Tax on retention bonus
WASHINGTON (AP) – The House is scheduled to vote today on a bill that
would levy a 90 percent tax on bonuses paid to employees with family
incomes above $250,000 at companies that have received at least $5
billion in government bailout money.
Didn’t C and BAC both get over $5 billion in bailout money? Will the retention bonuses paid to bac-merrill and citi-smith
barney reps be Fed taxed at 90%?
That is the dumbest freakin thing I have seen them do yet. First of all, why is it that people that make under 250K are somehow special? What if you make 85K and your wife makes 200K, now YOU have to get penalized for your bonus? What if you took the job with the explicit understanding that the bonus was the primary reason you took the job?
This is absolutely ludicrous. They are not punishing "corporate executives" or the people that got us into the mess (otherwise, every Senator would have their entire SALARIES taxed at 90%), they are punishing good, hard-working people, that may happen to earn a lot of money. Here we go again.....wealth re-distribution. "F" all of you that make too much money. When we elected Obama, even the most conservative people couldn't have imagined a 90% income tax....but we got what we (not me) voted for.my biggest beef with the whole $250K mark is that it is not a given that someone earning $250K is anywhere near “rich.” that $ amount in iowa/wisconsin is nowhere near the same value for someone living in larger metropolitan areas like nyc/chicago.
the worst part of this IDIOCY is that there are good people at each of these companies that had nothing to do with the downfall. who went about their daily business in the proper fashion, and work hard to put food on the table just like everyone else in this country. they count on this money to live and provide just like the welfare mom counts on her stamps to do the same.
why are these people being punished? just remember, if this administration can do it to these people... don't think it has not (or will not) cross their minds to do it to others in the private sector. all they need is a political reason.they count on this money to live and provide just like the welfare mom counts on her stamps to do the same.
Val- I want some of whatever your smokin dude. Give me a flippin break equating someone who gets a 1M bonus to a welfare mom. Xanax will help bring you back to reality...Why are these people being punished? Because congress doesn’t understand the concept of bonuses. They get paid regardless of how they perform. If they were paid by way of a bonus package not only would they not make any money, they’d have to pay us.
As Will Rogers said "Thank god we're not getting all the government we're paying for."[quote=footsoldier]they count on this money to live and provide just like the welfare mom counts on her stamps to do the same.
Val- I want some of whatever your smokin dude. Give me a flippin break equating someone who gets a 1M bonus to a welfare mom. Xanax will help bring you back to reality... [/quote] i knew this would surface - the point is not a dollar to dollar comparison, rather that everyone has their own standard of living that is built into their income and what that income will provide for their families. is a $1 million dollar bonus outrageous for those persons who ruined their company and facilitated this economic meltdown - absolutely. but not everyone who got that $1 million OR whose "family income is over $250k" (and did not get a $1 million bonus) was part of that circle of people. they are unjustifiably being punished IMHO - 90%!!!!! this entire scenario is exactly why our government has NO business running businesses.F*%^ Obama and everyone who voted for him. $250k isn’t enough to make a god damn mortgage payment anywhere around me. I think he should pay 90% taxes on the “forgiven” rent he’s getting while living in the White House and on everything over $100k he makes.
It’s too late to debate the bonuses for companies that receive government assistance. How anyone can justify a bonus (not wages) to an employee when the ship is ready to sink just doesn’t pass the smell test and never will.
Bonuses are generally not guaranteed are they? If they are maybe they shouldn't be. Your argument about government intervention is completely valid, except for one minor issue. They needed the money in order to continue and NO ONE was willing to lend them a dime more. I agree our govermnent shouldn't be running business, and I also believe that allowing these firms to go bankrupt would have been a better scenario over the long haul. The problem is that no one wanted to give the market time to correct itself. It has been too painful for many already. So we reap what we sow and now we have to deal with the aftermath....and it isn't a pretty picture as you describe. Let's not forget what caused us to go into this quagmire.If I read correctly some of the bonuses went to folks who had already left AIG. Is this not insane? Where is my Makers Mark...and ice...
Foot, your argument is flawed. If your argument were true, then why not just stop paying everyone at AIG? And at BAC? and at C? What’s the difference between the contractual bonuses they were offered before TARP, and their salaries? It’s all compensation. TARP money was meant to keep the companies solvent. Part of running the companies is paying them what they agreed to pay them.
I don't know who you operate through, but let's just say LPL for argument's sake. What if the government came out tomorrow and said that getting an 80% payout on commissions is unacceptable. In fact, anything paid out over 50% will be taxed at 90%. And it's retroactive back to all of 2008. But just at LPL. And RJ. And Commonwealth. They are not trying to take back the bonuses because these people got paid. They are doing it to try to prove to the American people that they are in control of the situation. And not doing a very good job of it.So, if you performed a job and, did it well, from 2006-2007, then in Jan 2008 you were given a contract that said because of your performance we’re giving you your million dollar bonus payable in 1 year (whether you’re here or not because it’s based on the year prior), why the hell should you not be entitled to take that bonus? Why should the weight of the firm’s failure rest on your shoulders. Are you the one at fault? Likely not. Should your family suffer because someone else screwed up (by the way, those people that did screw up got plenty of bonuses and didn’t have to wait a year for them).
***I’m just speaking hypothetically here. I’m sure someone the people who got these bonuses screwed up the company and some did not. But let’s be realistic.
I just read that some forms of the bill will levy the tax half on the company, and half on the individual. Isn't ultimately like we are charging ourselves for those bonuses?
-Government sends money to AIG from taxpayers -AIG sends money to employees in form of bonuses -Government then asks for a large portion of money that go out in bonuses to be taxed -AIG doesn't have the money, otherwise government wouldn't be sending taxpayer money. AIG uses taxpayer money to pay back tax payers. I hope I am wrong or unsophisticated with this. Otherwise, I think it is pretty awesome.[quote=B24] Foot, your argument is flawed. If your argument were true, then why not just stop paying everyone at AIG? And at BAC? and at C? What’s the difference between the contractual bonuses they were offered before TARP, and their salaries? It’s all compensation. TARP money was meant to keep the companies solvent. Part of running the companies is paying them what they agreed to pay them.
I don’t know who you operate through, but let’s just say LPL for argument’s sake. What if the government came out tomorrow and said that getting an 80% payout on commissions is unacceptable. In fact, anything paid out over 50% will be taxed at 90%. And it’s retroactive back to all of 2008. But just at LPL. And RJ. And Commonwealth.
They are not trying to take back the bonuses because these people got paid. They are doing it to try to prove to the American people that they are in control of the situation. And not doing a very good job of it.[/quote]
Nicely worded B24.
I am not sure that you can surmise that anyone did their job well in 06-08 if the company ran itself into the ground. If they were doing that well why not pay the gov back and pay their bonuses out of profits. Oops there weren’t any because they strayed into territory with great risk associated and lost. Maybe we are closer to the same side, but I just can’t get my hands around paying a bonus of a dollar, if the company is bleeding.
Again...pay a bonus for performance i.e., the company earned x therefore we are paying you y. But if you defer it to a different year and the company is now not profitable....there in lies the problem ,no money to pay the obligation. Maybe bonuses should be treated like deferred comp. The public at large can't and probably won't ever accept this practice. It comes back to the smell test.[quote=footsoldier]I am not sure that you can surmise that anyone did their job well in 06-08 if the company ran itself into the ground. If they were doing that well why not pay the gov back and pay their bonuses out of profits. Oops there weren’t any because they strayed into territory with great risk associated and lost. Maybe we are closer to the same side, but I just can’t get my hands around paying a bonus of a dollar, if the company is bleeding.
