It's hard to be for honest accounting when honest accounting would send everything into a black hole. If make-believe leads us into a real recovery, I'm all for it.

"set aside over $36 billion in the first quarter to pay their employees"

So now you not only object to big bonuses for top executives, but also to the banks paying their employees at all? Jesus jumpin' Christ on a pogo stick, Hilzoy! Give us Wall Street types a break, would you? We're not all freakin' Gordon Gekko caricatures, you know.

Most of us are just regular people from middle class families who took massive student loans and spent the better part of a decade studying to get these jobs that we now live in constant fear of losing. I'm not asking for any extra sympathy - everyone's worried about losing their jobs these days - but the ignorant generalizations are getting pretty tiresome.

And meanwhile, the NY Times tonight reports that the Swiss are trying to strong arm the US into dropping their demand for the release of the names of 52,000 US taxpayers who apparently have been illegally hiding their assets from US taxes using Swiss bank accounts.

So far the Swiss have turned over a grand total of 300 (one of whom was caught using a UBS employee to smuggle hundreds of diamonds into the U.S. in tubes of toothpaste on his behalf.)

The Swiss are balking because (oh irony of ironies) if they had to give up the names, they would be breaking Swiss banking laws against such release of information. Never mind that in following their own law, they are aiding and abetting the worst of the worst.....insanely wealthy Americans who believe they have no obligation to pay taxes and leave that to "the little people" like us. (See Helmsley, Leona)

RD: I do not object to your getting paid. What bothers me is getting paid "as much money this year as they did before the financial crisis began".

I suppose I did accept, as a background point I didn't need to mention, that salaries in financial services are crazily high. Possibly I should have made that more explicit. Salaries are, I think, going to have to come down, and they ought to come down sooner rather than later.

And tell me RD, how much, or rather what percentage of that 36 billion are you likely to see, as opposed to the percentage the Gekko's of your company, who pretty much destroyed it, are likely to get? Your anger might seem justified if you directed it at the people who deserve it--those in your own company you have placed you in the position you now are in, fearing for your job. And spare me the "oh, I'm just a hard-working grunt, who has student loans and studied the better part of a decade to do my job" routine. If it took you that long to learn how to be a grunt, you're pretty stupid. Aim your anger at the Gekkos of your company, not at the taxpayers who bailed out your ass. But for us, you wouldn't have a job at all.

This DeSantis (who has yet to quit the job he publicly resigned from in the NY Times) routine is getting pretty tiresome.

I suspect some of the passengers on the Titanic filled their pockets with silverware. The ship still sank.

Let it be known that Penn was ranting at one of the teabag parties last week. I'm sure both he and Teller are very carefully hoarding their millions.

Most of us are just regular people from middle class families who took massive student loans and spent the better part of a decade studying to get these jobs that we now live in constant fear of losing. I'm not asking for any extra sympathy - everyone's worried about losing their jobs these days - but the ignorant generalizations are getting pretty tiresome.

And yet the rest of us from the same background who didn't go into finance made no bonuses at all last year, and won't make any this year, because our companies didn't do well because of the financial crisis. Why exactly are you guys supposed to get bonuses for doing poorly when the rest of us have to go without?

Hilzoy wrote: "Salaries are, I think, going to have to come down, and they ought to come down sooner rather than later."

*sigh* I know. I actually do agree that salaries in the finance world will need to come down to a more sustainable level. It's really just the snarky schadenfreude I find objectionable.

Like I said before, most of us Wall Street types really are first or second-generation professionals with middle class backgrounds. We worked hard, pursued the education everyone told us was the key to success, trusted that the system was working as advertised, and had the rug pulled out from under us in the end, just like everyone else.

For instance, my retired parents and unemployed brother are currently dependent on my salary, which is high but not unlimited (about $200k). If I lose my job or take a substantial pay cut, there's a pretty good chance my parents will have to sell the home my dad worked his whole life to provide for the family.

