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More bonuses for Citigroup's bankers? Yes

Posted Apr 29 2009, 06:01 AM by Douglas McIntyre
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Citigroup (C) has gone to the Treasury to beg for bonuses for some of its most important traders, people who make the banks extraordinary amounts of money. The Treasury’s reaction will probably be that it wants to stay out of a fight with Congress and avoid negative public opinion and will turn the request down.

That would be a mistake.

Wall Street’s primary argument for keeping a high level of compensation for its best investment bankers and traders is that if they leave, overall losses at banks could get worse. People can be profit centers. The most successful ones help offset the red ink created by the series of poor decisions big financial firms made about mortgage-backed paper and commercial credit loans.

It is easy to assess the value of the best traders by looking at a bank’s books.

According to The Wall Street Journal, Citi is asking to lift “pay restrictions that could break apart its legendary energy-trading unit.” If the government turns the request down, it is likely that many of these people will leave for hedge funds, start their own businesses or join banks based outside the U.S. The bank is not making an idle statement. If critical people leave, so does critical income.

The government is going to have to come to grips with the fact that banks have to pay the best bankers even if the idea is unpopular. There is nothing new in this argument, but it is extremely urgent that it be resolved.

The results of bank “stress tests” are about to come out and some firms will be asked to raise capital. One of the banks’ key arguments for keeping new investment to a minimum is that they have some divisions that are highly profitable and will contribute to earnings to help offset losses. Once the government takes away the opportunity for those business to be a success by helping to drive the people who run them out the door, it will insure that its investment in financial firms will only grow.

Top Stocks blogger Douglas A. McIntyre is an editor at 24/7 Wall St.

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Comments

 

Gosh, Americans are the dumbest people on the planet.  Errrr make that dumbest primates, to include the ape afmily.  Unbelieveable.

IF THESE BANKERS WERE SO GOOD AT THEIR JOBS. WHY WASN'T THIS MESS

AVOIDED TO BEGIN WITH?

 How about they operate like every small business.  No profit, no pay.  Oh, that might be too simple to understand.

So make the deal to pay more/offer bonus' AFTER the company is no longer struggling.....  you know, like when you have a 5 year old who gets a quarter AFTER they clean their room...if they dont clean it, no quarter.  Half way doesnt entitle you to 12 cents.  Good luck to the ones who want to leave...I know a dozen people who have had (FORCED) paycuts and hour reductions but are still greatful to have a job.  I doubt if anyone else could afford their services.

It is clear that this type of "talent" is not trusted by anyone anymore.

When distrust and disgust consistently enter into conversations regarding ANY person or entity that relies on the faith of its subscribers to thrive and survive, then there will be negative consequences.

A NEW beginning is being demanded by Americans. Bamks' business as usual is no longer acceptable. The trust has been stolen by the thieves. The disgust has replaced it.

You may make the strongest argument using the most profound and unshakeable logic but it will be shunted aside by the anger of experience(s) with unscrupulous banks.

Americans may take a bullet to the foot by forcing the banks down and out but the breathing will be easier and a great weight will be lifted out of our pocketbooks and off our shoulders. The foot will heal.

Let them go. Join a credit union.

We get the point about retaining good people, but when you take bailout money, the rules change.  If you want to give the good performers the money saved by firing the crooks at the top, fine, but don't ask the taxpayers to shell out more to those deemed "top performers" by the very political and subjective evaluations made by most American corporations.

How much bull can the bank shovel? That is the question. The company has to dispurse the lack of money just like a person does. They fine us and fee us to death don't pay any intrest for using our money lose our wealth at unbelievable rates. Then need our tax dollars to give themselves raises and bonuses while there customers go broke and lose there home. What kind of person can defend that?

What a load of BS. Where are they going to go. Since most large banks are in the same boat. You must think America is stupid. Maybe you should lopok in the mirror and see if you truely believe what you are saying.

Honestly, you Wall Street sympathizers are completely out of touch with the rest of the planet. The average pay for teachers and professors -- adding arguably more value, even in $$ terms -- to the US economy, is between 60K & 80K per year. These are educated people, folks, not min-wage workers.

Investment bankers and stockbrokers do not "create" wealth, and are not in some mystical way entitled to past rates of compensation -- their compensation was an outrageous bubble, just like the housing & tech bubbles, AND IT'S NOT COMING BACK.

"The best people" will do the job for appropriate income. If not, they'll "go elsewhere," to all those thousands of available jobs paying millions at other banks. Right.

Does anyone see a pattern here?  Citigroup wants to BORROW more money to pay BONUSES for their traders -  "people who make the banks extraordinary amounts of money."  I believe the days of bonuses, expecially huge bonuses, are over; collect your paycheck and be grateful you're still getting one.

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