Friday, May 15, 2009

About those banker's bonuses

This Time article in their online version discusses the importance of paying the Citibank traders their bonuses.

The well-reasoned and thoughtful article is based on the premise that since they make huge amounts of money for Citibank, keeping them is in the bank’s best interest. If they left, not only would Citibank loose the profits, but since these men and women are so good, business would naturally leave Citibank and follow them to their new firms.

Horse pucky!

If these guys are the best and brightest, why did they recommend buying stocks and derivatives at prices that “The Market” over valued.

Don't think they were over valued? Ask the market that crashed to burst the bubble. If we accept that the current economic situation is a market correction for improperly priced financial products, then the people who must carry the largest responsibility are the people who advised buying at that price. If they were that wrong then, why should we want to keep them?

If your business judgment was that bad, would your boss want to keep you much less pay you a bonus?

I am constantly flabbergasted by the policy makers and pundits who have a totally different set of performance standards for the CEO of a major company than for the slob that fixes their plugged up commode.

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