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Your Take: Anger At Banker Pay

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When Goldman Sachs announced it would set aside $10 billion for staff pay this year, CNN Money went to the Occupy Wall Street demonstrators and asked them what they thought. It was equal to $292,000 per employee, which is a drop of $78,000 from last year. The responses were what you’d expect – everyone was upset. They didn’t know why people needed to be paid that much.

Here’s the crazy part – bankers aren’t paid huge sums everywhere. In Germany, bankers aren’t paid millions to do their jobs (I was very surprised to read how little they made). In the United States, where capitalism meets unchecked human greed, bankers are paid like professional athletes (you could argue athletes are paid too much, but that’s at least sustained by sports revenues). The bar keeps getting set higher and higher in order to get the “best talent,” whatever that may be in the eyes of the person writing the checks.

We pay bankers too much because we knocked down that wall separating basic banking and speculation. Speculators who guess right can pay vast sums to people who are good at picking the winning bets. Basic banking is boring, there’s no leverage, and you can’t make absurd sums of money. It’s like a grocery store that sells lottery tickets. The lottery tickets can make big bucks but lettuce and oranges are boring low margin items. When parts of Glass-Steagall were repealed, it set the stage for what happened. For political folks keeping score at home, the repeal was a bi-partisan effort. It was sponsored by Republicans, passed in a Republican Congress, and a Democrat President (Clinton).

So being paid vast sums is offensive, especially with unemployment is at fault, but politicians deserve the ire.

I’m curious to hear what you think about bankers being paid that much?

{ 36 comments, please add your thoughts now! }

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36 Responses to “Your Take: Anger At Banker Pay”

  1. Traciatim says:

    I’d much rather see if the median was much lower than just look at the average. Are you sure your customer service reps, loan sales reps, and the people that actually get the meat of the work done are being paid even half the average?

    10B at 292k puts them at 34264 employees. I think the problem is that they probably have 50 employees making upwards of 50 million a piece, and front line staff making 30K. I think that is the much bigger issue than the average being 292K.

    Though, I’m not a supporter of the ‘give me what you have for free on wall street’ movement. I know their against corporate greed and income inequality, but have you seen the hypocrisy and blatant brand whoring in the crowds? I have yet to see someone wearing a sweater that they knit from their own sheep complaining about ‘ebil corpz steelin ur muneeze’. You only have to look at the record sales of the iPhone 4s to realize that the idea of the corporation is not the problem here.

    • cubiclegeoff says:

      I’m not sure that someone protesting and having an iphone is really hypocrisy.

      • billsnider says:

        I like the guy who is angry that he had to borrow $100,000 to get his PHD in psychology. He is mad that government (stated differently – you and I) does not give him the money to pay the loans.

        I worked my way through college with summer and after school jobs. I came out with loans, and in my early life I paid them off. I then went on to a better paying life.

        Why in hell am I now expected to pay for his college education? I did enough for him previously paying high real estate taxes for elementary and high school education.

        Bill Snider

      • Traciatim says:

        Really? People protesting greed while tweeting on their branded phones in their branded shirt, carrying a branded shoulder bag, walking in their branded shoes, while mostly everything on their person is made by exploited workers overseas is not a hypocrite? Surely you jest.

        • vik says:

          Really ? Judging people by the phones they use and shirts they wear surely irk me more than protesters.

    • Ryan says:

      I keep seeing this argument about the protestors using products from the corporations they are protesting against. This is a stupid argument. The protestors aren’t anti-corporation. They are anti-inequality, among other things. Income inequality within a bank firm is the same as income inequality in the country as a hole.

      There’s a reason why our country is ranked like 60something in inequality.

    • tecate says:

      I didn’t see Tea Party aholes wearing tea either, so what, wearing a tshirt or having a iphone is ridiculous, you can pretty much get a free iphone if you sell your soul to AT&T for 2-3 years, you don’t know if everyone if those phones isn’t bought used, what I do know about these people is that they are angry about being used yet again by coporate, greedy, rich bastards, so how much of Steve Jobs estate went to help others, I’m waiting cause so far he was a creep and a jerk about sharing.. So far I’m not a support of the ‘I am a jerk and I want MINE MINE MINE’ movement that has happened in this country, goodmanners have been LOST… so if you have an iphone and wear carry a Gucci bag are you a brand whore, and a republican? when they come knocking as did the French revolution be ready.

  2. tom says:

    Frankly, I don’t care. If you can get a coveted job at Goldman Sachs and you perform well, you deserve that $300,000 bonus. If you perform poorly and still get the $300,000 bonus, then the company is taking away money from other employees and that’s an internal dispute.

