers who actually design these systems paid the lion's share of the benefits for them? How about the people who install and maintain them? Of course not; that is not how the banking compensation system works. Massive service fees are charged, and this money is apportioned out to people in the executive suite who make decisions about buying or selling things, regardless of whether these decisions turn out to be good ones.

Employee compensation should be based on how hard the person works, how exotic/rare his skillset is, and how much risk he himself is exposed to. A highly paid doctor knows he can be sued for a shitload of money if he screws up. Bankers, on the other hand, are paid in a perverse system where they are paid for not for how much risk they expose themselves to, but how much risk they expose their employer to. If they make decisions which turn out well, they get bonuses. if they make decisions which turn out badly, they get bonuses.

I see you totally ignored the whole point of the original article. If this perverse system is to be defensed based on the idea that it is "performance based incentive pay", then there should be a disincentive for terrible performance. This is a fucking obvious component of the performance-based pay concept. But we have seen that there is no such disincentive, therefore it is not performance-based pay, no matter how many times industry apologists use that term.

[Darth Wong]

Prove to us now that makers of "widgets" produce more value for the economy than those who render financial services. By what strange math have you proven that everyone who makes something tangible is doing me a favor?

For myself, I develop weapons that hopefully prevent the Russians and the aliens from killing you and your loved ones. When shit happens, would you rather throw bankers against enemy aircraft or a couple BVRAAMs?

Can we throw both? I actually kind of like this banker-catapult weapon system concept.

[Colonel Olrik]

Prove to us now that makers of "widgets" produce more value for the economy than those who render financial services. By what strange math have you proven that everyone who makes something tangible is doing me a favor?

For myself, I develop weapons that hopefully prevent the Russians and the aliens from killing you and your loved ones. When shit happens, would you rather throw bankers against enemy aircraft or a couple BVRAAMs?

Can we throw both? I actually kind of like this banker-catapult weapon system concept.

Me and my colleagues have been toying with the idea of using trained mice in the missile to replace the current propulsion control algorithms. We fear it's animal cruelty, but the idea of trained bankers strikes me as a breakthrough option.

[General Zod]

Employee compensation should be based on how hard the person works, how exotic/rare his skillset is, and how much risk he himself is exposed to. A highly paid doctor knows he can be sued for a shitload of money if he screws up. Bankers, on the other hand, are paid in a perverse system where they are paid for not for how much risk they expose themselves to, but how much risk they expose their employer to. If they make decisions which turn out well, they get bonuses. if they make decisions which turn out badly, they get bonuses.

It seems to work this way for the most part, but for some strange reason Executives and bankers are allowed to completely ignore this concept.

I see you totally ignored the whole point of the original article. If this perverse system is to be defensed based on the idea that it is "performance based incentive pay", then there should be a disincentive for terrible performance. This is a fucking obvious component of the performance-based pay concept. But we have seen that there is no such disincentive, therefore it is not performance-based pay, no matter how many times industry apologists use that term.

The way the system's worked out right now, an executive could even make no decisions at all, let alone bad ones, and still net himself a cool multi-million dollar severance bonus.

[Axis Kast]

Employee compensation should be based on how hard the person works, how exotic/rare his skillset is, and how much risk he himself is exposed to. A highly paid doctor knows he can be sued for a shitload of money if he screws up. Bankers, on the other hand, are paid in a perverse system where they are paid for not for how much risk they expose themselves to, but how much risk they expose their employer to. If they make decisions which turn out well, they get bonuses. if they make decisions which turn out badly, they get bonuses.

Employee compensation should not be based on how hard the person works, but on how well they work. Workers aren't paid to "do their best" - they are paid to do a job.
I assume by exoticism of skill-set, you mean demand for the same. My industry may be looking for software engineers, which these days are quite numerous, rather than underwater basket-weavers, which are not. Demand isn't a stand-alone variable. If I can get a service more cheaply, why shouldn't I?
Your characterization of risk is either dishonest or completely incorrect. Executives can survive bad decisions just like anybody else survives a bad product or bad performance: they are deemed to have value to the firm regardless. Yet bank executives and financial "wizards" can be fired, too. They often are.
Repeatedly, you and others have ignored that financial executives are often paid with respect to who they know, rather than what they know, which is presumed to follow as a result of knowing the right people. This is also true of university presidents, who may make incompetent administrators but excellent fundraisers. In those situations, deans and other personnel can pick up the slack only with respect to the former task.

