U.S. cuts pay at bailed out firms

[eridanus]

One of the proposals to modify pay included Chrysler and GM. For these two, I'd certainly be in favor of taking the bankruptcy approach. Renegotiate the labor union contracts and salaries of ALL workers to come up with a market rate. Slash the lingering retiree pension and medical payments (or let PBGC take over - since these are government owned car companies anyway, the $$ is all coming from the same pot).

Already done in bankrutpcy.

GM union swallows cost-cutting concessions - May. 29, 2009

"Seventy-four percent of UAW members voted for the contract, which will allow the company to cut costs and "eliminate the wage and benefit gap" with competitors, according to the UAW president and a statement from GM."

 

[FUEGO]

Already done in bankrutpcy.

GM union swallows cost-cutting concessions - May. 29, 2009

"Seventy-four percent of UAW members voted for the contract, which will allow the company to cut costs and "eliminate the wage and benefit gap" with competitors, according to the UAW president and a statement from GM."

I hadn't followed the news re: GM very closely. Good to see this happened. Good for the future of GM, that is.

From the article: "But the union did not agree to any wage or benefit cuts for the 61,000 UAW members working at GM."

So they clearly have a ways to go to get down to one of the basic problems. Overpaying people. Start at the top with the crooked incompetent execs and work your way down to the guy sweeping the factory floor. I have working friends and neighbors that don't make ridiculous salaries at a cush union protected job at a government owned and run company. Yet these friends and neighbors of mine are paying the salaries of these highly paid wrench turners (and I don't intend to demean lowly paid wrench turners elsewhere by the way).

 

[RonBoyd]

5 myths about Wall Street pay days

Washington's Plans May Result in Even Higher Executive Pay

Fed plan to police bank pay unlikely to curb risk

etc., etc., etc.

 

[audreyh1]

Once again I am amazed and annoyed with CNBC "analysis" of the situation. Maria Bartiromo - with a straight face! - tries to claim that the govt seeking to control the compensation for bailed out Wall Street firms to avert future risky behavior is analogous to the government stepping in to control compensation of professional athletes.

Ummm - Maria! - highly paid athletes did not almost bring down the entire global financial system nor require massive coordinated government bailouts to avert the disaster!

Hello! Is there a brain in there at all?!?!

Doesn't matter, CNBC thinks that Wall Street should get all of the money, all of the time, no strings attached, and screw the rest of the world........

Audrey

 

[Bikerdude]

How is a company going to pay back loans when they can't get the best people? Any company run like the Government would soon go bankrupt. If Congress were to institute "pay for performance" Congress would be paid -0-.

 

[Midpack]

While I have heard some specific cases of seemingly outrageous compensation over the past year, all this discussion seems to take place without any facts. It's political pandering/hyperbole without knowing compensation specifics, are these execs going from $100K/yr to $50K/yr OR $100M/yr to $50M/yr (exaggerating to make a point). How can any of us have anything other than a 'feel good' opinion without knowing the actual compensation and fair market compensation? We've gone mad...

 

[ERD50]

I hadn't followed the news re: GM very closely. Good to see this happened. Good for the future of GM, that is.

From the article: "But the union did not agree to any wage or benefit cuts for the 61,000 UAW members working at GM."

How does this jibe with the other line in that article?

"Seventy-four percent of UAW members voted for the contract, which will allow the company to cut costs and "eliminate the wage and benefit gap" with competitors, according to the UAW president and a statement from GM."

How do they "eliminate the wage and benefit gap" , without "any wage or benefit cuts for the 61,000 UAW members working at GM."?

-ERD50

 

[MichaelB]

This is what happens when banking and investment businesses mix.

Risk taking businesses that invest for themselves and others should be allowed to keep the results as long as only their money is at risk and they can lose as well.

Banking businesses that intermediate should not be taking risks with other people’s money. If the bankers want the money they should find jobs in investment businesses and hedge funds.

The best and brightest never have and probably never will be bankers. They always have and probably always will be doctors, lawyers and scientists.

“The banks will lose their best people” is BS, pure and simple. If there is a market that screams for greater openness and more competition, it is the job market for highly compensated individuals in finance in the US. Not just banking folks either – start with CEOs that have created this mess.

 

[HFWR]

How is a company going to pay back loans when they can't get the best people?

I'm not real big on meddling by the govt, but I find myself crying crocodile tears on this one. Methinks there's a lot of self-righteous indignation involved...

In an ideal world, the "best and brightest" should be designing the next electric car, or curing cancer, or converting [-]bullshit[/-] biomass to methane...

Any company run like the Government would soon go bankrupt. If Congress were to institute "pay for performance" Congress would be paid -0-.

An excellent idea! In fact, the Congress critters should be repaying us...

 

[Gone4Good]

The pay regulation is weak-kneed, populist pandering that doesn't actually solve any problems but gives cover to gutless politicians so they can avoid making tough decisions.

Last I saw all of these financial institutions were still "too big to fail" but only now they operate with implicit government guarantees. Messing with pay formulas doesn't change this fact and it will end up being very bad policy if it serves as an excuse for not dealing with the real problem. I was in favor of saving these firms because their failure would have brought down the entire system. But now that they've been saved, they need to be downsized in an orderly fashion.

 

[Gone4Good]

How is a company going to pay back loans when they can't get the best people? Any company run like the Government would soon go bankrupt. If Congress were to institute "pay for performance" Congress would be paid -0-.

