[Jack]

Fannie Mae, Freddie Mac Still Dishing Out Big Bonuses - CBS News

[GeneV]

Freddie and Fannie are structured as publicly held private corporations with investors who bought common stock for profit. The federal government has some guarantees involved and owns some preferred stock. The criticism here could easily be leveled at banks or other institutions where failures may result in a federal takeover. To some extent this is just another example of pay that seems to have little connection with contribution at public corporations.

[Nesster]

...of course, we forget excecutive compensation logic: if the business is doing great, they deserve huge pay increases for the job well done. If the business sucks, they deserve huge pay increases as a form of hazard pay: imagine how stressful it is to be making those difficult layoff decisions, facing hostile stock analysts, all the while being anxious your multi million dollar payday is gone, and your multi-multi million dollar stock and option package is losing value... Sure, some worker frets about their $50K job, but consider you're talking real money here - how would that worker feel if it was $10mill at risk?

[GeneV]

...of course, we forget excecutive compensation logic: if the business is doing great, they deserve huge pay increases for the job well done. If the business sucks, they deserve huge pay increases as a form of hazard pay: imagine how stressful it is to be making those difficult layoff decisions, facing hostile stock analysts, all the while being anxious your multi million dollar payday is gone, and your multi-multi million dollar stock and option package is losing value... Sure, some worker frets about their $50K job, but consider you're talking real money here - how would that worker feel if it was $10mill at risk?

Heads I win; tails you lose.

[Nesster]

Heads I win; tails you lose.

Or, the true test of parenting isn't when the kids are all turning out right without problems...

[jeffkrol]

Ahh the old "we have to to keep "talent" mantra............(repeat till you believe it) . never gets old.

So why do wards of the state like Fannie and Freddie need to throw money at top execs? The feds seem to think that outsized pay equates with superior performance. In fact, as the housing crash made glaringly clear, it often works the other way around. Studies have shown how soaring executive comp often goes hand-in-hand with companies short-changing other critical corporate functions, like outside audits.

Perhaps it's not by coincidence, as Politico notes, that the FHFA's inspector general found earlier this year that the agency struggles even to keep track of what Fannie and Freddie pay execs. The upshot? Comp on Wall Street and in the housing agencies remains distressingly out of control.

I would wager that if you choose the execs by lottery you would have a 10% chance of picking a winner at 1/4 the compensation.... some might even just do it for fun......

[GeneV]

Ahh the old "we have to to keep "talent" mantra............(repeat till you believe it) . never gets old.



I would wager that if you choose the execs by lottery you would have a 10% chance of picking a winner at 1/4 the compensation.... some might even just do it for fun......

People will raise a billion dollars in donations to get a certain job that pays $400k. I can't believe that you wouldn't get able people for $500k to run a business. The average CEO pay in Japan is $1.5mm, or 1/10 of that in the U.S. There are a lot of problems with that system, too, but it is hard to say our business leaders are doing 10 times better.

[Nesster]

Gene, that's because somehow human motivation is boiled down to money, and money only. E.g. you're not really an artist if you don't make big bucks from it - and in fact you are a social parasite if you don't.

There's no room for ego, the hunger to boss people around, to have influence and get good seats at the best restaurants, to (theoretically) get laid by the best genetic material, etc.

Yes, our business leaders are 10 times better than those in Japan, because ours have figured out how to get paid 10x more.

[Ratmagiclady]

They should really stop trying to blame them and Barney Frank when Wall Street insisted that under the deregulation they'd already done, that everyone but the richest needed more speculation in the bubble, lest they lose money falling behind on.... The bubble.

There was bullshit there, but it came from the 'experts.' Wall Street experts.

Who, it turns out, were widely-believed, but ... WRONG.


If anyone reads the transcripts, never mind remembers what all the big money people were selling at the time: the big problem was the notion that *not* speculating on derivatives would be a 'de facto losing money for the public.' If we don't subsidize predatory lending. Then participate in it.'


The whole premise for that whole decade was 'Participate in the bubble from this scam or you will be in the red.' Cause who said so. Fox or CNN or whoever even had like a bipolar dude screaming at people to do the exact wrong thing at the time, with a bank of 'Wall Street Experts' telling us *all* via the corporate media where to put our money... if we had any. They want to scapegoat Barnety Frank, but he was actually cautiously doing what all the 'experts' had been screaming at *all* of us to do. I know this, I was in the home renovation trade at the time. You couldn't buy a freakign *router bit* without someone trying to up-sell you about market forces, never mind the money. Remember?