I see you totally ignored the whole point of the original article. If this perverse system is to be defensed based on the idea that it is "performance based incentive pay", then there should be a disincentive for terrible performance. This is a fucking obvious component of the performance-based pay concept. But we have seen that there is no such disincentive, therefore it is not performance-based pay, no matter how many times industry apologists use that term.

Performance-based pay makes sense, but you oversimplify by failing to take into account the role of expected performance and employers' tolerance for negative outcomes.
I didn't defend a system that pays people arbitrarily. I pointed out that (1) a lot of the criminations against the utility of the financial sector amount to sour grapes that can't be justified by referring to the intrinsically greater value of widgets or tangible things over the intangible (not every physical thing improves my life; (2) financial executives are being paid for their charisma and emotional intelligence, not because they sit in a room throwing unlabeled switches and hoping for the best, which is what people here would often have us believe.

[Duckie]

Without getting in to the issue of whether financial sector actually does anything useful at all, but rather the payscale: So, they're paid well because they make playing russian roulette with other people's money charismatic and they can read people's reactions well? That strikes me as bizarre, although it does reenforce my perception of the banking industry as something similar to street conning and professional gambling combined.

That still doesn't follow that they're any better at their job of investment banking just because they're better at convincing people they'll do fine, unless payscales should automatically rank bullshitters above people who can't bullshit.

[erik_t]

Me and my colleagues have been toying with the idea of using trained mice in the missile to replace the current propulsion control algorithms. We fear it's animal cruelty, but the idea of trained bankers strikes me as a breakthrough option.

Trending dangerously OT, the US Navy tried this with pigeons in 1942.

[Colonel Olrik]

Me and my colleagues have been toying with the idea of using trained mice in the missile to replace the current propulsion control algorithms. We fear it's animal cruelty, but the idea of trained bankers strikes me as a breakthrough option.

Trending dangerously OT, the US Navy tried this with pigeons in 1942.

I'm printing this tomorrow morning and putting it on my door.

[Darth Wong]

Employee compensation should not be based on how hard the person works, but on how well they work.

Don't nitpick. That word choice was completely tangential to the point I was making.

I assume by exoticism of skill-set, you mean demand for the same. My industry may be looking for software engineers, which these days are quite numerous, rather than underwater basket-weavers, which are not. Demand isn't a stand-alone variable. If I can get a service more cheaply, why shouldn't I?

Rarely do you see someone nitpick in such an incredibly obvious fashion. You even ignored the fact that I also mentioned rarity of skillset, which accounts for supply/demand.

Your characterization of risk is either dishonest or completely incorrect. Executives can survive bad decisions just like anybody else survives a bad product or bad performance: they are deemed to have value to the firm regardless.

Based on what? They don't produce anything of value apart from decisions, and if those decisions are catastrophic, what precisely is their great value to the company? Why has there been no stampede to hire executives away from more conservatively-run Canadian banks, which weathered the storm far better than the US ones in part due to a more rational risk assessment approach?

Yet bank executives and financial "wizards" can be fired, too. They often are.

Yeah, with huge severance packages that no normal employee ever gets.

Repeatedly, you and others have ignored that financial executives are often paid with respect to who they know, rather than what they know, which is presumed to follow as a result of knowing the right people. This is also true of university presidents, who may make incompetent administrators but excellent fundraisers. In those situations, deans and other personnel can pick up the slack only with respect to the former task.

So you're defending the old boys' club as if it's a good thing?

Performance-based pay makes sense, but you oversimplify by failing to take into account the role of expected performance and employers' tolerance for negative outcomes.

No I didn't. I simply pointed out how perverse it is to have such high tolerance for negative outcomes that there appears to be no penalty at all.

I didn't defend a system that pays people arbitrarily. I pointed out that (1) a lot of the recriminations against the utility of the financial sector amount to sour grapes that can't be justified by referring to the intrinsically greater value of widgets or tangible things over the intangible (not every physical thing improves my life; (2) financial executives are being paid for their charisma and emotional intelligence, not because they sit in a room throwing unlabeled switches and hoping for the best, which is what people here would often have us believe.

1) You haven't done jack shit to prove that these accusations are all sour grapes, other than simply SAYING so.

2) "Charisma and emotional intelligence?" You're pretty much admitting that the OP is correct, and they are NOT being paid for performance. You're also admitting that point #1 is wrong: they are being paid for knowing the right people and being charismatic, which is perfectly sound reason for people outside the industry to complain about their compensation, especially when we have spent so much money bailing out their industry. It's not just "sour grapes".