Again...pay a bonus for performance i.e., the company earned x therefore we are paying you y. But if you defer it to a different year and the company is now not profitable....there in lies the problem ,no money to pay the obligation. Maybe bonuses should be treated like deferred comp. The public at large can't and probably won't ever accept this practice. It comes back to the smell test. [/quote] Foot, AIG has many divisions so let's just take this example - you are a manager in the life/health division, said division had nothing to do with the deritives/CDS's, etc, that ultimately got AIG, as a company, in trouble. under your leadership, the life/health division prospered, thus you were to be given a contractually oblligated bonus. are you telling me that you would not expect your bonus "because the company ran itself into the ground", but was bailed out by Uncle Sam to the tune of $170 Billion? I think most in that scenario would expect that bonus as contractually obligated exactly BECAUSE of your performance(although I agree with you that bonuses moving forward may need to be restructured). Bankruptcy would have solved all of this, but NOOOOOOO, our wondeful politicians, in the heat of a Presidential election year just could not resist. Regarding your other post, I agree with most everything you stated there. Hopefully your Makers is in the sameplace as my Woodford Reserve - at home, in the bar, awaiting my arrival.What about the Merrill,SB, and MS brokers who have already spent their bonuses…and does this mean everyone goes to UBS and Janney for the "recruitment bonus???
I told you we agree more than disagree...
Now if Geithner would resign maybe we can at least have someone running treasury who pays his taxes on time. Why does my nose turn up so often? Another test where the shnoz twitches.Article 1, Section 9 of the US Constitution
http://www.constitution.org/constit_.htm GO![quote=Valhalla]Article 1, Section 9 of the US Constitution
http://www.constitution.org/constit_.htm GO![/quote] I assume you're referring to the "bill of attainder," as in: A bill of attainder (also known as an act or writ of attainder) is an act of legislature declaring a person or group of persons guilty of some crime and punishing them without benefit of a trial. Bills of attainder are forbidden by Article I, section 9, clause 3 of the United States Constitution. Good call, that's exactly what it is.[quote=now_indy][quote=Valhalla]Article 1, Section 9 of the US Constitution
http://www.constitution.org/constit_.htm GO![/quote] I assume you're referring to the "bill of attainder," as in: A bill of attainder (also known as an act or writ of attainder) is an act of legislature declaring a person or group of persons guilty of some crime and punishing them without benefit of a trial. Bills of attainder are forbidden by Article I, section 9, clause 3 of the United States Constitution. Good call, that's exactly what it is. [/quote]Yeah the Demorats really believe in the US Constitution
[quote=feebasedrep]What about the Merrill,SB, and MS brokers who have already spent their bonuses…and does this mean everyone goes to UBS and Janney for the "recruitment bonus???[/quote]
I guess you missed this
FORBES
Brian Wingfield and Joshua Zumbrun,
<span =“date”>03.17.09, 07:00 PM EDT
Sen. Robert Menendez, D-N.J., expanded the battlefield Tuesday, calling
on the Obama administration to halt $3 billion in similar payments to
financial advisers at <span =“tickerlinx”>Morgan Stanley
(nyse:
MS -
news
-
people
).
“The retention payments at AIG and Morgan Stanley are both essentially
the same form of extra compensation, and they are not fully necessary
to retain executives in this tough financial market,” Menendez told
Treasury Secretary Timothy Geithner
in a letter. He’s called on the administration to use “every legal
means available” to stop the payments, which are scheduled to be
awarded in January 2010.
If you read the legislation it states it will not apply to commissions. They could rewrite our contracts to call them commissions paid?? There will be loopholes.
They cant say commissions paid? That would be "paid" and no chance for firms to recover. This would be an amazing mess with getting back up front deal money also. We brought over a 5 person team of 2.5 million in Jan. They were going nuts today worried about what it would mean, manager was telling them it could get dicey. Nightmare coming up for 1000's of reps who got money in 2009, or due money down the road on backend deals.If you read the legislation it states it will not apply to commissions. They could rewrite our contracts to call them commissions paid?? There will be loopholes.
Easy fix…deferred commissions.
1,000,000 worth of deferred commish!! My bet is they say "sorry cant give money now"...with no bonus deals for recruits it wont hurt them.. Think the way I read it, the pikers are good to go, because they fit under the 250K income including bonus threshold!!Easy fix…deferred commissions.
They are forgivable “loans”.
You “earn” it through production and time with firm in future.
Hell, one thing you can say about us is we earn our MF money.
This proposed legislation, if passed by the Senate and signed by the president as currently written, will surely be tested in the courts. I believe the courts would strike it down as illegal for a number of reasons, many of which are being discussed in various blogs and talk shows. The ultimate fall guy will be Geitner, who stated that he takes full responsibility for the loophole that allowed for the bonus payments. The President along with the liberal congress is going too far with their socialist agenda and it will backfire on them. It’s going to take time…but this will eventually come back and bite them hard.
[quote=now_indy][quote=Valhalla]Article 1, Section 9 of the US Constitution
http://www.constitution.org/constit_.htm GO![/quote] I assume you're referring to the "bill of attainder," as in: A bill of attainder (also known as an act or writ of attainder) is an act of legislature declaring a person or group of persons guilty of some crime and punishing them without benefit of a trial. Bills of attainder are forbidden by Article I, section 9, clause 3 of the United States Constitution. Good call, that's exactly what it is. [/quote] yes. thank you. going to be interesting to see how this plays out in the courts over the next few months.This is all a big distraction from dealing with the real problem that Obama and minions now have in their lap re: buffoons in the legislative branch that speak for their party and are driving the agenda right now coupled with the farce at the Treasury Dept...the tax is unconstitutional and won't pass, simple truth....
This is an anti-business, big government administration. We'll see how voters feel about it next year and 2012...The Revolution Begins.Morgan Stanley should scrap $3 billion bonuses: senator
Wed Mar 18, 2009 7:01am EDT Email | Print | Share | Reprints | Single Page [-] Text [+]
By Jonathan Stempel
NEW YORK (Reuters) - Morgan Stanley (MS.N) should be barred from paying as much as $3 billion to entice brokers to stay when the company and Citigroup Inc (C.N) merge their brokerage operations, U.S. Senator Robert Menendez said.
In a Tuesday letter to U.S. Treasury Secretary Timothy Geithner, Menendez, a New Jersey Democrat, urged the government to use “every legal means available” to stop the payouts as long as Morgan Stanley receives support from taxpayers.
“These payouts constitute misuse of taxpayer money,” Menendez wrote. "Some on Wall Street don’t understand that they, more than anyone, cannot be permitted to carry on with business as usual. These times demand shared sacrifice."
The senator said the payouts, like bonuses paid at troubled insurer American International Group Inc (AIG.N), are “essentially the same form of extra compensation” and are "not fully necessary to retain executives in this tough financial market."
Morgan Stanley has taken $10 billion and Citigroup $45 billion from the government’s Troubled Asset Relief Program (TARP).
Christy Pollak, a Morgan Stanley spokeswoman, said each award is “not a bonus,” but is a nine-year “forgivable loan” that must be paid back if a broker leaves sooner.
“The program is necessary because our financial advisers are being poached by competitors,” Pollak said. The cost is covered by operating revenue of the joint venture and not government TARP money."
About 6,500 of the venture’s 20,000 brokers are expected to be eligible for awards, which would be made in 2010 and 2012.
Retention awards are paid to keep brokers from defecting after a company is bought. Financial companies getting taxpayer money are facing heavy pressure from Congress and regulators to limit pay.
“If you want this venture to succeed, then this type of award is necessary,” said Danny Sarch, founder of recruiting firm Leitner Sarch Consultants Ltd in White Plains, New York. "If the awards are cut back, they will have dramatically more attrition than they would otherwise. The rest of the industry would have a field day in recruiting."