    I don’t think it’s offensive at all to get paid truck loads of money with unemployment so high. Good for them, they earned it. Most of those people aren’t CEOs running companies into the ground and leaving with $60M severance packages. These are people like you and me working their butts off. In fact, they probably work long hours for a meager salary and that bonus makes up 75% of their compensation package.

    • mannymacho says:

      I agree with you tom. The nature of investment banks (a few gigantic deals per year) is such that they need a workforce of employees who are highly specialized, have 24/7 availability, and are willing to work like mad when it’s deal time. The only way they can keep that kind of talent around, frankly, is to wave around the prospect of huge salary and bonuses. If a banker could be making the same amount for 40 hours per week M-F, where is the incentive to stay?

  3. catherine says:

    Until you have worked on the inside and knows everything that contributes to what you deem as a “high pay.” It is none of anyone’s business what a firm pays their employees when it is not taking money from the Gov or your pocket. GS paid off the so called TARP money back, every dime of it. It’s not GM. If you don’t like it, don’t buy the stock. The idiots that occupy Wall Street have nothing better to do but complain about other ppl instead of working harder on themselves. Go complain what the politicians are getting when their salaries derive from taxes that an individual has no control over. Investment firms, are none of your business when you’re too dumb to work there.

  4. cubiclegeoff says:

    I don’t think anyone is worth the millions that some of these people pay. I think most executives in this country are grossly overpaid. Especially when they really don’t do all that much work that makes the company money. And the idea of having to pay for talent, is ridiculous.

    • cubiclegeoff says:

      This is not to say that some executives are not great at making a company profit or anything, but putting in place a good team and making good decisions that other people implement does not equate to these pay levels.

  5. DonC says:

    “So being paid vast sums is offensive…” Wow, is this America? You get paid what your employer thinks your worth. That goes for the top earners and very bottom earners. Certain bankers get paid millions because they genrate that much many times over for their employers?

    Where is the Occupy Hollywood protesters with actors making millios to “act”? Where are the Occupy Sports protesters with athletes making millions to play sports. They get paid that much money because they generate lots of revenues for those paying them. Wall Street is no different.

    • Tony says:

      I never heard of taxpayers bailing out Hollywood or the NFL/NBA/MLB. I did hear of a little bail out ($700B) of a certain sector in 2008. Was it banking?
      I don’t have a problem with executives making millions in bonuses when times are good, but what happens when they make mistakes and the banks have to be bailed out. There should be a clawback clause in those contracts, that way you’ll see them making less risky bets.
      If they know they can make millions if the bet goes their way but the only penalty for the bet going the wrong way is that they don’t get a bonus that year I’m sure we would all take that bet.
      I’m a stock trader, if I buy a stock and it goes higher I make money, if it goes lower I loose money, that’s the way banker’s compensation should be structured. If the bank does well the CEO does well but if the bank goes bankrupt so should the CEO.

      • Traciatim says:

        By bailout you mean giving loans? I know a lot more went on, but exactly how much of the TAF money hasn’t been paid back? Of the banks that used any of the loans set up which ones still paid bonuses to executive?

        (I’m honestly wondering, I’m not from the USA so I don’t have a lot of the news).

      • Sun says:

        Where are the “free market” proponents now? Let irresponsible banks crash and burn. I honestly think we would have been fine. I know if BofA tanked, they wouldn’t be trying to charge me $5 on my former checking account.

        • Aaron says:

          It would be great if we could let the banks crash and burn, but therein lies the problem. Letting the banks crash and burn let’s the entire economy crash and burn.

          Clearly the banks are going to continue their speculative ways that got us in this mess. The only answer is an intelligent government to regulate the speculation or the industry at large to prevent another collapse.

    • Tecate says:

      Best of my knowledge I’ve never had my tax dollars used to bail out Hollywood. You will notice that the NBA and players are LOCKED in a war about money.. a million cheers to the kids/people who have the time and guts to occupy Wall Street.. the greediest people of all time.

  6. DonC says:

    The real problem is when things go bad, there is no accountability on the bankers. When they mess up economies with the risks they take, they should accept the blame and be held accoutable. But no, government step is and bails them out. Why should the goverment (i.e. taxpayers) take over the bad loans and bad investments and then let the banks prosper?

    • Aaron says:

      Because not doing so would have destroyed the economy. I completely agree with you on principle, but pragmatically, I’d rather bail them out then have gone through another Great Depression. Remember, as bad as this recession has been, the unemployment rate during the Great Depression was 25%!

      • John says:

        Just remember that unemployment is not calculated the same way is was during the Great Depression. And even with UNemployment not showing quite as high UNDERemployment is much higher.

        And how many of today’s problems are caused by the “solutions” implemented to bring us out of the Great Depression. I don’t think the problems are as bad as back then but bailing them out without changes in the system is just pushing the problem onto another generation.