[Axis Kast]

Without getting in to the issue of whether financial sector actually does anything useful at all, but rather the payscale: So, they're paid well because they make playing russian roulette with other people's money charismatic and they can read people's reactions well? That strikes me as bizarre, although it does reenforce my perception of the banking industry as something similar to street conning and professional gambling combined.

That still doesn't follow that they're any better at their job of investment banking just because they're better at convincing people they'll do fine, unless payscales should automatically rank bullshitters above people who can't bullshit.

You completely misunderstand.

First of all, nobody is condoning "Russian Roulette." If somebody can't tell you where your money will go, and why, then you shouldn't trust it to them. To the extent that nobody can figure it out anymore, we obviously require regulation of the market. When banks accept blind action, they do everyone a disservice. Executives that literally gamble ought to be fired. However, the term "gamble" has become a snarky euphemism for all kinds of financial dealing, which is as dishonest and self-serving as it is incorrect.

Second, executives in any industry are paid big money because boards are trying to attract organizational genius. At minimum, they expect charisma to sell the company's brand both to big-ticket investors and the public and motivate employees; the experience to anticipate, identify, and manage crises; and the knowledge of where to get the most useful intelligence about what has happened, what is happening, and what might happen in the future. They're paying for somebody with extraordinary emotional intelligence; prior experience wrangling with the media; and, as previously mentioned, the equivalent of a personal intelligence network.

Don't nitpick. That word choice was completely tangential to the point I was making.

It has everything to do with this discussion. We don't pay people according to the level of strain that goes into their work; we pay them according to how much we value the results after the fact.

Based on what? They don't produce anything of value apart from decisions, and if those decisions are catastrophic, what precisely is their great value to the company? Why has there been no stampede to hire executives away from more conservatively-run Canadian banks, which weathered the storm far better than the US ones in part due to a more rational risk assessment approach?

If somebody makes a catastrophic decision, management decides whether the incident warrants disciplinary action based on a number of inputs. If somebody makes catastrophic decisions regularly, they ought to be fired. If events were out of their hands, or if it is perceived that they can still provide value-added in the future, the outcome may be different.

I couldn't tell you why there's been no stampede to hire more conservative bankers. I'm not here to substantiate what the financial industry has done. I'm interested only in laying bare certain ridiculous misperceptions that have been allowed to perpetuate because everybody seems to agree that bankers are scum.

Yeah, with huge severance packages that no normal employee ever gets.

Those huge severance packages appear to be a necessary inducement to find talent.

So you're defending the old boys' club as if it's a good thing?

No, I'm telling you how decisions are made with respect to people who occupy these pinnacles of power.

A university president is a fundraiser, first and foremost. We can certainly debate whether that's a good thing. There is doubtless a sacrifice of academic integrity every time financial considerations trump. I couldn't tell you who comes out ahead.

No I didn't. I simply pointed out how perverse it is to have such high tolerance for negative outcomes that there appears to be no penalty at all.

Anybody would agree that high tolerance for repeated negative outcomes when fault can be assigned is stupid.

You haven't done jack shit to prove that these accusations are all sour grapes, other than simply SAYING so.

I can't prove they're sour grapes unless you say so. Sorry. Don't have a mind-reading device.

2) "Charisma and emotional intelligence?" You're pretty much admitting that the OP is correct, and they are NOT being paid for performance. You're also admitting that point #1 is wrong: they are being paid for knowing the right people and being charismatic, which is perfectly sound reason for people outside the industry to complain about their compensation, especially when we have spent so much money bailing out their industry. It's not just "sour grapes".

They're paid for the supposed inputs to performance.

Why complain? Knowing the right people, and being charismatic, are skills. Not everybody can do that work. It's a "grass is greener on the other side" mentality. "Oh, gee. That job looks easy. Wish it were mine." Could you get the same results, helming a bank?

[Darth Wong]

Why complain? Knowing the right people, and being charismatic, are skills.
Not everybody can do that work.

You could say the same thing about prostitution.

It's a "grass is greener on the other side" mentality. "Oh, gee. That job looks easy. Wish it were mine."

Bullshit. We're saying "that job is way overpaid. They should be paid less". You are putting words in peoples' mouths for no intelligible reason.

Could you get the same results, helming a bank?

Losing billions of dollars and driving the company into bankruptcy? Sure, I could achieve that result. My dog could achieve that result. Give me my $50 million severance package, please.

PS. You said that these obscene severance packages are necessary in order to hire qualified personnel. What evidence is there for this claim?