Under the payout plan, brokers who generate at least $1.75 million in revenue a year may get awards equal to 105 percent of their annual production, a person familiar with the plan said last month. The person was not authorized to publicly discuss details of the plan.
Wells Fargo & Co (WFC.N), which bought Wachovia Corp at the end of 2008, said last month it will not issue retention awards to about 14,600 brokers from Wachovia’s brokerage arm, Wachovia Securities.
Morgan Stanley is paying Citigroup $2.7 billion for an initial 51 percent stake in their venture, and may take full control after five years. A closing is expected this summer.
A Treasury Department spokesman was not immediately available for comment.
(Reporting by Jonathan Stempel, editing by Gerald E. McCormick and Jeffrey Benkoe)
wow. anyone thinking about taking a check should probably jump. we are under siege.
i guess this crap will make d*** head Stumhp and MF WFC look smart
Who would pay you to leave, that would be a bonus?? WFC, BAC, MS, SB, BAC can not give a bonus..Guess UBS could be the only one who could recruit, could get crowded and would think they could give guys 50% if they wanted and people would have no choice but to say where do I sign??Morgan Stanley should scrap $3 billion bonuses: senator
Wed Mar 18, 2009 7:01am EDT Email | Print | Share | Reprints | Single Page [-] Text [+]
By Jonathan Stempel
NEW YORK (Reuters) - Morgan Stanley (MS.N) should be barred from paying as much as $3 billion to entice brokers to stay when the company and Citigroup Inc (C.N) merge their brokerage operations, U.S. Senator Robert Menendez said.
In a Tuesday letter to U.S. Treasury Secretary Timothy Geithner, Menendez, a New Jersey Democrat, urged the government to use “every legal means available” to stop the payouts as long as Morgan Stanley receives support from taxpayers.
“These payouts constitute misuse of taxpayer money,” Menendez wrote. “Some on Wall Street don’t understand that they, more than anyone, cannot be permitted to carry on with business as usual. These times demand shared sacrifice.”
The senator said the payouts, like bonuses paid at troubled insurer American International Group Inc (AIG.N), are “essentially the same form of extra compensation” and are “not fully necessary to retain executives in this tough financial market.”
Morgan Stanley has taken $10 billion and Citigroup $45 billion from the government’s Troubled Asset Relief Program (TARP).
Christy Pollak, a Morgan Stanley spokeswoman, said each award is “not a bonus,” but is a nine-year “forgivable loan” that must be paid back if a broker leaves sooner.
“The program is necessary because our financial advisers are being poached by competitors,” Pollak said. The cost is covered by operating revenue of the joint venture and not government TARP money."
About 6,500 of the venture’s 20,000 brokers are expected to be eligible for awards, which would be made in 2010 and 2012.
Retention awards are paid to keep brokers from defecting after a company is bought. Financial companies getting taxpayer money are facing heavy pressure from Congress and regulators to limit pay.
“If you want this venture to succeed, then this type of award is necessary,” said Danny Sarch, founder of recruiting firm Leitner Sarch Consultants Ltd in White Plains, New York. “If the awards are cut back, they will have dramatically more attrition than they would otherwise. The rest of the industry would have a field day in recruiting.”
Under the payout plan, brokers who generate at least $1.75 million in revenue a year may get awards equal to 105 percent of their annual production, a person familiar with the plan said last month. The person was not authorized to publicly discuss details of the plan.
Wells Fargo & Co (WFC.N), which bought Wachovia Corp at the end of 2008, said last month it will not issue retention awards to about 14,600 brokers from Wachovia’s brokerage arm, Wachovia Securities.
Morgan Stanley is paying Citigroup $2.7 billion for an initial 51 percent stake in their venture, and may take full control after five years. A closing is expected this summer.
A Treasury Department spokesman was not immediately available for comment.
(Reporting by Jonathan Stempel, editing by Gerald E. McCormick and Jeffrey Benkoe)
wow. anyone thinking about taking a check should probably jump. we are under siege.
i guess this crap will make d*** head Stumhp and MF WFC look smart
Obama administration is using this as another oppurtunity to get the masses all fired up at wall street and the wealthy.
they knew about these bonuses for months and congress even agreed to them.
Obama administration wants to pass laws so they can tax certain groups at crazy levels. They are not doing this to get back at AIG. They are doing this to set a precedent for the future.
This is socialism. The government will be able to pick certain companies and certain people to tax at special rates.
There needs to be a serious revolution in this country. Capitilism is going away at a very, very fast pace.
I don’t agree with AIG getting bonuses like this when they got that much money, but the precedant that is about to be set is unbelievable.
These stupid idiot liberal congressmen jerk offs.
john mack will give that money back soon.
mack is the man
[quote=Hydeho] [quote=feebasedrep]What about the Merrill,SB, and MS brokers who have already spent their bonuses…and does this mean everyone goes to UBS and Janney for the "recruitment bonus???[/quote]
I guess you missed this
FORBES
Sen. Robert Menendez, D-N.J., expanded the battlefield Tuesday, calling on the Obama administration to halt $3 billion in similar payments to financial advisers at Morgan Stanley (nyse: MS - news - people ). "The retention payments at AIG and Morgan Stanley are both essentially the same form of extra compensation, and they are not fully necessary to retain executives in this tough financial market," Menendez told Treasury Secretary Timothy Geithner in a letter. He's called on the administration to use "every legal means available" to stop the payments, which are scheduled to be awarded in January 2010.
[/quote] I'm just glad that Senator Menendez knows that payments "are not fully necessary to retain executives." He must be a genius. He probably knows just how many miles per gallon are "necessary" for my car to get, and just how much water is "necessary" to flush my toilet, and just how many calories are "necessary" in my BigMac, or just how much money is "necessary" for me to make, or just how much government cheese is "necessary" for my family ... These guys must have some type of God syndrome, where they think their opinion is fact. I can't wait until 2010, and some of these goobers will get a wake up call. Chris Dodd, enjoy your two last years in the Senate.
congressman should have to pay back all of the politcial contributions from companies that got tarp funds. the clawback should go back 10 years.
if every congressman returns every nickel via campaign contributions received from tarp recipients immediately in a single lump sum, this would almost be palatable. the likelihood these crooks see their frivilous law apply to themselves is nil.
keep in mind that this legislation renders insolvent any contract ever written. the impact is beyond the scope of imagination. the usa is a banana republic in the making and civil war may be the end result. at least you won't have to pay your bills anymore since the contract is irrelevent... worst presidential administration in history and not even 2 months in office...congressman should have to pay back all of the politcial contributions from companies that got tarp funds. the clawback should go back 10 years.
good call
I guess Merrill knows the proper palms to grease since this proposal would not affect their bonuses since it occurred before Dec. 31. How simple it would be for the affected firms to take the money back and say it wasn’t their fault. If you recently moved to a firm how would you explain to your clients that you are moving their accounts again? I guess you would just tell them that the $1 million plus you recvd was taken away. NOT
What a sweet deal for these firms. Have you ever thought that these firms may be secretly backing this legislation behind closed doors?
Just food for thought.
[quote=Apollo 13] I guess Merrill knows the proper palms to grease since this proposal would not affect their bonuses since it occurred before Dec. 31. How simple it would be for the affected firms to take the money back and say it wasn’t their fault. If you recently moved to a firm how would you explain to your clients that you are moving their accounts again? I guess you would just tell them that the $1 million plus you recvd was taken away. NOT
What a sweet deal for these firms. Have you ever thought that these firms may be secretly backing this legislation behind closed doors?
Just food for thought. [/quote]
it is coming. a reason for them all to stop. UBS will be only one and deals will drop big time. WFC started it
Take my retention bonus!
