Fine Upstanding Bankers

[jlmaca]

It is no longer just whispers, conjecture, or rumors. The perpetrators are bold, and in your face. Fine upstanding bankers openly shaking down all of us. What do we do? Other than scream and holler a bit here and there....nothing. Or we ask them, oh so kindly, to forgo that $1M bonus for a year or so...till things blow over. Bernie Madoff rots in jail while the government sanctioned crooks are busy socking away the loot.

This short video clip details just one way to steal from the taxpayer...there are many more.

http://www.thinkbigworksmall.com/mypage/player/tbws/23088/1382274

[justbroke]

I really don't care about this video. That is precisely how banking works. The FDIC has never been designed to be "solvent" as there is no way they can insure and cover losses for a catastrophic bank failure involving even one major bank.

As someone who works hard to get a 5 digit bonus each year, it is actually part of my salary, just as it is for many bankers. I have 21% of my salary at risk, even though I still make well into 6 figures. It's just the way that it works. Those on commission depend even more on this. I use to get stock options as part of my compensation, but sense employment is "difficult" these days, the company doesn't need NQSOs to keep me around.

The real sad part, is that most of "working" America doesn't understand the way compensation works when you become a professional in certain industries. To the working poor, these seems highly unfair and just greed. However, it's from years of hard work, advanced degrees, working long and countless hours, and being one of the lucky 5% to have high paying jobs. I don't get paid overtime and I work the equivalent of a full-time job and a 20-hour/week part time job. That's just the normal days, and I sometimes work the equivalent of two full time jobs. When put into perspective... it may be a little more clear.

Now are there some individuals who are really overcompensated? Absolutely. However, these are the "CxO" level executives (not the level I am at), and their bonuses are tied directly to company performance. They are on "contracts" and you can't just ignore the contract when the company performs. (I no longer work under "contract" but did in my previous job. It included 5-digit annual "retention" bonuses as well as performance bonuses, and a without-cause separation payment.)

I won't defend the Madoff's and the like, but there are a lot of people out there working hard and have been for years. Many people choose their profession because of earning potential, not because they like that work.

[iv65536]

I think the OP was more upset about 8+-figure bonuses to the senior executives.

[StartingOver08]

The video was NOT about bonus payments.

The video is about the One West Bank puchasing the assets of Indymac FROM THE FDIC for 70% of the par value of the first mortgages and 58% on second mortgages PLUS the FDIC guaranteeing the loans in the case of default by the borrower. The guarantee includes payments to One West for 80% to 95% of the loss based on the amount of the ORIGINAL loan (not the 70% or 58% of the actual purchase price of the loan). So when the property forecloses or is sold thru a short sale ONE WEST makes a very large, actual profit. Not a loss. The video gives a very specific short sale example where One West makes $101,000 on the transaction.

On top of the above, in a short sale, One West made the borrower sign a promissory note for an additional $75k.

Take a few minutes and listen to the video.

[justbroke]

Take a few minutes and listen to the video.

I watched the video and while this is just more of the same in my book, I'm not getting too upset or enraged at what's been standard practice by some banks. I think my problem is more... I'm numb to it now. There's probably nothing you could tell me about the financial services industry that would shock me.

The FDIC arranges these "takeovers" all the time (SunTrust was just "given" a few banks in Florida), and the FDIC makes the deals sweet as they have to insure the insolvency of the receiver. Nothing new or alarming about that.