Tuesday, November 4, 2008

Surely The Pledge By Wall Street Is a Joke

It is reported in the FT, that "Wall Street firms will pledge not to use the recent $125bn cash infusion from the US government to pay bankers’ bonuses in an effort to defuse the mounting political furore over compensation at battered financial groups."

Instead, "Wall Street executives say that banks will pay bonuses from earnings and existing cash resources, like in previous years, and use the government capital for acquisitions and to replenish their depleted balance sheets."

The news report says, "The nine institutions which sold preferred shares to the government in exchange for $125bn, have set aside an estimated $108bn for employee compensation and bonuses in the first nine months of the year."

Question: Any reason why bonuses are being paid at all? After all these guys have messed it up. Why shouldn't the "earnings and existing cash resources" be used to "replenish their depleted balance sheets"? What am I missing here?

Stumble Upon Toolbar

No comments:

My Library