There will be civil unrest. Mark my words!OK, I stayed up late to see the Prez with Leno. It’s clear that Washington libs have our industry in their crosshairs. He said that AIG is a bunch of crooks that should not be paid, ML guys should go to jail, and college students should consider science and engineering rather than investment banking. The Prez indicated the entire problem boils down to Wallstreet greed. WHAT A BUNCH OF BULL sh*t! When are they going to talk about the decision in the 1990’s to loosen lending standards to low income people and have the loans subsidized by GSE’s like Fannie and Freddie? Meanwhile when the GSE’s were in trouble, blow me barney frank said all was OK. And what about Clinton & Rubin repealing Glass Steagall which allowed the banks to buy the toxic crap created by bad legislation. And what about the fact that derivatives and credit default swaps were traded in unregulated markets because of government legislation. Meanwhile, the SEC did not have the balls to bring back common sense rules such as the uptick rule or jawbone FASB to eliminate or loosen mark-to-market accounting. I am sick and tired of hearing DC people point their lying, incompetent fingers at us! We have GOT to fight back!!
preach on brother!OK, I stayed up late to see the Prez with Leno. It’s clear that Washington libs have our industry in their crosshairs. He said that AIG is a bunch of crooks that should not be paid, ML guys should go to jail, and college students should consider science and engineering rather than investment banking. The Prez indicated the entire problem boils down to Wallstreet greed. WHAT A BUNCH OF BULL sh*t! When are they going to talk about the decision in the 1990’s to loosen lending standards to low income people and have the loans subsidized by GSE’s like Fannie and Freddie? Meanwhile when the GSE’s were in trouble, blow me barney frank said all was OK. And what about Clinton & Rubin repealing Glass Steagall which allowed the banks to buy the toxic crap created by bad legislation. And what about the fact that derivatives and credit default swaps were traded in unregulated markets because of government legislation. Meanwhile, the SEC did not have the balls to bring back common sense rules such as the uptick rule or jawbone FASB to eliminate or loosen mark-to-market accounting. I am sick and tired of hearing DC people point their lying, incompetent fingers at us! We have GOT to fight back!!
this would only make sense in reality, which unfortunately is not where career DC politicians live.congressman should have to pay back all of the politcial contributions from companies that got tarp funds. the clawback should go back 10 years.
How about someone on this board who is politically savvy, and doesn’t mind giving up a good career, run for office? Then, we can all jump on board and support that person for office. I’m sure a board full of salesmen (probably the ultimate salesmen) can get someone elected if they choose. We do have connections to some wealthy and powerful people as a whole. Just a thought.
I’ll throw all of my support behind someone who is willing to fight for us.
Here is a post on March 8th:
You hope this is not true, but it’s possible. Ever notice the Obama commercials? he’s always taking a jab at business. expressing that good things are not created in skyscrapers. health care should be non for profit industry. the financial services industry is at the height of irresponsibility. there should be a windfall tax on the oil companies,
specific quotes:
"a corporate culture rife with inside dealing; questionable accounting practices and short-term greed;
"the real problem is not that someone who doesn’t look like you might take your job; it’s that the corporation you work for will ship it overseas for nothing more than a profit."
he stands for socialism, but that word never comes out of his mouth. He writes a several hundred page book and doesn’t mention that dirty word once.
once things meltdown more, he’ll say see this is why we need complete CHANGE because the old way wasn’t working[/quote]
Things are getting much worse and now Obama is egging on the general public to despise wall street. Now they want to target certain people at certain companies. The AIG thing is a tool for them to target certain groups in the future. America needs to wake up!! This is serious sh*tx.
Congress wants ta tax dem at 90%…Which leaves 10% fo’ state an’ local taxes
Lets not forget ta mention Congress usin’ tax policy as uh financial weapon
Ya’ll is mad stupid
Friend sent me this, was pretty good:
http://xkcd.com/558/
Shouldn't the leaders of our firms stand up and call BS. Take a stand for America.
Instead they are hiding and butt kissing.
You have to see the writing on the wall…This is a gamechanger for our industry. We are going to be under more scrutiny than ever and bonuses are going away or severly cutback or monitored by the government. We asked for this by our own stupidity, by putting our collective heads in the sand, and allowing excesses to escalate out of control.
Any CEO who stands up against the masses (regular folk can't get their hands around the concept of 165 Million to AIG and 3+Billion in bonuses for Merrill, 3B for MS/C merger... and the list goes on) now that Washington is dictating to Wall St, the CEO's are hunkering down becasuse they know they can't win in the court of public opinion. A whole new world. Get used to it.How is everybody liking Obamanomics now?
this country is no longer a safe place to do business. Contracts mean nothing. Mortgages are being rewritten. Employment contracts are being rewritten. These things are being done after the fact. If you are a group not liked by federal gov watch out. This is only the beginging.
While we're at it, we'd better get used to the idea of a much larger bailout when AIG fails because it's being run by $60,000/year staff accountants. Get used to a congress that passes laws without any thought about unintended consequences. Let's also get used to a congress that completely disregards the constitution when crafting opinion-poll-driven legislation. Stupid. And disgusting.A whole new world. Get used to it.
While we're at it, we'd better get used to the idea of a much larger bailout when AIG fails because it's being run by $60,000/year staff accountants. [/quote][quote=footsoldier]A whole new world. Get used to it.
They SHOULD put $60,000 a year staff accountants in charge. They'd do a better job than the morons who effed up an insurance company. I mean, how can you not make money in insurance.
The only people dumber are the bankers. Look what they did: Borrow money at 2 percent. Lend money at 5 percent. Lose $2 trillion. Ask for it back, with bonuses.
The way I look at it is this…Did your state get a bailout or accept stimulus money? If they did then some of the college coachs (they are state employees at public institutions) should give some of their bonus money back…I am huge sports fan but don’t mess with my money.
unfortunately, no bonuses would have been paid for C, AIG, FNM, FRE, MER, and others if the government wouldn’t have stepped in and made major contributions of capital…i have no qualms with a huge shareholder or capital holder calling the shots one way or the other.
you guys don’t like it? tough sh&%…no one any executive who received a bonus at a bailout firm shouldn’t have it taken back. and no, I don’t consider FAs executives…mgmt made their own beds, bankers made their own beds…if they don’t have one to sleep in now, tough titty said the kitty
Does anyone know for sure if the FA recruiting deals are going to be included in the 90% tax plan? If so, how would they be calculated? Would it be just the current years repayment of the forgivable loan that would be taxed at 90%, or would the taxable amount be based on the full amount we received upfront which is to be forgiven over the next 6 years. Either way it sucks but there is a huge difference. Also if your current years forgivable portion and annual income are under 250k are you excluded? Take from the rich, give to the poor. Does the IRS tax the people at 90% on the Freddie and Fannie “Government Money” that they barrowed with their mortgages/credit cards/home equity lines, and then failed to pay back. No, they try to figure out a way to renegotiate their loans or even reduce the principal amounts owed, because apparently it was all the banks fault that they took their home equity line of credit money and went out and bought a new Hummer. Now that is free money, and that is what should be taxed at 90%. However, they have a better idea, lets put our country further in debt, lets flood the banking system with tarp money, lets lower interest rates to historic lows, lets create more dept for the county and artificially try to lower interest rates though buying treasuries, so that we can get everything back on track, and consumers and our country can continue to dig deeper and deeper holes. Lastly, lets hope that we will be able to tax the “rich” (that got us into this mess lol) enough, to repay all of our depts. What a crazy couple of years.
Don’t forget about the year end sales bonus for the top producers. We just got ours at Wachovia based on our A.G. Edwards fiscal year that ended February. It looks like that could fall under the legislation since that was paid the middle of March.
