Tragedy!..Merrill reduces 2008 bonuses from $15.9B TO $15B
Discussion
http://www.bloomberg.com/apps/news?pid=20601087&am...
I am saddened for the innocent victims here. Fewer spa trips, less detailing on the Bentley, redecorating deferred on the Nantucket cottage. They are rightly upset about the bonus reduction and I hope the government does the right thing and gives them a lifestyle bailout.
Just because Merrill had six consecutive loss quarters and the entire financial house of cards fell down is no reason to penalize them. The little people can , of course, eat cake.
I am saddened for the innocent victims here. Fewer spa trips, less detailing on the Bentley, redecorating deferred on the Nantucket cottage. They are rightly upset about the bonus reduction and I hope the government does the right thing and gives them a lifestyle bailout.
Just because Merrill had six consecutive loss quarters and the entire financial house of cards fell down is no reason to penalize them. The little people can , of course, eat cake.
Not quite as saddening as the awful 2008 you told us all about, I was welling-up while reading that, I promise you.
I read somewhere that the bonus pool was voted through 4 weeks earlier than usual and 3 weeks before ML was bought by BOA. Attorney General Cuomo is to investigate ex CEO Thain and I presume the other Directors to establish whether this broke any security laws. Maybe we'll see Thain hung drawn and quartered yet.
Neil_H said:
Not quite as saddening as the awful 2008 you told us all about, I was welling-up while reading that, I promise you.
I remember that one. Must have been hell!
10 Pence Short said:
Neil_H said:
Not quite as saddening as the awful 2008 you told us all about, I was welling-up while reading that, I promise you.
I remember that one. Must have been hell!
10 Pence Short said:
Neil_H said:
Not quite as saddening as the awful 2008 you told us all about, I was welling-up while reading that, I promise you.
I remember that one. Must have been hell!
I read an interesting blog that suggested a better way to motivate people.
Should we kill bankers? I don’t mean as vengeance for their past misdeeds. Instead, I mean that, if banks are to remain in the private sector, the death penalty should be part of the new regulatory regime.
The problem with any regulation is that regulators are always at an informational disadvantage; outsiders know less than insiders. There is therefore a danger that breaches of the new regulatory code - excessive risk-taking - will not be identified quickly; as Warren Buffett said, it’s only after the tide’s gone out that you can see who’s been swimming naked.
This means that if the penalties for breaches are low, bank bosses might have an incentive to ignore regulations - as they discount punishments by the probability of getting away with their crimes. To prevent this, punishments must be huge.
What I’m advocating here is a system of perfect deterrence, as discussed by Saul Smilansky in 10 Moral Paradoxes; if the punishment is high enough, no crime will occur.
What’s more, the death penalty will focus bosses’ minds. As Chesley Sullenberger showed us, when a man faces the likelihood of death, he finds a way to do a great job. The notion that bank bosses require big bonuses to incentivize them rather than the threat of punishments was always a self-serving fiction, not a realistic psychological proposition.
You might object here that threatening bank bosses with death would deter good men from taking the job.
I’m not convinced. For one thing, the threat of death doesn’t stop good people from applying to become airline pilots or army officers. And for another, having duffers run banks wouldn’t be a catastrophe. A return to the old 3-5-4 business model (borrow at 3%, lend at 5%, be on the golf course at 4 o’clock), whilst being sub-optimal, would at least save us from disasters.
Another objection you might have is that banks are so complex that no chief executive or board of directors can possibly control them adequately - hence the number of rogue traders. If this is so, then we risk killing men for things over which they have no control.
This, though, just raises the questions. If this is so, why have we attributed such importance to chief executives? And should banks remain such ungovernable structures?
http://stumblingandmumbling.typepad.com/
Should we kill bankers? I don’t mean as vengeance for their past misdeeds. Instead, I mean that, if banks are to remain in the private sector, the death penalty should be part of the new regulatory regime.
The problem with any regulation is that regulators are always at an informational disadvantage; outsiders know less than insiders. There is therefore a danger that breaches of the new regulatory code - excessive risk-taking - will not be identified quickly; as Warren Buffett said, it’s only after the tide’s gone out that you can see who’s been swimming naked.
This means that if the penalties for breaches are low, bank bosses might have an incentive to ignore regulations - as they discount punishments by the probability of getting away with their crimes. To prevent this, punishments must be huge.
What I’m advocating here is a system of perfect deterrence, as discussed by Saul Smilansky in 10 Moral Paradoxes; if the punishment is high enough, no crime will occur.
What’s more, the death penalty will focus bosses’ minds. As Chesley Sullenberger showed us, when a man faces the likelihood of death, he finds a way to do a great job. The notion that bank bosses require big bonuses to incentivize them rather than the threat of punishments was always a self-serving fiction, not a realistic psychological proposition.
You might object here that threatening bank bosses with death would deter good men from taking the job.
I’m not convinced. For one thing, the threat of death doesn’t stop good people from applying to become airline pilots or army officers. And for another, having duffers run banks wouldn’t be a catastrophe. A return to the old 3-5-4 business model (borrow at 3%, lend at 5%, be on the golf course at 4 o’clock), whilst being sub-optimal, would at least save us from disasters.
Another objection you might have is that banks are so complex that no chief executive or board of directors can possibly control them adequately - hence the number of rogue traders. If this is so, then we risk killing men for things over which they have no control.
This, though, just raises the questions. If this is so, why have we attributed such importance to chief executives? And should banks remain such ungovernable structures?
http://stumblingandmumbling.typepad.com/
The problem with draconian punishments is that most criminals don't believe they will get caught. Just look at the number of murderers on death row in the US. Would the death penalty have prevented a Madoff? If you think back to the Enron scandal, its Chairman Ken Laye committed suicide (a bit like the death penalty without the theatrics). He's reasons appeared to have more to do with protecting his assets, however, death is a pretty final act however it comes.
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