*shrug* This is what happens to everyone in a recession, I guess, but it nevertheless strikes me as quite sad. I'm just saying, it would be nice if the bloggers and politicians I usually respect tried to remember that there are a lot of real, decent people behind the "Wall Street" strawman.

That's all well and good. I guess you can't operate on the patient until they're strong enough to survive. Once they are, however, it's time to slice and dice these monster size corps. into manageable entities. Or else we'll be back at it again when they party too hard and the hangover nearly kills the economy. Some clear signposts also need to be erected in the form of new regulations with a new idea that gambling is OK in a capitalist society, provided it's not with money marked for low risk. Make illegal credit default swapping and the bad loans wrapped into peoples IRA's and deposits that are supposed to be low risk investments. If folks want to use their cash for chance and the sharks to bet with, then fine, but rebuild the wall of separation that was took down by idiots like Phil Gramm, and others.

@RD

I comprehend your unhappiness. Nobody likes being portrayed as the enemy.

But your 200k is going to provide > 60k to each of the three households you mention. Your salary alone is sufficient to provide three households an income greater than the median American household income. That's something to think about.

Nationalize the “investment banks� now. Clean up the stench and enact strict oversight. Make them small enough to fail before returning them to the private sector. NOW would be a good time to put a dagger in the heart of the Fed (read The Creature from Jekyll Island).

CHANGE you can NOT believe in:

Now in the NEW contracts for AIG (80% taxpayer owned): http://dealbook.blogs.nytimes.com/2009/04/21/we-fought-aig-and-aig-won/?scp=10&sq=deal%20book&st=cse

¨Essentially, golden-parachute and retention payments to senior executives of A.I.G. are now limited to 3.5 times their annual salary and bonus for 2008.¨ (N.B. a bonus used to be a small supplement of salary for a job done extremely well; please Wall Street: a salary is not just for showing up, but in return for doing a the job very well)
¨In addition, the annual bonus pools payable to the senior executives in 2008 and 2009 shall not exceed the average of the annual bonus pools paid to them in 2006 and 2007.¨(N.B. 2006 and 2007 were over the top top years as far as Wall Street bonuses were concerned).

Remember how Obama is supposed to have said to the collection of bonus bankers on a nice White House visit: he was standing between them and the pitchforks?
If he really felt that way, why-oh-why is the above new bonus contracts exactly the outrageous same, instead of the change the voters (most of them reluctant owners of AIG et al.) voted for????

Unfortunately for Citi, we decided on Friday to move our checking accounts, our savings accounts, and the college accounts for ALL THREE OF OUR CHILDREN to another bank; a locally-owned bank that now holds the refinanced mortgage at a lower rate than we had at---you guessed it---Citi. We also paid off the loan on the car 9 months early, and canceled the application for a home improvement loan---both, again, from Citi.

Now, under normal circumstances I'd freely acknowledge that out "petty punitive action" was notoriously meaningless, and ranked right down there with all the other mousies than have roared against this "Franken-Bank" behemoth, but getting a phone call on Sunday afternoon from a regional accounts rep (yep---Citi) insisting that they would beat the other bank's interest rates if we brought our business back seems somewhat on the "writhing desperation" side of things.

Maybe this excerpt from an interview Bill Moyers did on The Journal with Simon Johnson and Michael Perino puts things into perspective:

BILL MOYERS: Here are these people receiving billions of dollars in taxpayer money who are now raising fees on credit cards, who are resisting any more regulation of credit card interest rates, who are, you know, saying, "We're going to get out of the game if you insist that we do something about executive compensation." What is going there as you see it? Both of you.

SIMON JOHNSON: I think there's an arrogance of power. They think they won, Bill.

BILL MOYERS: Even now--

SIMON JOHNSON: And actually they're pretty confident they won. And I think probably at this point, they have won. They got the bailout. They got the money they needed to stay in business. They got a vast line of credit from the taxpayer, both the top money, which gets a lot of attention. But, also the guarantees they have on their debts from the FDIC, which really helps them borrow more cheaply. And the money that they get that they can borrow from the Federal Reserve when they need it, all right?

