Streams

The Bonus

Friday, December 11, 2009

To counter criticism from politicians and the public, banks are dialing back on cash bonuses to their executives. Matthew Bishop, U.S. business editor and New York bureau chief of The Economist, talks about the new bonus systems.

Guests:

Matthew Bishop

The Morning Brief

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Comments [21]

John Anderson from New York

Your guest fumbled his way through Patterson's view on bonuses. Blah, blah, blah. What amazes me is how the banks, both investment and commerical, have allowed themselvels to be pilloried by our broken down political system when that same system is the root cause of our financial problems today....the repeal of the Glass–Steagall Act in 1999. It (the repeal)opened the door for the CDOs, SIVs, etc. And then the rating agencies....Yikes, they've gotten away scott free. Bonuses may get out of hand but they are just a small part of the problem...a smokescreen for the Beltway incompetents.

Dec. 11 2009 11:43 AM
Voter from Brooklyn

Patterson’s argument, if you listen without thinking of your rebuttal while he spoke, was that financial workers typically work for less than they would otherwise be willing to in expectation of a bonus. (You can argue what privately employed financial worker should get paid in general, but Wall Street bonuses are part of the salary/benefit package.) The bonus is not, in fact, always a bonus, sometimes it is a contractual obligation.
You’re getting hung up in the word bonus, not in the facts of payment agreements.
That’s akin to calling an employee’s benefit package a benefit when it is now considered a given (vacation days, insurance, sick days, retirement account, etc.) There are a lot of people who probably don’t deserve “benefits” for lack luster work performance, but no one is advocating taking those away from them when they were agreed to when they were hired.

Dec. 11 2009 11:34 AM
Moishe from Rockland

This guest's entire point is built on sand. It's the unending, overreaching, hundreds of trillions of dollars of mandates and current trillions of dollars of government programs that have and will, even more so, devastate the once "free" market. It's socialism that has failed and is on the verge, with the insane universal health care, of destroying America. This is in no way an exaggeration. Upside-down Washington and state and local governments make programs and then tell us to give up our money to fund them. This system is sorely irresponsible, untenable, and completely destructive. This is why Obama's poll numbers are around 45% approval, only around 25% supporting further government health care interference. This is why support for congress is barely in the double digits.

Dec. 11 2009 11:32 AM
anon from NJ

This class war thing is getting old and it oversimplifies the situation.

I heard some old ladies on SSI yesterday talking about Obama being a communist, should be impeached, etc. Funny to me, considering I'm the one paying the increased taxes for THEIR social benefits and I voted for Obama.

Reminds me of all the people on here who utilize social services but despise the people who pay the taxes to fund said services. Oh, and they're the same people who want wildly expensive health care reform even though they won't pay an extra penny in taxes to fund it!

Dec. 11 2009 11:31 AM
Derrell from Red Hook

What does Mr. Bishop think of the argument of giving tax breaks to Wall St. to keep that business there? Could trade easily go to another city besides NY?

Dec. 11 2009 11:27 AM
Jennifer Hickey from Flushing, Queens

What ever happened to reform of the credit rating agencies?

Dec. 11 2009 11:27 AM
db from nyc

gee... no goldman sachs weenies calling in???

too busy raping the world?

immoral!

Dec. 11 2009 11:26 AM
anon from NJ

I agree with JK. I think Patterson, with all his flaws (he was rude to a Kennedy?), is acting like a grown up with the NY State budget and speaking the truth about bonuses.

He didn't create the Wall Street bonus construct, he's just pointing out that NY depends a great deal on the tax revenue. (which will go to social services that absolutely no high earner will benefit from, e.g., food stamps, public schools, public transportation, etc.)

Grow up, people!

Dec. 11 2009 11:24 AM
superf88

Mr. Bishop: so If you were TARP czar what would you do?

Dec. 11 2009 11:23 AM
JK from Midtown

wow, what a low blow by your guest on gov. patterson. bloomberg said the exact same thing about bonuses and the city losing out on tax money for it last year and the year before. does your guest feel the same way about bloombergs business acumen?

Dec. 11 2009 11:20 AM
anon from NJ

People in that tax category are already paying nearly 50 cents on the dollar on everything they earn anyway! Patterson is right, even though it's a bitter pill. He refuses to pander which makes him unpopular.

I'd rather they take back the huge earnings the KKR and Blackwater type firms got via no bid contracts and inflated prices for waging an unnecessary war. Where's the reconciliation and justice there? And how about the people who made huge profits from Exxon which gets plenty of subsidies and ruins the environment? The lumber company execs who make huge dollars logging on public land?

I am galled by this bonus scheme on Wall Street but it is hardly a unique example.

Dec. 11 2009 11:18 AM
Julia from Brooklyn

I'm a textile designer in the past 13 years I've worked for 2 different companies and starting about 10 years ago my bonuses (which were very small) were taxed at 50%. I know a number of other people who experience the same thing. We are not getting bonuses this year.

Dec. 11 2009 11:18 AM
Anon from Staten Island

Perhaps I am a bit "20th-century" in my thinking, but why do we need to "incentivize" someone for doing the job for which they were hired? If you do a good job, you get to keep it. If you do a great job, you may be entitled to a small bonus. BUT if you do a bad job, you should NOT get a bonus, nor should you be retained as an employee. There is NO incentive for NOT doing a poor job, so they have nothing to lose except the TAXPAYERS money.

Dec. 11 2009 11:14 AM
Nancy from Little Silver, NJ

Does your guest want to pay a 50% tax on any stock market profits he's made since the bailouts?

Dec. 11 2009 11:14 AM
John Lobell from New York

Please explain the British 50% tax -- taxes are already 50% here (fed, state, local) and I am sure more in Brit.

Dec. 11 2009 11:14 AM
Arthur Aptowitz from Forest Hills, NY

If that 50% British tax includes ALL income taxes, plus health benefits, the equivalent of our Social Security, etc., it's not nearly as high as it seems and only a bit more than our top taxpayers pay for far fewer benefits.

Dec. 11 2009 11:13 AM
smidely from

brian -- mortgage securities "were" "crazy"?

Correction -- Crazy profitable for Goldman et al. And perfectly legal to date.

Dec. 11 2009 11:13 AM
Susan from Chatham NJ

If the economic collapse had happened while GS was still a partnership rather than a public company, would GS have behaved the same way? Would it have been in as much trouble? Would it have cut back bonuses sooner? Would the collapse have looked any different had GS still been a partnership?

(My experience was that in the 80's and 90's GS as a partnership had a vastly different philosophy of operation than it does as a public company.)

Dec. 11 2009 11:13 AM
M from UES

But...they're doing God's work. Shouldn't they just get whatever they want?

Dec. 11 2009 11:09 AM
Allison from Gowanus

The British tax...is that an additional 50%? Because people who get big bonuses here are already paying nearly 50% tax on their money, bonuses and otherwise.

Please explain.

Dec. 11 2009 11:08 AM
superf88 from

See? Bush was right -- self regulation really does work! I had a feeling it was "just a few bad apples" and I guess this proves it. Next!

Dec. 11 2009 11:01 AM

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