At first I wasn't too excited about the bonus issue with the bank employees, although as time has gone on I find my anger rising with regard to continued payouts to people working for broken banks. The big guys (BoA, C, et al) are broken if not technically broke. They would be insolvent and would have went the way of Lehman had TARP not been passed. I saw a thing last week that the average, the average, bonus was $400,000 for these executives for 2009.
Here is my thoughts about bonuses for their employees.
1. If a bank still has TARP funds, no payouts of bonuses, period. These bonuses can be deferred indefinitely until the bank pays back TARP. An employee which resigns to work for another bank gives up his deferred bonus.
2. TARP is "paid back" when the firm has repaid in full with interest equal to the average of the overnight rate (essentially 0%) and the highest rate they charge customers on their credit cards. Suck on that one for a minute.
3. No new employees can be hired with bonus clauses for TARP-dependent banks.
4. Any foriegn bank which chooses to do business in the US must abide by all regulations of the US (this means you, UBS). Any employees who are either US citizens or work in the United States for one day will be assessed income taxes that year by the IRS.
Some may say this tramples on the sanctity of contracts. I would counter that Obama and crew already blew that one away with the Chrysler and GM bankruptcies. There is a clear order in which parties get paid in a bankruptcy, but somehow Gettlefinger and the UAW was able to jump up in line.
Others within the banking industry say that not paying these bonuses would give foreign banks or non-Tarp banks the pick of the litter of employees. If foreign banks want these guys to do the same for them they did to the US and UK banking industry...have at it.
1985 Honda VF1000R, 1990 Ducati 851, 2008 YZ450F