So, they got everything they wanted. They came-- a couple of players got knocked out. The guys who remain are more powerful, okay? And their position is, "Look, if you want a recovery, if you want get your economy back, you've got to be nice to us." And I'm afraid that the government has blinked and then--

Oh, and to get a view on the glorious role of the current Secretary of the Treasury in all of this, the NYT has an interesting contribution as well:

http://www.nytimes.com/2009/04/27/business/27geithner.html

The arguments Hilzoy presents here are sufficient proof for me that the clowns who got us into this disasterous obscenity have nothing worthwhile to justify their existence in the world other than mumbo jumbo. My contempt for the financial leech class continues to grow by leaps and bounds. Time to bring back the guillotines.

Swine flu swine influenza virus from an acute respiratory tract caused by infectious diseases, the disease frequently occur in pigs, but rarely led to the death of pigs.

RD stinks of concern troll. At $200K per year, I'm guessing he or she knows the reason banks need to "set aside" #36B for salaries is that accounting tricks don't generate cash flow. They only create the image of success, and once again, wasn't it this ability to create false images that got us into this mess in the first place? Go Galt young man (or ma'am).

Populist outrage over accounting isn't much more enlightening than the Banks outrage over mark to market.

While Goldman burying December disclosure in appendices, etc, is hardly honest, the Fiscal Year switchover was not a magic trick, it is a legal requirement (due to their conversion to commercial bank status).

The entire commentariat on the Left is sufficient argument for at least Americans going the nationalisation route, you bloody well won't be able to manage the institutions rationally and will be consumed with cutting off your own banks noses to spite your face...

you bloody well won't be able to manage the institutions rationally and will be consumed with cutting off your own banks noses to spite your face...
Posted by: The Lounsbury

Actually, the preferred option is to cut off a few of these economy-sucking mega-banks altogether, to spite the Lounsburys of the world---unless, of course, that isn't your "cuppa char", L.

There's been a bit of discussion, deep back in the fringe corners of economics over the past several decades, concerning the potential elimination of a monetary society altogether. I'll go out on a limb here and hazard a guess that such fiduciary anarchism just might become more mainstream, as the bottomless pit of whorish investment houses and book-juggling banks becomes even deeper, and people finally begin to realize that they can, indeed, live without credit....

.
Hm. Great idea. Think I'll do the same thing: Repudiate all my debts, then offer to settle them for 10¢ on the dollar, declare myself a millionaire, and demand more money from the banks. Sounds like a plan.

Or it would if we were all allowed to make and remake all the rules to suit ourselves, whenever we liked. All we'd have to do is get the Fed and the Treasury to go along.

Let's just get stoned and listen to music instead. Oh, wait. That's illegal.
.

I'm going to take RD's side of this a bit.

$200K sounds like a lot of money, but probably, living in an area where he'd make that kind of salary, it really isn't as much as it seems. "Higher" paychecks often mean higher costs of living. Also, if he truly has to help out his retired parents and unemployed brother (He doesn't mention a family of his own.), his income IS being stretched.

Depressing

Can now be revealed that swine flu has been rampant and spreading on wall street most of the new millenium...

This is off subject, but the republicans seem to have made a rather large gaffe by blocking the money Obama had in the stimulus bill for a flu pandemic, also for blocking his HHS secretary.What timing!

Sometimes I ask myself if I should buy a little bit of financial sector stock (the one stock I had, Washington Mutual, went belly up)

The obvious answer would be "No." but I have no idea if Geithner plans to help these reckless economic Vandals survive no matter what stupid stunts they pull.

Do I take a little piece and ride the crooked train back to the top and let my soul die just a little? Or buy reputable company stock and get punished for rewarding companies that had the dopey idea of actually making something worthwhile?

