Make $15 million a year and don't need to be responsible for anything! WOW!

[slider2828]

Amazing how these people can't say I messed up! Even a 3 year old can do that....

Prince, Rubin Defend Roles as Panel Criticizes Citi (Update1) - BusinessWeek (http://www.businessweek.com/news/2010-04-08/prince-rubin-say-they-didn-t-recognize-citi-s-cdo-risk-in-time.html)


Excerpt:

The Financial Crisis Inquiry Commission was mandated by Congress to produce a report by the end of this year on the causes of the financial crisis. Members of the panel criticized Prince and Rubin for arguing that virtually none of their peers on Wall Street predicted that securities carrying the highest ratings would bring on a global credit crisis.


“What do you get paid for if it isn’t having some intuition, understanding or knowledge?” Commission Vice Chairman Bill Thomas said. “Or do you just do what everybody else is doing because everybody else is doing it, and if you don’t do it you won’t make money?”

Losses on the collateralized debt obligations -- created by repackaging mortgage bonds into new securities-- crippled New York-based Citigroup and triggered a $45 billion federal bailout, the largest of any financial firm. The U.S. government still owns 27 percent of the bank and has announced plans to sell that stake over the next year.

[g6civcx]

This is the only problem I have with in the whole article:

they weren’t aware of the size of Citigroup’s position in mortgage-related securities or the risks surrounding them.

The CEO and the committee should always know the general composition of the corporate portfolio and the risk associated with each position.

They're supposed to match investment risk with client's risk aversion. How can you match if you don't know how risky you are?

[WanganRunner]

They're supposed to match investment risk with client's risk aversion. How can you match if you don't know how risky you are?

^^
Therein lies the problem.

Traders have WAY too much autonomy at these firms, and their compensation structure motivates them to take too much risk.

Take risk, maybe make a hundred million dollars, take no risk and make nothing. If you lose, it's someone else's money anyway, and you only lose your job.

The programmatic trading is getting out of hand, IMO.

[slider2828]

^^ I totally agree, but the problem also lies within trading overseas and how to regulate that... Having more new market/outside country exposure to portfolio's are pretty common nowadays, its pretty hard to regulate that.... But still I just don't believe the amount of money these guys are making all the while making people suffer.... its bs....

[drift freaq]

^^ I totally agree, but the problem also lies within trading overseas and how to regulate that... Having more new market/outside country exposure to portfolio's are pretty common nowadays, its pretty hard to regulate that.... But still I just don't believe the amount of money these guys are making all the while making people suffer.... its bs....

Ok I agree with most of this. Overseas trading actually has less regulations than ours. Oh and by the way, what the Congress wants to easily forgot or ignore was the removal of the uptick rule. As long as shorts could function without the uptick rule it caused extreme volatility. Did the banks have a role in the crisis? Yes, did the mortgage companies play a part? Yes. Did the general public? Yes. Did previous congress's and presidents before the previous administration play a part as well. Indeed they did.

The loosening of credit during the Clinton administration in a effort to create affordable housing indeed paved the way for the mess.

Are bonus's and salaries possibly to high? Most likely, but its a tricky and dangerous thing to try and control that stuff at a Government regulated level.
If you make your company a profit do you not deserve compensation? If you got none their would be no desire to succeed and profit. Like it or not these things help power the economy.

The populist cry of they profited while we lost, is more like an Enron situation than all Wall street firms.

People need to stop crying and get on with turning things around. Shit has happened its done. Even congress knows they can do nothing more but try and roast the companies for what they think was wrong which congress is not exactly altruistic about either.

In the end Congress needs to get off the roasting wagon. Funny you do not seem them roasting GM now, or Freddie Mac and Fannie Mae.
They are trying to grandstand wall street firms to try and curry favor with their voters. Its all political grandstanding.
All of the firms they are roasting have paid back TARP and the federal government actually made a 8% average profit on the TARP loans.

Political grandstanding that is what this is all about.

[slider2828]

^^ Hahaha THey are roasting Freddie and Fannie Today as we speak.....

I dunno how long the list goes, but yet... What I think is true, is you are paid an astronomical high salary for a reason.... that means you have some sort of astronomical insight to the market and control something.... It is what it is compensation for the work... if your company fails you fail just as much, but yet these guys still get paid.... doesn't make sense....

The thing is yes EVERYONE was to blame, but they failed to blame themselves is the problem I have... They never took repsonsibility and never said this is my fault.... Thats the sucky part.... But yet still no one has gotten to the bottom of how its not foreseeable and the point congress is trying to make is, we better get to the bottom of it or we are failed to repeat it again......

[drift freaq]

^^ Hahaha THey are roasting Freddie and Fannie Today as we speak.....

I dunno how long the list goes, but yet... What I think is true, is you are paid an astronomical high salary for a reason.... that means you have some sort of astronomical insight to the market and control something.... It is what it is compensation for the work... if your company fails you fail just as much, but yet these guys still get paid.... doesn't make sense....

The thing is yes EVERYONE was to blame, but they failed to blame themselves is the problem I have... They never took repsonsibility and never said this is my fault.... Thats the sucky part.... But yet still no one has gotten to the bottom of how its not foreseeable and the point congress is trying to make is, we better get to the bottom of it or we are failed to repeat it again......



Ya but Congress is just as guilty about not accepting their part in the role. Basically they want to blame it all on the previous administration. Who did play a role and make mistakes as well. Rather than accepting that they were the same people pushing the Clinton administration to relax credit, to make it easier to purchase.

I feel Congress is the pot calling the kettle black.

Oh and yes its about time Freddie and Fannie got called. LOL

[slider2828]

Oh man... just a morning quote from grilling freddie and fannie paraphrasing...

The large banks were selling mortgage securities and that was directly in competition to us. We had no other way of financing their mortgage business, therefore we would either fade out of the entire industry as banks were taking over or find another financial driver for our business... There was no way in hell congress would let us fade away as we were being push to finance people's dreams of home ownership, so the only other way to finance the business was through the subprime markets. This in our eyes was the only possibility because congress would have busted our ass if we didn't help finance america's dream of buying a home, so we had to do it.... Also we weren't f...ing allowed to NOT take the jacked borrowers from other institutions, so of course we were screwed....

I feel for Freddie and Fannie, they were the REAL stuck ones..... either way they were f....ed...