  7. Jerry says:

    So what if they get paid like professional athletes? IF YOU EARN IT, YOU KEEP IT. That’s the spirit of America and I am sick of the communist protestors trying to destroy us. Occupy Wall Street? They should be occupy bathrooms, some of them haven’t showered in days.

  8. Scott says:

    I sense a theme here and I’m joining the choir – the bailout of banks was a horrible idea by the government. We’re supposed to be a capitalist economy, in both good times and bad times. Let them fail…

  9. Sun says:

    Even a small change like an executive gets paid $1 if they don’t make profits that quarter would be a starting point

    Bank executive pay is set by the board. The board is comprised of other bank executives from other banks. If you vote for a pay raise and bonus, the next time you need a job, you will be ensured higher pay because the prevailing “market rate” is collectively raised by the board. It has nothing to do with merit nor performance.

  10. Rob O. says:

    Banking execs – not the people who actually do the work at banks – are certainly vastly overpaid.

    If a small business owner runs his business in the ground, he’s out on the street right along with his workers – in fact perhaps more so since he had more personal finances at stake.

    So why then did the execs from ruined banks walk away with golden parachutes big enough for several lifetimes?

    Perhaps more salaries need to be contrasted with that of the President of the United States. Should anyone really be making -exponentially- more annual salary than the leader of the free world?

  11. Dave says:

    Hey, as much as I personally don’t think anyone is worth $20MM a year, fundamentally, I have no problem with a company paying its top management that type of salary. If the company feels the person earned it, hey, who are we to question how much they should be paid. As long at the owners of the company (read: shareholders) don’t have a problem with it, there shouldn’t even be an issue for people who have no stake. If you are an investor and have a problem with it, don’t buy their stock or product.

    For those who say who have a problem with golden parachutes and high pay for executives who bankrupt companies, etc – its still a business decision. It may be a bad business decision on the part of the company, but it is their decision to make.

    • Ron says:

      It is definitely not their decision to make. The stockholders own the company, not the executives. They appoint their fellow execs to the board, then a “you scratch my back, I’ll scratch yours” round sets in of ever increasing executive pay increases. Or looting of the corporation would be more descriptive.

  12. Eddie says:

    It’s not the size of the pay, it’s the time frame.Getting a bonus based on the performance of a quarter, or a year, is an invitation to take chances and make moves that benefit the short term at the expense of the long term.
    Inflate the pay to whatever the market will bear: just make sure they have to stick around long enough to deal with the aftereffects in addition to cashing the checks!!!

  13. Andrew says:

    I think that the protesting movement is misunderstood by many INCLUDING many doing the protesting which is causing mixed messages to circulate. As I see it, it’s not unfair however much money anyone makes no matter who you are. Thats the beauty of our freedom to capitalize in this country. Should you choose to go work for a big corporation or even a small company as a secretary, or answering phones for customer service or digging holes in construction and don’t have the ambition to go out and get something better; don’t blame someone else for it! That’s a personal problem. Yes there are people that don’t necessarily earn their way to the top, because their uncle or dad is their boss or their best friends with the brother or married in. (You get the point…) That may not be fair, but that’s the way it is and that will never change, EVER. HOWEVER, that doesn’t mean you can’t learn something about something whether it’s a skilled trade, selling insurance, fixing something or selling anything for that matter and take full advantage of what the REAL AMERICAN DREAM is all about and be that entrepreneur and go get what’s yours! Most people are too scared to do that so it’s always more “safe” to work for someone else, living paycheck to paycheck. The problem is the big box corporations can take advantage and ABUSE the tax laws this country has in place and for example, just because the don’t make as much money as the “projected” even though they are still making a huge profit, get to use that difference as a major tax write-off and as a result send the stock market way down when really, there was no lost money. The other half of the problem is the obvious when the corporations get all this bailout money and a good portion goes to feed the bonuses of the CEO’s when well undeserved all the while small businesses suffer without a damn dime from the government when it was small business that set the foundation of capitalism in our country to begin with! I could go on and on but people, do your homework and quit listening to the media because the media isn’t going to tell you the truth because their run by the big corporations who are paying off the government… WAKE UP!

  14. not_pre-occupied says:

    $292K!? So while you OWS are debating this I just sent them my resume!!

  15. Money says:

    We should check ourselves that while talking of financial equality we are not moving towards the Marxism. We had past this cross road long ago and we also got the fruit of our choice. I believe that if you have anything (skill, knowledge) that others don’t have, you have right to earn amount of money that others don’t imagine.

  16. dave says:

    If customers are willing to pay that much then its fine

  17. Jessica says:

    I think it’d be fun/interesting to do a survey of all OWS protestors and see which credit/debit cards and checks they have in their wallets and which company they use for their insurance policies. Also… how many among them are registered voters (or ever have been)?

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