Remember? You couldn't watch 'Hometime' without those clean-cut not-quite tradespeople telling you to take out loans on a granite countertop, or else..


Notice how that show was *everywhere,* for the Bush decade, then suddenly *vaporized* when the bubble burst? That's cause *all* the reruns were chock full of epic fail of financial advice. Essential message: Borrow twenty grand on this or the 'Invisible Hand' says your home's not worth crap. But it'll pay off later. Really. Here's how to shave a few hundred' ....so much for "Experts."

[Nesster]

The role of Marketing is undervalued in much capitalist theory - especially the purist kind, which currently (ironically?) is using marketing especially well.

RML, what you're remembering is the massive coordinated marketing machine in operation. We get coordinated messages through all channels in order to create a demand for something. The onset of greed - the result of early easy money - is more fodder for the operation. Consensus reality becomes consistent with the marketing thrust - dissent is simply drowned out or suppressed.

Once more, to figure this out, follow the money. There need not be a conscious explicit cabal, only economic actors all along the way figuring out their angles to make a buck. However, it helps when there are a few well funded primary actors on the stage.

We've established that everyone along the chain had their economic interest tied up in continuing the bubble. But the really big money - the too big to fail money - was where? And the little money - the small enough to fail money - was where?

Should a bank or financial company that avoided the mess entirely resent the bail-out receivers? Should they be complaining loudly and often about the feckless and amoral banks that got the TARP? Whether they should be or not, they aren't. About the only mention has been in I forget what company's advertising where they point out they never took a bailout.

So why do people then get up in arms about bailing out other people? Maybe we don't see our financial self interest as clearly as the corporations do? Maybe it is yet another way how corporations are not people?

Marketing - there's a definition that goes something like: selling unnecessary crap to fools. Marketing often creates a new 'demand' to meet an existing supply - e.g. Restless Leg Syndrome... Marketing creates a market place reality that then 'seems' to be the Invisible Hand in operation. Marketing at its most effective is both a market manipulation and a reality manipulation. We ought to be aware of Marketing in all things.

[Ratmagiclady]

The role of Marketing is undervalued in much capitalist theory - especially the purist kind, which currently (ironically?) is using marketing especially well.

RML, what you're remembering is the massive coordinated marketing machine in operation. We get coordinated messages through all channels in order to create a demand for something. The onset of greed - the result of early easy money - is more fodder for the operation. Consensus reality becomes consistent with the marketing thrust - dissent is simply drowned out or suppressed.

Once more, to figure this out, follow the money. There need not be a conscious explicit cabal, only economic actors all along the way figuring out their angles to make a buck. However, it helps when there are a few well funded primary actors on the stage.

That's exactly the point, though... And, to be honest, as that 'bubble' was sold by the same 'experts' as a permanent and ongoing condition, it made *sense.*

I was even semi-in-on the actual home improvement thing: it was part of how a cooperative with a disabled GC could even *do* a lot of those projects (which were mostly about sustainability, to be fair to myself. If I could have gotten my severance all at *once* I could have walked away from that with the means to be reasonably-well-set for something else, despite the physical collapse and all: instead it got eaten up trying to find, then keep, housing and paying out of pocket to see a doctor...who seemed promising at the time, but in hindsight, I'd have been better off buying a trailer and going nomadic, if that was what it took. I'd gotten in a bad habit of being too proud to ask too much help at *once,* )


But then we get back to how systems are set up... By banks, particularly. It's *capital-ism,* and unfettered or top-favoring capitalism *does* have 'invisible hands: often by no deliberate contrivance meaning that even if you have a *little* capital... or do theoretically, you can't put enough in one place to do the cheaper, but certainly more efficient thing: I could have had that trailer for the same as I ended up paying in first, last, and security on a place too big for me, but available, ...not having enough at once meant, 'I am risking all I have right now while being exhausted and uncertain I'll even own the tow vehicle. Assuming I can arrange to park this.' And what I ended up doing...which was paying big rent to someone with ulterior motives proved to be more expensive than all of that *very rapidly,* but just wasn't seeming-doable at the time. Some would blame the government for that, but the reality was, it was always about the big money-holders. And credit raters, whoever *they* are, ...and even pretty well-off people at the peak of that bubble couldn't *put* enough in one place to really honor their word... I got my severance, but in dribs and drabs, mostly: the only problem is it was eaten up by rents as fast as it came in, really, at least before it could be used to do anything but languish.

