[jeffkrol]

good article.. something for everyone.

But one of the city’s most successful hedge-fund hotshots offers a different surmise: “The majority of Wall Street thinks, ‘Hey, you lent us money. We did a trade. We paid you back. When you had me down, you could have crushed me, you could have done whatever you wanted. You didn’t do it! So stop your bitching and stop telling me I owe you, because I already paid you everything! The fact that I’m making money now is because I’m smarter than you!’ I think that’s where you’ve got this massive disconnect. In simple human terms, the government is saying, ‘I saved your life, and all you did was thank me once. You should be calling me every day: Thank you. Thank you.’ The guy who saved the life expects more. And the guy whose life is saved says, ‘I already thanked you!’ ”

The issue that most sorely tested Obama’s restraint was that of Wall Street bonuses. Emanuel and Axelrod had reams of data showing that this was by far the hottest of populist hot buttons—and one that could inflict collateral damage on the White House. One day in the winter of 2009, Emanuel was meeting with a senior Goldman executive and offered some Rahmian advice. “You don’t ****ing get it!” he said. “You’re making $600,000 a year and you think you’re a ****ing saint—because you were making $50 million before. But as far as the guy across the street thinks, you’re still a ****ing pig! Reduce it to zero and he’ll love you!”
Oh, how history might have been different if that dude, and the rest of his chums, had only listened. Instead, last October, news broke that Goldman was planning to award $23 billion in bonuses to its executives at year’s end. Suddenly, a story that had been simmering all year hit the boiling point—and it indeed proved to be a problem for Team Obama. By December, Axelrod’s polling gurus were seeing clear signs in their numbers that the president was perceived as being too close to the Wall Street greedheads.
That month, Obama appeared on 60 Minutes and proclaimed, “I did not run for office to be helping out a bunch of fat-cat bankers on Wall Street.” Railing against “massive profits and obscene bonuses” and demanding, “We want our money back,” he unveiled in January a tax on the 50 biggest banks that would raise $90 billion over ten years to cover bailout losses. And, finally, he rolled out the Volcker Rule.

Obama has actually found the political sweet spot. “Main Street is mad at the president because he’s too close to Wall Street, and Wall Street is mad at him because he’s too populist,” Altman says. “Therefore, almost by definition, he’s in the right place.”

Psychoanalyzing the Relationship Between Obama and Wall Street -- New York Magazine

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Last edited by jeffkrol; 05-27-2010 at 06:59 AM.

[Nesster]

I'm not saying the hedge fund manager isn't making more money than he can ever use, but if he earned it, who are we to say what an earning "Limit" should be? If we want to limit how much someone can earn, why don't we just become communist while we're at it and control every aspect of human life.

A hedge fund manager chose a career that is extremely difficult, risky and makes a lot of money. If you chose a job because of security that happens to not make much, don't whine about it to the rest of us.

The flaw in this argument is this: nobody is telling anyone what an earning "Limit" is. You can earn as much as you can, god bless. The argument is how these earnings ought to be taxed. Taxation has never stopped anyone from earning filthy amounts of money - though they may have had to take some evasive steps, ala the Rolling Stones of the Exile era.

The thing that makes this a tax loophole: the percentage of annual profit is a FEE to the fund manager, and common sense calls a FEE income. But in this case it is considered LONG TERM CAPITAL GAIN.

Now, these fund managers have their own money in their funds. This money, and the money of other investors, is reported between Income + Short Term gains (from the type of frequent, short term trades these funds tend to do) vs. long term capital gains, as defined by tax law.

That is an inconsistency, and costs the rest of us, and represents an additional government subsidy, in effect, to people who certainly do not need a subsidy.

---------- Post added 05-27-2010 at 10:34 AM ----------

Now, the effects of the TARP are another thing entirely.

Pay on Wall st is heavily laden towards bonuses, options, stock grants. As such, we in the business have become accustomed to thinking of these as our 'total compensation' or the equivalent of salary. And this goes all the way to first level managers and even higher paid workers.

The high bonus babies got all the press, as well as the aggregate total of bonuses paid out. From the outside, the word 'bonus' connotes a variable that is determined by how the company does + the individual's contribution. When things are really bad and the company requires a bail out, how come it is still paying out these huge bonuses?

The result of the TARP in the NYC area is a lot of depressed paychecks. We've seen our stock drop 70-90 % - and part of our compensation is in stock, so this represents a retroactive pay cut - and our bonuses melt down to nothing. It doesn't make it feel any better for those of us in the lower end of this that those with far bigger bonuses are also hurting.

I believe it is this difference in how 'total comp' is seen by those inside the industry vs. those outside that caused the politically inane behavior by wall st companies.

[Phil1]

I wonder why they didn't use NBA, NFL, and our Hollyweed friends too in the stats? Maybe even Al Gore, Kerry, Soros Oprah and Cheney too. They go off shore too. Just askin.

[Nesster]

The analogy to Hollywood is Kevin Kostner, say, as director and star, makes a deal for a cut (fee) of film profits. His salary as director and star is taxed as income. The cut of the profits - from the initial release - are what? If he were taxed as a hedge fund runner, that would be cap gain, but I strongly suspect it's taxed as income also.