[quote=slouzcar]Didn’t C and BAC both get over $5 billion in bailout money? Will the retention bonuses paid to bac-merrill and citi-smith
barney reps be Fed taxed at 90%?
[/quote]
<span =“news_story_title”>…still not hearing anything specific out there regarding FA’s. What are firms <span =“news_story_title”>that received over $5B <span =“news_story_title”>and that have paid a retention, and/or longevity bonus in 09 <span =“news_story_title”>saying to their FA’s<span =“news_story_title”>?
<span =“news_story_title”>Courts Unlikely to Strike Down AIG Tax Law, Legal Experts Say
"general language affecting all companies receiving more
than $5 billion in federal bailout money. Bonuses for employees
at Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co.,
Goldman Sachs Group Inc. and Morgan Stanley would be affected. "
http://www.bloomberg.com/apps/news?pid=20601087&sid=aC_hgTeumc70&refer=worldwide
<span =“news_story_title”>Citigroup, Bank of America, JPMorgan Reassure Employees
http://www.bloomberg.com/apps/news?pid=20601087&sid=aPe8yIbgLpto&refer=worldwide
"The House bill would affect employees whose household
income is more than $250,000 at companies that received more
than $5 billion. JPMorgan took $25 billion as part of the first
round of infusions. Citigroup got $45 billion and agreed to
allow the government to become its biggest shareholder. Bank of
America, including Merrill Lynch, has received $45 billion in
cash and a backstop on $118 billion in assets. "
<span =“news_story_title”>
<span =“news_story_title”>
This bill will get watered down…it is unconstitutional…although I agree those who were directly involved with the CDO’s etc should give their bonuses back.
Financial Advisors had nothing to do with the problems. The retention bonuses are loan. When you leave your company and are recruited that is a different situation. You take risk..there is revenue and production that for various reasons you have to leave behind. That is why you are paid. It takes time to rebuild your business, and learn new systems, management etc. It is very different than a retention bonus for staying in your seat. I can see them possibly trying to tax the retention bonuses but that is a stretch. I have spoken to people on this and the recruitment situation would really be a long shot. It may be that the deals go down going forward because of the public scrutiny but to tax people who took the risk to leave their company and to go to another who had nothing to do with the problems should not happen. The law suits stemming from this would be unbelievable. These are loans and not bonuses. Maybe in the future the new retention packages and recruitment packages being offered would be structured as bonuses but they can't change the past structure.Retention bonuses are not loans. Recruitment packages are not loans. They are sums of money paid in exchange for a time commitment. They are structured with a loan backstop in case you do not honor the time commitment and for tax deferral purposes.
The real problem with bonuses is that it handcuffs the advisor for the period of the payback and then forces the advisor either to find a new firm who will pay recruiting bonus or the existing firm pays the retention bonus.
I have said it before and will ask again... How does this practice help the client or shareholder?[quote=footsoldier]The real problem with bonuses is that it handcuffs the advisor for the period of the payback and then forces the advisor either to find a new firm who will pay recruiting bonus or the existing firm pays the retention bonus.
I have said it before and will ask again... How does this practice help the client or shareholder? [/quote] Let me ask you the question, how does it hurt the client or the shareholder? Should brokers get paid less of the revenue they generate? Should the govt ban recruiting between firms? Should the govt ban free agency in sports to help keep ticket prices down? A lot of stadiums are built with "tax payer" money.First, footsoldier - get a job! Your obviously on the dole and have no idea about working for a living. You get paid to work - you generate $1 and the company pays you .40 cents - they take .60 - they pay you a bit to come over for the privilege of taking your .60 cents. If they don’t many others would love that .60 cents so they’d pay you.
The people that have jobs and generate value get paid for it. People that work for a living understand the concept…naturally you don’t. Anyway
Recent news story:
A growing number of healthy bank chains across the country are bailing out of
the $700-billion federal banking bailout program, saying it has tarnished the
reputation of banks that took the money and tangled them in unwieldy
regulations.
When the program began last fall, it was billed by
then-Treasury Secretary Henry M. Paulson as an investment in strong banks to
make them even stronger. (end of news article)
…And, there were no strings attached - just repayment and an interest rate.
Now that comrade Obama and his band of lackeys are in charge, those
loans come with a 90% tax on some of your key employees. I wonder how
much UBS would have paid for that legislation affecting every one of
its competitors.
Even though I disagree with the legislation to my core - all these
legislators salivating like starving dogs in front of fat steaks - and
that includes the republicans that are complicit – at the idea of
being able to pass a 90% tax on anyone - - welll…
I can’t help but feel real happy that one top person who shall remain
nameless - from a company that recently promised some retention for
some 5 months - promissing an announcement every two weeks or so - and
then canned it and told the troops to go sell financial plans when many
other alternatives had gone away - and then that person (among others)
gave themselves hefty multi-million dollar retention bonuses and then
bragged to a disheartened work force about how many top recruits they
recently bought with the billions of dollars they just saved in
retention - well that person - who shall remain nameless is probably
going to have to pay those millions of dollars he paid himself - right
back to the government and thus get nothing. How’s it feel?
So, what was said about the Nazi’s in Germany? Something like first
they came for one group - no bother to me. Then another group - well
who cares - no bother to me – then another group - well too bad - not
my problem - and then they came for me. So don’t think there not going
to tax recruitment bonuses - they surely will - would you anticipate
these thieves would look the other way at the potential for billions in
additional tax receipts! No way - you should have stayed at the firm
you were with – Barney Frank thanks you.
This is fear and conquer campaign. It’s designed to scare the hell out
of people so they will willing go along with something billed as a
cure. It’s a campaign to then make people dependent on goverment by SS
disability - SS payments - two years of unemployment insurance -
massive taxes on productivity - Food Stamps - Welfare and countless
other pay for people to be non-productive programs. Then take all
those people who are now helpless and make them vote for big
government.
It’s a curse and an opportunity - if you work through it - you have
less and less competition to think about. In my opinion there is huge
money to be made in difficult environments - you just have to take
advantage and think big.
I just spoke to an attorney and regarding the recruitment contracts- all payments are loans until they are earned each year according to the corresponding bonus payments.
You are only getting 1/7th (7 year contract) or 1/9 th (9 year contract) of the payment each year. There is a corresponding bonus that the firm pays each year which offsets the payment. But only when you get that bonus would you then be taxed - the tax would be split between the company and the employee. Not sure what that would be at this point. Most likely if this unconstituional and " far sweeping to the left" law passes then any company who could pay back TARP would do so as soon as they could. So maybe worst case is that if your company doesn't pay it back this year then next year you would be taxed on the bonus that you received that year. If banks can't pay TARP back and good talent can't be paid then they will leave or a new compensation structure will have to be devised with commissions? Of course anything can change and all laws and contracts seem to be void so who knows what will happen?I have a job. I run an indy shop. I don’t get bonuses unless I earn them. I don’'t run to the next firm for a check. I have been in this biz since 92 and what I see has made me conclude that they frankly deserve the regulation for their stupidity. I do agree that what the government is doing is ludicrous, creates serious precedents, but I can’t help but think if they had only self regulated themselves…none of this had to happen. Greed, stupidity and arrogance.
The mere fact you have to ask how it affects the client and the shareholder says it all. Take the money and run and who cares about profitability, who cares that client costs have to go up, do I have to remind you without clients we are out of business. Most clients I talk to think its reprehensible taking bonuses while requiring tax dollars to stay afloat. The sports analogy is always a fun topic to bring up. When confronted with the multi million dollar signing bonuses and the pompous behavior that they are getting what they deserved, my response is to make my statement by spending dollars elsewhere. I have been to several football games and a few baseball games, always as invited guest. I spend my hard earned dollars at college and high school games. The message of excesses has been heard and its only a matter of time before our industry has to react to it. It's my hope that just as the owners of professional sports are starting to recognize, that the owners of our industry reign in our excesses.Sometimes there are valid reasons why people need to move to another firm and it is a difficult thing to do but there are many times it is done for the right reasons.