Which goes to how a lot of the system pushes the burdens of its own inefficiencies *downward.*

Even in terms of the raw dollars: there are ways in which being poor is more *expensive,* not by percentages or degrees, but by geometric proportions: *especially* in terms of capital, if you can get any, and expenses. Even if you manage to get some all in one place, what can you do with it? Pay in till it's gone. And that's again where the stratification hurts people.

Marketing - there's a definition that goes something like: selling unnecessary crap to fools. Marketing often creates a new 'demand' to meet an existing supply - e.g. Restless Leg Syndrome... Marketing creates a market place reality that then 'seems' to be the Invisible Hand in operation. Marketing at its most effective is both a market manipulation and a reality manipulation. We ought to be aware of Marketing in all things.

Was this supposed to be a fraud, or just someone trying to sell a thing cause of stress or maybe even neurological damage?

I'm wanting to think of the movie version of Johnny Mnemonic.

[Nesster]

Raymond J. Learsy: Citigroup's CEO's Monster Pay Package While Cutting Jobs. America's New Capitalism

Citigroup is not alone. But it has become a primal example of our vaunted system of American capitalism, once a meritocracy open to all, that has now been diminished, if not erased, into a cesspool of self dealing and outright unfairness. In May of this year, Vikram Pandit received a retention award that could reach a pay package of $42 million ("Pandit May Get a $42 Million Retention Award If Citigroup Meets Estimates" Bloomberg 05.19.11 ), which would make him one of the highest paid banking executives in a field littered with banking institutions who would not exist today were it not for bailouts, TARP programs, and so on, paid for and at the risk of the threadbare pockets of the federal government (for those who have forgotten or believe stratospheric compensation falls in line with the responsibilities at hand, please recall the President of the United States earns a $400,000 annual salary, along with a $50,000 annual expense account, a $100,000 nontaxable travel account and $19,000 for entertainment). Of these, Citigroup has led the pack with $45 billion alone of government succor, reimbursed in whole or in part to the nation's Treasury, but without the government's largesse and assumption of enormous risk at a critical moment, Citigroup and many of the other institutions would have gone under.

Vikram Pandit's payout will be spread over four years and is subject to meeting certain performance goals. And how do these benighted executives achieve these dollar and cent performance goals? Well, that's just the rub. The New York Times has just reported "Citigroup to lay Off 4500 Over Coming Months." Well, it's the new American way. You get paid more for hiring fewer people (and Pandit is not alone here), or putting those already employed on the unemployment roles.

Wall Street banks in general are laying off more and more people given the headwinds of the financial sector. But that is the point. How many of the laid off could have been kept on the payroll with just a portion of Pandit's paycheck? And for society to countenance an ethos where the more people you lay off, the more you get paid, is madness.

And this not the first time at Citigroup or with Vikram Pandit. In 2007/2008 just before becoming a tin cup institution, Vikram Pandit, after just six weeks on the job, was awarded $26.7 million stock bonus and 3 million in stock options while almost concurrently announcing that Citigroup's work force would be cut by 4200 employees (please see "Citigroup's Self -Immolation And The Beginning of the Eclipse of American Style Capitalism" 01.28.08) from which the following is quoted hereby:

While all these 'executives' (i.e. Pandit together with past Chairman Chuck Prince and eminence grise board member Robert Rubin) were wallowing in gravy, Citigroup had the effrontery to announce almost simultaneously that it was cutting 4200 jobs! 4200 jobs lost, 4200 families in distress. Shameless is hardly too strong an adjective. By proceeding with such unfairness, in such a one sided callous manner, Citigroup has become the poster child of so much that is wrong, and much of what is happening throughout corporate America.
And that was in January 2008, before the meltdown in September that same year, and before it took $45 billion in government funds to bail out Citigroup alone. This, only to revisit much of the same distortions near four years later.

A transliteration from a popular French proverb "Plus ça change, plus c'est la même chose" would not be out of place. "The more it changes, the more it stays the same."

Actually, this would fit in the Middle-Class Romney thread as well...