Maybe, but my air and water are clean. My house has never been robbed and I've never been mugged. Our borders have never been invaded. My mail always arrives at its destination. My food is safe to eat and my products are safe to use. Business runs smoothly due to contracts rendered enforceable by the courts. My retirement portfolio has generally been safe from fraud. I've never lost a dollar on my bank deposits. My car drives nicely over public roads and my public education has served me well . . .

I don't know what I'd pay to achieve all of that, but I think it is something north of $0.

 

[RonBoyd]

Maybe, but my air and water are clean. My house has never been robbed and I've never been mugged. Our borders have never been invaded. My mail always arrives at its destination. My food is safe to eat and my products are safe to use. Business runs smoothly due to contracts rendered enforceable by the courts. My retirement portfolio has generally been safe from fraud. I've never lost a dollar on my bank deposits. My car drives nicely over public roads and my public education has served me well . . .

Wow! Where is this wondrous place?

 

[teejayevans]

If for no other reason, I think this is great because this will
prevent future companies going to govt. for a bailout.
TJ

 

[Bikerdude]

Maybe, but my air and water are clean. My house has never been robbed and I've never been mugged. Our borders have never been invaded. My mail always arrives at its destination. My food is safe to eat and my products are safe to use. Business runs smoothly due to contracts rendered enforceable by the courts. My retirement portfolio has generally been safe from fraud. I've never lost a dollar on my bank deposits. My car drives nicely over public roads and my public education has served me well . . .

I don't know what I'd pay to achieve all of that, but I think it is something north of $0.

I have to agree with you that our current Congress has spent money on public education and paving roads. Even roads that don't need paving.

 

[RonBoyd]

Today's Op-Ed piece by Frank Rich in the NYTimes is interesting... if only for the observation contained in the ending sentences:

If Heene’s balloon was empty, so were the toxic financial instruments, inflated by the thin air of unsupported debt, that cratered the economy he inhabits. The press hyped both scams, and the public eagerly bought both. But between the bogus balloon and the banks’ bubble, there’s no contest as to which did the most damage to the country. The ultimate joke is that Heene, unlike the reckless gamblers at the top of Citigroup and A.I.G., may be the one with a serious shot at ending up behind bars.

 

[ziggy29]

Our borders have never been invaded.

I take it you weren't at Pearl Harbor on 12/7/1941.

 

[RonBoyd]

I take it you weren't at Pearl Harbor on 12/7/1941.

September 2001?

 

[explanade]

Along with direct regulation of pay packages at the bailed-out firms, the Fed is supposedly looking into pay at all banks.

Goldman Sachs is paying out $20 billion in bonuses. They pay bonuses out of revenues, not profits. And the bonus pool is over 50% of their revenues?

Andrew Ross Sorkin on a tour to tout his book says the culture of the street is that they consider themselves "survivors" like cancer survivors and feel entitled to the money.

GS has paid back the govt. but it turns out that they were on the brink of failure last year too. After Lehman, if AIG, Merrill Lynch and others were allowed to fail, GS eventually would have fallen too. It took equity investments by Buffet and others to restore confidence in GS and other firms.

Now, GS is very profitable but apparently, most of their recent profits have been from trading. They're not lending or financing ventures which would add to GDP output. They're essentially gambling, using cheap credit.

 

[harley]

I take it you weren't at Pearl Harbor on 12/7/1941.

According to some we're being invaded every day at the Mexican border.

 

[ERD50]

I take it you weren't at Pearl Harbor on 12/7/1941.

September 2001?

Or February, 1993?

1993 World Trade Center bombing - Wikipedia, the free encyclopedia

The 1993 World Trade Center bombing occurred on February 26, 1993, when a car bomb was detonated below the North Tower of the World Trade Center in New York City. The 1,500 lb (680 kg) urea nitrate–hydrogen gas enhanced device[1] was intended to knock the North Tower (Tower One) into the South Tower (Tower Two), bringing both towers down and killing thousands of people.[2][3] It failed to do so, but did kill six people and injured 1,042.

-ERD50

 

[HFWR]

September 2001?

That doesn't count, 'cause it was an inside job...

 

[Gone4Good]

I take it you weren't at Pearl Harbor on 12/7/1941.

September 2001?

Or February, 1993?

Except I've never heard the term "invasion" being used to describe aerial bombardment of any kind or any other activity that doesn't involve ground forces attempting to take, and hold, land. Imagine my surprise to learn here today that Germany invaded Britain during the blitz, that the U.S. invaded Libya in 1986 and NATO invaded Bosnia in 1995.

But you're right. Government has zero value. It's easy to see that people are enjoying life so much more in places like Somalia where there is no functioning central government to cause such hardship. Poor us.

 

[RonBoyd]

Warren Buffett tackles bankers' bonuses

A somewhat misleading Headline but within there is this great quote:

As my friend Bill Gates says, if I've been born in some different place or some different time I'd have been some animal's lunch. I'd have been running real fast, and the animal would have been chasing me and I'd say "I allocate capital" and the animal would say "well, those are the kind that taste the best".

 

[ziggy29]

But you're right. Government has zero value.

Nobody said this, and I think people might appreciate it if you didn't put words in their mouths.

 

[audreyh1]

I like this Buffett quote from the article:

If 50 of us were on a ship and there was a shipwreck, we all swam to an island, we knew we'd never be rescued - and fortunately it was a fertile island so we could all plant rice and grow enough to take care of ourselves. We would not take the five smartest people out of the 50 and tell them "why don't you start trading rice futures and speculate among yourselves", and by the way we think that's so valuable we're going to give you the most money and probably a favourable tax rate on top of it. Hell no, we'd get everybody producing rice.

Audrey