So just because you are an indy doesn't mean that you wouldn't go to a different group or platform in the future. I do agree those that hop around for bonus money are wrong and the firms shouldn't hire them. One thing to remember is that when the Government starts targeting and regulating industries etc it doesn't just end there they will keep pushing as far as they can go. Maybe you'll realize that what they are doing with this bill is crossing the line and.... what will you say when they decide that professionals in the investment advisory business (this would include independents) are now capped at $250,000. If you make any more in that professional industry you will have a professional tax of lets say 15% more on any income you have so you will be taxed 39% plus another 15%. This is so they can redistribute the wealth. They did this to the doctors and attorneys when they made them professional service corporations which increased their taxes.Hopefully everyone is emailing their Senators this weekend.
[quote=footsoldier]I have a job. I run an indy shop. I don’t get bonuses unless I earn them. I don’'t run to the next firm for a check. I have been in this biz since 92 and what I see has made me conclude that they frankly deserve the regulation for their stupidity. I do agree that what the government is doing is ludicrous, creates serious precedents, but I can’t help but think if they had only self regulated themselves…none of this had to happen. Greed, stupidity and arrogance.
The mere fact you have to ask how it affects the client and the shareholder says it all. Take the money and run and who cares about profitability, who cares that client costs have to go up, do I have to remind you without clients we are out of business. Most clients I talk to think its reprehensible taking bonuses while requiring tax dollars to stay afloat. The sports analogy is always a fun topic to bring up. When confronted with the multi million dollar signing bonuses and the pompous behavior that they are getting what they deserved, my response is to make my statement by spending dollars elsewhere. I have been to several football games and a few baseball games, always as invited guest. I spend my hard earned dollars at college and high school games. The message of excesses has been heard and its only a matter of time before our industry has to react to it. It's my hope that just as the owners of professional sports are starting to recognize, that the owners of our industry reign in our excesses. [/quote] How do you know whether or not these people "earned" them. I am willing to bet that 99% of the employees who have gotten bonuses had nothing to do with creating subprime mortgages, or derivatives. Suppose you were an investment banker that brings in 100million in fees for merrill, should your bonus be taxed at 90%? Should retail brokers who generate millions in revenue for their firms (and probably get 35% at best if you include all fees generated) be taxed at 90%? These people have nontarp firm options, it is in the taxpayers interest to keep these people in their seats, keep them making money for their firms. Funny how the media and the politicians forget to mention all the taxes these people and firms have paid over the last several years.....this is a "high tech lynching."Another point, keep in mind that retention and recruiting bonuses are a business decsion these firms make. Take a look at the cost of hiring and training a retail broker. I would bet that the average wirehouse has 150k in salary and training expenses the first couple years, and many of these people will fail. It is much more profitable to pay a 500k producer to transfer, then to keep hiring trainees that fail, and many of the recruiting bonuses are based on the assets you transfer and the production you generate.
I don’t know why you’re all trying to convince FOOT of something that even child could understand. Do you really believe this will be the end of the “new” wave of anti success laws. I agree with BlueChip, everything that this country was built on…you remember the American dream, go to school, work hard, become succesful, and yes with success comes financial reward…well our goverment has decided how succesful we should be allowed to become…250k a year. If you’re naive enough to believe that this is all about TARP dollars then you need to read world history. Do you think as our “Govt” looks to overhaul healthcare…Doctors won’t come under the microscope…why should one doctor in Vt make 75k a year and some hot shot in NYC makes 1.5m a year…(they’re supported by tax payer dollars throught medical programs)lets average them out 250k a year, that sounds about right. As far as being an independent in this business, you have to be competley out of touch in a post MADOFF era if you think you’ll be allowed to operate the way you always have without so much regulation and oversight. That you probably won’t be able to afford to remain independent. They just haven’t gotten to you yet. Yes, our firms have taken TARP money…but how many 100’s of billions of dollars have these firms paid in taxes over the past 25 years…No one in Govt seemed to mind when the dollars where rolling in, no one even thought of asking how is all this revenue being created. As far as your point how does it help the client or the shareholder? My clients are successful business people, they don’t like what they’ve seen happen but the can make the distinction between what happend on the investment banking end and the recurring revenue of a financial planning practice…that has real value and those people SHOULD be paid. As far as shareholder, they will never recover thier “investment” if they are not allowed to keep quality people…yeah lets put some 65k a year bookeeper in that AIG spot. Wake up FOOT… the American Dream is being rewritten by our new Govt…oh yeah and their not interested in your opinion of what it should be…its not our choice anymore. Enough Said I’m Done.
Suppose over November, a hedge fund had stepped up to save Citigroup. Then, they declared that there would be no bonuses paid until their investment had started to bear fruit. Anyone have a problem with that?
These firms sent their top execs around the world with a cup in their hand, raising capital whenever and wherever they could at usurious rates. In October, the music stopped completely, and the only institution with deep enough pockets was the US Treasury. And as soon as you cash a government check, you’ll be answering to them.
Nobody’s telling you that you can’t make your $500,000+ a year. Or a million. Just don’t do it with bonuses at a firm that is hundreds of billions of dollars in hock to the US government. Up to me, these lousy firms wouldn’t have been allowed to survive at all. They were insolvent, functionally bankrupt. And if you really believe that Main Street America gives a damn about Wall Street execs having their bonuses cut, you need to get outside your bubble awhile.
If they didn’t survive, they wouldn’t get bonuses. However, in this case, the government elected to let them survive and the government did know in advance that these bonuses were going to be paid. The government can cap pay at $6/hour at AIG if they want to do so. What they shouldn’t be able to do is to take away income that was promised to employees after the fact. Employees took the job/ stayed at the job knowing that they would get paid. The alternative would have been to simply pay them much higher salaries instead of calling them bonuses. Of course, that would have let the employees quit at any time.
This is nothing more than the government wanting to make sure that AIG looks bad instead of them.Am I missing something about these bonuses?
If I work at AIG and I make $500,000 a year with half of this being a bonus, shouldn't I quit if I just got a $250,000 bonus since all of my income for the rest of the year is going to be 90%+ taxed?I work at AIG. I have a lazy wife. She sits on her butt eating bonbons. If I make $150,000 + $100,000 bonus, I will make $250,000 and won't have an issue.
My neighbor works at AIG. He has a hard working wife. She is a full time teacher to kids with disabilities and is a geriatric nurse. He makes $150,000 + $100,000 bonus. She makes $100,000. Since $100,000 of their income will be taxed at close to, or maybe more than 100%, doesn't she need to quit her jobs since the government is forcing her to work for free?Here is an interesting thought. If AGE brokers took the retention in monthly installments instead of the upfront, are these payments now subject to the 90% tax if the bonus puts the broker over $250m? Food for thought.
Q: What is the goal of Obama and Co. by whipping up all this ill will toward Wall St ?I know it's political, but what do they gain in the end by making enemies with the industry that enables entrepreneurship and will help return prosperity? It seems like political suicide if they succeed in suffocating the financial services industry- very surreal.
[quote=oldpruguy]
Q: What is the goal of Obama and Co. by whipping up all this ill will toward Wall St ?I know it’s political, but what do they gain in the end by making enemies with the industry that enables entrepreneurship and will help return prosperity? It seems like political suicide if they succeed in suffocating the financial services industry- very surreal.
[/quote]Entrepreneurship? Prosperity? LOL LOL LOL!!! Not on the radar screen for these commies. Until poor people figure out that voting for democrats has kept them poor, for decades, democrats will continue to create new poor people.
