Mullings An American Cyber Column By Rich Galen

US & Int'l Papers

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Billions in Bailout Bonuses

Friday October 31, 2008

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I'll wait ... This is not really a showtune, but after watching a month of CNBC ...

They used to tell me I was building a dream, and so I followed the mob,
When there was earth to plow, or guns to bear, I was always there right on the job.
They used to tell me I was building a dream, with peace and glory ahead,
Why should I be standing in line, just waiting for bread?

Once I built a railroad, I made it run, made it race against time.
Once I built a railroad; now it's done. Brother, can you spare a dime?
Once I built a tower, up to the sun, brick, and rivet, and lime;
Once I built a tower, now it's done. Brother, can you spare a dime?

-- Rich Galen

Hey! This is fun. Send me your favorite showtune lyrics. If I use it in the "I'll Wait" section you'll get a Mull-Shout-Out!

You might have noticed that we are at the end of October. That means we are two months away from the end of December which means that we are in Wall Street Bonus decision time.

According to the Wall Street Journal, this whole bonus thing is giving some Wall Streeters some pause to think.

In a sign that Wall Street is waking up to the political tempest over billions of dollars in year-end bonuses likely to be paid out at securities firms lining up for government infusions, top executives are in discussions to possibly cap their own compensation, according to people familiar with the situation.

Let's deconstruct that graf:

"Wall Street is waking up to the political tempest over BILLIONS OF DOLLARS IN YEAR-END BONUSES"

See? That's where Wall Street is wrong. They have no idea of what the "political tempest" is going to be if there are even TENS OF DOLLARS in year-end bonuses for the greedy, ego-centric, self-important, over-paid, under-performing, Wall Street goofballs who got us into this mess.

The Congress - the Democrat-controlled Congress - is coming back on November 17 for a lame-duck session. I would like those two geniuses who have been asleep at the switch for the past two years: Sen. Chris Dodd (D-Ct) and Rep. Barney Frank (D-Ma) to take an oath that they will enact legislation which forbids any Wall Street entity to pay bonuses if it has received a single dollar of taxpayer funds to keep the lights on, the doors open, and the limos rolling.

If you think this is a matter of a couple of extra bucks in Friday's pay packet, read this from the same WSJ article:

Since the start of 2002, Goldman Sachs Group Inc., Morgan Stanley, Merrill Lynch & Co., Lehman Brothers Holdings Inc. and Bear Stearns Cos. have paid a total of $312 billion in compensation and benefits. Bonuses generally account for about 60% of total Wall Street compensation, meaning that the five firms paid out an estimated $187 billion in bonuses.

Bear Stearns is now the foster child of J.P. Morgan Chase. Merrill Lynch was swallowed whole by Bank of America. Lehman Bothers went belly up and has disappeared. And last month, Goldman and Morgan, "the last major American investment banks remaining" according to the New York Times "asked the Federal Reserve to change their status to bank holding companies."

The five gigando investment banks - they of the multi-million dollar condos and helicopters to the Hamptons - are no longer. They are gone. Finished. Defunct. Kaaaa-put.

But, the fiction which is Manhattan generally and Wall Street in particular, continues. Again to the WSJ piece, "lower-level traders and investment bankers � could get plucked away by rival firms if compensation practices are significantly altered."

Let me see if I understand the logic of Wall Street.

If I worked for Goldman or Morgan and made investments - let's call them bets - on things like a Zillion dollars in worthless mortgages (as well as credit card debt, boat loans and who knows what-all) which are the equivalent of having bet the kid's college fund on the Tampa Bay Rays in Six thus causing a complete collapse of the world financial system I have to get a really big bonus or some other company will "pluck" me away?

Why wouldn't Goldman or Morgan be more likely to press a tenner into the palm of my hand for cab fare and tell me to keep in touch?

Dear Mr. Mullings:

You are only demonstrating your unmitigated lack of sophistication in the area of big-time finance.
Signed,
The Mitigated and Sophisticated Financial Investors Association of Lower Manhattan
Yeah, well, my 401k had a total value at the start of this year of about $37.50. It was, and still is, all in cash and, thus, is today worth $37.50. How's yours doing?

As a Public Affairs Professional I have two words for any Wall Street firm which thinks it is going to convince the Members of Congress who represent taxpayers in North Dakota or South Carolina or anywhere else that bonuses are necessary to retain traders: Dubai Ports.

On the Secret Decoder Ring page today: A link to "Brother Can You Spare a Dime," and to the Wall Street Journal piece which got my blood boiling. Also a rare context-appropriate Mullfoto and a Catchy Caption of the Day.

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