The latter. Someday perhaps we'll have a government that looks at the long view and puts two and two together as our currency declines to those of more productive economies.

If wall street wants to perform magic tricks, they should get paid no more than David Copperfield, or any other illusionist. Alternatively, they could just perform one last trick and make themselves disappear.

This is a bit tangential, but argues and explains how oil speculation drove up the price last year because regulatory agencies were weakened, etc.
http://money.howstuffworks.com/oil-speculation-raise-gas-price.htm
"How Stuff Works" is a great resource, I didn't know they delved into controversial economic/policy issues.

$200K sounds like a lot of money, but probably, living in an area where he'd make that kind of salary, it really isn't as much as it seems. "Higher" paychecks often mean higher costs of living.

It's a high-cost area because there are a lot of people from Wall Street with large incomes who want to live there. Supply and demand, remember?

I don't think anyone here wants to get on RD's case. But there are a lot of highly-trained professionals not on Wall Street who have lost their jobs, or had their pay cut due to the financial crisis who never made anything near $200K. They got an education, they did what they were told were the keys to success, and never fared anywhere as well as Wall Street did.

They can say that they might buy their debt back at 60 cents, but do they do that?

When the value goes back up again, will they show a loss, or try to pass it on somehow?

Hilzoy: That's not easy to do -- but the intrepid Goldman employees made it happen. I'd say that deserves a raise.

The problem here, as RD has tried to highlight, is not (necessarily) the individuals working in finance, but the institution itself. Employees who actually make a company profitable ought to be rewarded. But the sleight of hand bullshit which passes for accounting on Wall Street makes everyone a little pissed off.

But re: RD's comments in particular, that Wall Street is comprised of many middle class kids trying to work off their debt...

I've met some people who worked for Lehman back in the day (my brother was a bond trader), and I was sort of appalled at the general contempt with which these 'financiers' viewed literally everyone who was not part of the high finance club. If you weren't a player in the game, they seemed to think, you were a stooge who ought lose his money. The insularity of this group was astounding.

You know, there's creative accounting and then there's CREATIVE ACCOUNTING. The Wall Streeters are certainly doing the latter. As did Enron. When I read this stuff, I wonder what in the heck accounting principles they are teaching at universities these days.

Adding to my prior comment:

But then, I am a lowly full-charge bookkeeper, who is seeing some of my clients struggle because the actions of the Wall Streeters (and the Enron-types before that) are just killing their businesses - the bad economy trickles down. In fact, one of my clients, a non-profit, went under last year for lack of a mere $100K in funds it was unable to raise to keep things going. The feds didn't bail us out. Four of us lost our jobs.

Just one example.

Geez RD you don't seem to get this do you? People lost tens of billions of dollars due to fraud in the banking system, and bookeeping only a thief could love. Their retirements were ruined...100% ruined...people lost a LOT of money...some lost a lifetime of savings...most lost at least 10 years...at least your brother has a roof over his head, many do not.

Then the Bankers who caused this whole mess hold the American Taxpayers for ransom, and it is back to the same old fun and games at the expense to the rest of us? Please get a clue.

Lots of people in this country went to school, and lots of people work hard...and they don't get paid near the sum of 200K per year. Stop whining.

Bankers should be paid according to the job they do...not their entitlement mentality....Bankers SUNK the US economy but want to take no hit for it??? You folks sunk the boat, and you are lucky we gave you a lift to the shore. Now it is time for realism to hit you (collectively) smack in the face...

BTW for another poster above, Washington Mutual Inc is not dead, and are suing the FDIC for plenty, to get just compensation for what was stolen by the banker magicians on Wall Street and the Treasury, the OTS, the SEC and the FDIC...who managed to screw up everything they touched.

see www.wamutruth.com for info abvout what was done wrong, and what remedies there are at this point. If you still hold WMI stock, there may be a day of reckoning in the near future.