[quote=Blitzkrieg Bop] [quote=oldpruguy]
Q: What is the goal of Obama and Co. by whipping up all this ill will toward Wall St ?I know it's political, but what do they gain in the end by making enemies with the industry that enables entrepreneurship and will help return prosperity? It seems like political suicide if they succeed in suffocating the financial services industry- very surreal.
[/quote]Entrepreneurship? Prosperity? LOL LOL LOL!!!! Not on the radar screen for these commies. Until poor people figure out that voting for democrats has kept them poor, for decades, democrats will continue to create new poor people.
[/quote] People won't stand for this s%$^ if this is all they're about....4 years and out for BHO in that case. Even though we are increasingly becoming an entitlement society, most working voters still like the capitalism idea. The Southern Democrats will abandon him soon and his working majority will be gone.
You miss the point, if a hedge fund had put in the capital, it would want to retain the key employees so that they can get a return on their investment. Politicians are more interested in political points, since it is not their money anyway. Do you really think the govt will allow 500k+ salaries? The govt had a hand in the BAC/MER deal, the JPM/Bear deal, the WFC/WB deal, Paulson also told Goldman and the other big firms they had to take tarp funds. It is outrageous to now come and put them through this circus. A lot of employees who had no role in the crap that blew up, have seen their company stock drop dramitically, in some cases to next to zero. Haven't they been punished enough for stuff beyond their control? This is a media driven outrage, and politicians need a scapegoat. UBS and Duetche Bank have got to be loving this show. If this passes, they will have their pick of the top investment banker/analysts and traders. The regionals and UBS will have their pick of the brokers. Can you imagine, your MER/WS/MS recruiting bonus is taxed at 90% and your bonus from a regional is not. The recruiters will have a field day getting people to pay back their wirehouse bonuses and taking a new bonus from a non tarp firm. At the end of the day, I can't imagine this becomes law.Suppose over November, a hedge fund had stepped up to save Citigroup. Then, they declared that there would be no bonuses paid until their investment had started to bear fruit. Anyone have a problem with that?
These firms sent their top execs around the world with a cup in their hand, raising capital whenever and wherever they could at usurious rates. In October, the music stopped completely, and the only institution with deep enough pockets was the US Treasury. And as soon as you cash a government check, you’ll be answering to them.
Nobody’s telling you that you can’t make your $500,000+ a year. Or a million. Just don’t do it with bonuses at a firm that is hundreds of billions of dollars in hock to the US government. Up to me, these lousy firms wouldn’t have been allowed to survive at all. They were insolvent, functionally bankrupt. And if you really believe that Main Street America gives a damn about Wall Street execs having their bonuses cut, you need to get outside your bubble awhile.
[quote=oldpruguy]
Q: What is the goal of Obama and Co. by whipping up all this ill will toward Wall St ?I know it’s political, but what do they gain in the end by making enemies with the industry that enables entrepreneurship and will help return prosperity? It seems like political suicide if they succeed in suffocating the financial services industry- very surreal.
[/quote]Read some Karl Marx and you will understand whats going on. Does anyone else see a “Chevez” (sp) like turn in Washington with the Gray Shirts (1/2 black-1/2 white) going door to door trying to sign you up to back Socialism.
No, the point is that had the government not stepped in with over a trillion dollars–and counting–these firms would be gone. And instead of bitching about whether or not bonuses over $250,000 would be taxed, every single person in every single branch in the country would be looking for another job.
Suits me fine to have no government involvement at all. No money, no heavy hand, no late-night emergency meetings between the heads of these investment and money-center banks and Treasury and Fed officials. But that cuts both ways. The only institution on planet earth that is collectively more stupid than Wall Street is the dumbasses who sit on those Congressional committees, and they happen to be the ones cutting the checks your way.
I know a lot of financial advisors who believe we should let GM go bankrupt. In fact, I do. But it’s a whole lot easier for an FA to get a fresh start after leaving Lehman or Bear or Merrill or MS or SB, than it is for a guy whose work experience involves screwing on bumpers for trucks nobody wants. You have a book of business? Leave, take your clients with you, and quit expecting taxpayers nervous about their own $45,000 jobs to be concerned about your $500k retention bonus to keep you at a bankrupt company for another year or two.
“No, the point is that had the government not stepped in with over a trillion dollars–and counting–these firms would be gone. And instead of bitching about whether or not bonuses over $250,000 would be taxed, every single person in every single branch in the country would be looking for another job.”
No, that isn't the point. As part of the bailout deal, something could have been done to cut/stop the bonuses. At that point, employees could have chosen to keep working or quit their jobs. An, after the fact punitive tax, is nothing more than government theft. People were working for free, or for substantially lower wages, but didn't know it. What's next...a 90% tax paid on all 401(k) balances of over $250,000? It makes sense since the taxpayers are going to be giving these people social security. Taxpayers don't need to care about retention bonuses. Taxpayers do need to care that the government has a willingness to use the tax code as a way to steal all of the earnings of some of its citizens. When we know the rules, we can plan our lives around the rules. To make the rules after the fact is theft.If these firms are saved and the government gets their money back, is there a provision in this 90% tax that will give the money back to these employees? If the government ends up making money on this, do the employees get their bonuses back plus an extra bonus? Why doesn’t this work both ways?
Isn't the alternative to bonuses simply paying a higher salary? How would this benefit anybody? It's not atypical for an employee to make a salary of $200,000 and then get a bonus of between $200,000 and $800,000 based upon many factors. What's a company supposed to do? I guess that they'll have to pay a bigger salary which averages out to be the same, but takes away motivation of the employee and is a financial hardship to the company during lean times.Okay. So everybody is trying to make their own points. Fair enough.
Just pay the TARP money back. Why are all these firms who claim they didn’t need the money, say they’ll be able to give it back sometime in 2010? Where did it go?
The firms are bankrupt. Simple as that. And were it not for the TARP, there would be no bonuses, no money to pay them. If you care to make the slippery slope argument about whether or not your 401k balances are next up for grabs, that’s an enormous stretch. Is government stupid? Yup. Are these big money center banks stupid? Uh huh. So don’t be surprised when these two megadumb institutions climb into bed together, and start hating themselves in the morning. And if you work for one of these firms and know you can make more money elsewhere with less headaches–DO IT.
This has a been one of the most fascinating threads in a long time. I am wondering is anyone pointing the finger at our industry besides me and Bodysurf?
Pay back the money and the bonus the sh*t out of each other in any way you want. Make sure you give the CEO's an appropriate amount for tennant improvements!"If you care to make the slippery slope argument about whether or not your 401k balances are next up for grabs, that’s an enormous stretch. "
That's not the point that I'm trying to make. The point is that if the argument is that the Government can take one's pay because the taxpayers are footing the bill, nobody is safe because everyone gets money from the government.[quote=footsoldier]This has a been one of the most fascinating threads in a long time. I am wondering is anyone pointing the finger at our industry besides me and Bodysurf?
Pay back the money and the bonus the sh*t out of each other in any way you want. Make sure you give the CEO's an appropriate amount for tennant improvements![/quote] The industry deserves lots of blame. However, that has nothing to do with this thread. This thread is about our government retroactively taking the money that people have earned. The government could have said, "We will give you these bailouts and in exchange we will need to change the compensation structure." They didn't do that. Instead, the government said, "We will give you these bailouts and we will let you keep the compensation structure." They then, after the fact, said, "We change our mind. It's in our best political interest to confiscate the money that you have been paid. Too bad. So sad."Obama is not going to sign this tax bill. Aig will renogiate with their employees, and give him cover. The congress has already generated all the sound bytes they needed. Obama needs to show maturity, and this is a way for him to do it. The economy doesn’t come back til the bank stocks come back, and he knows it.
Come on. At least give Congress some credit for having an ear to the ground, and able to gauge the sentiments of their constituents back home. The bill passed overwhelmingly; if Obama doesn’t sign it, they’ll override him. He will, though. And if the guys at AIG or Citi run to find lawyers to challenge the law, they’d better hope it isn’t a jury trial.
Nobody’s saying you can’t make a million dollars worth of commissions. But–for the umpteenth time now–if your biggest shareholder and biggest bondholder is the same entity, don’t be surprised if he wants a say in how much your people are paid. Pay back the TARP, and Barney Frank and Barack Obama go away. Hope I’m not going too fast for anybody.
But they can’t. They’re broke. Up to me, we would bankrupt them and start all over. Guess what their bonuses would be then?
Bodysurf, I think that we are all going to fast for you. It's not a question as to whether people should be getting bonuses. The biggest shareholder and biggest bondholder should have a say in compensation.
The biggest shareholder and biggest bondholder should not be able to say, "We'll give you a big bonus" and then after giving the bonus say, "Ok, now you have to give the bonus back to us." If they were to bankrupt them, the employees could choose whether to work or not work knowing that they were not getting bonuses. Instead, the employees made life decisions based upon the fact that they knew that they were getting the bonuses.yep you are going a little fast for me…would not be a jury trial, juries decide facts, they don’t interpret laws. If the govt wants to use their ownership to deny bonuses, that is one thing, but to pass a tax is unfair and I hope, illegal. What’s next? A 90% tax on all doctors who won’t perform abortions? How about a 90% tax on everybody that works at Phillip morris that makes over 250k a year? How about taxing anybody that works at a company that gets govt contracts and makes over 250k a year? Given all the earmarks in the stimulus bill, anybody who thinks congress is the stewards of taxpayer money is an idiot.
Obama will not sign this bill, too many unintended consequences. Do you really think that every big bank in the country was that poorly managed, or do you think there might have been a problem with the system? Congress's hands are not clean. Bankruptcy at these firms wouldn't hurt their top employees much other then the stock they own. Their top bankers/traders and analysts would get paid to work someplace else, just like you would get paid to work someplace else if your firm went bankrupt. It is the taxpayer that will get screwed if these banks go under, after all, they own the stock. The banks capital problems are the result of marking illiquid assets to a market that doesn't exist. If you bankrupt the countries biggest banks, who is going to buy these assets? Do you suggest selling these assets to the vulture funds at pennies on the dollar? If that were to happen, the securitization market for student loans/ credit cards/ home equity loans etc would never come back. These assets are always going to perform the worst in an economic down turn, and no firm that is subject to marking their portfolio would ever touch those again. The cost to consumer would be enormous, especially to the poor. The govt would have to permenantly start subsidizing these asset to provide affordable credit to the poor. The lehman bankruptcy was the catalyst that sent our economy over the edge, no way will they let that happen again.“Obama will not sign this bill, too many unintended consequences.”
I hope that you are correct, but I doubt it.[quote=anonymous]“Obama will not sign this bill, too many unintended consequences.”
I hope that you are correct, but I doubt it.[/quote]Be interesting what the Republicans in the Senate does. One one hand, they have to votes to either kill this or keep it from getting 60 votes, and that's what they would like to do. On the other hand, politically they'd rather put Obama on the spot.
http://www.foxnews.com/politics/first100days/2009/03/22/administration-changes-needed-percent-tax-aig-bonuses/
He won't sign the bill.I believe that the courts may find that a tax law that is retro-active may be unconstitutional. If not this would set a terrible precedence. I think that it is sinful that the bonuses were paid with tax-payer money, but our congress and administration should have taken steps to prevent it by making a stipulation that bonuses, trips, planes etc. would not be allowable if TARP money was accepted by a company. Our country’s corporate culture is morally as well as financially bankrupt, and congress is just as bad or worse.
[quote=mnbondguy]
http://www.foxnews.com/politics/first100days/2009/03/22/administration-changes-needed-percent-tax-aig-bonuses/
He won't sign the bill. [/quote] He is doing many things people thought he wouldn't and he said he wouldn't do. I have no faith in the man.[quote=anonymous]
Bodysurf, I think that we are all going to fast for you. It’s not a question as to whether people should be getting bonuses. The biggest shareholder and biggest bondholder should have a say in compensation.
The biggest shareholder and biggest bondholder should not be able to say, "We'll give you a big bonus" and then after giving the bonus say, "Ok, now you have to give the bonus back to us." If they were to bankrupt them, the employees could choose whether to work or not work knowing that they were not getting bonuses. Instead, the employees made life decisions based upon the fact that they knew that they were getting the bonuses.[/quote]You are missing the point. If Obama signs this it sets and extremely bad precedent, and people in the financial business...perhaps throughout the business world...will think twice before they trust the government to keep its word regarding ANYTHING.
I hate the fact that these guys got these ridiculuous bonuses, but this "tax act" amounts to outright confiscation.
What’s the difference between a contractually required bonus and salary? The primary answer is nothing. These bonuses were promised and paid because that was what was felt was needed to be done to attract and retain top people. If it is so important that AIG was allowed to survive as a company, I think that it would have some importance that the compensation be structured in such a way that they get the employees that they want. Hundreds of billions of dollars are at stake and we are worried about $160 million? It makes no sense. What would have happened if they knew that they were going to confiscate these bonuses is that AIG would have had to structure the pay as salary and not bonuses.
Well, I know there have been times where the highes marginal income tax bracket was over 90%. We know that's not the same as being taxed 90% on dollar one, but if you don't think QP withdrawals can be taxed at a much higher rate than they are now, you're the one who's grasping for straws.If you care to make the slippery slope argument about whether or not your 401k balances are next up for grabs, that’s an enormous stretch.
There are all kinds of retroactive laws. Congress can meet at any time and say that the tax rate for 2009 will be 50%, and that number applies to everything you’ve made from January 1 until now.
I take the back seat to nobody when it comes to my sheer disgust at this Congress, so please don’t misunderstand me. But neither should anyone be surprised by them. And when you go to Washington and tell them that you’re bankrupt unless they start kiting a whole lot of checks your way, they’re going to have a say as to how much your execs are going to be paid. These banks were their own worst enemy, and still are. It would be wrong to let a little righteous indignation about the dumbasses inside the Beltway get in the way of realizing that these banks are bankrupt. They’re gone. And EVERYBODY on the payrolls there are there by virtue of the same crooked Congress they now decry.
The problem is that he’s not going to stop with capping salaries on just AIG or anyone else who took TARP money. He’s going to pass it on to anyone who makes over what he deems too much. Anyone catch the comment he made about corporate salaries and that those people need to move outside of NY to someplace like ND, AR, or IA where people would be happy to make $75K a year? Since when is it the POTUS’s job to even think about what is going on in a public business. It’s not illegal to pay execs $1 mil a year. It’s not illegal to give them stock options or deferred comp or company cars. Why the does anyone in Washington feel they have the right to dictate what ANYONE makes?
It's pretty obvious to me that he's never really been in AR or ND or IA. He doesn't know how much some of those big farmers make. Or that Wal-Mart's headquarters is in AR. Or that from a cost of living viewpoint those folks who work in Des Moines probably make as much as those folks in NYC. When you're paying a couple thousand a month for a little efficiency apartment in Manhattan a $100K a year pencil pusher job doesn't really mean that much. Here in my neck of the woods I've got a client who will sell you an acre of good farmland for about $5K. It's all relative.With more bonehead moves,are you listening JP Morgan?, like the 113M spent on new corporate jets, Obama is getting all the ammo he needs to control Wall St.
They are going to pay back the 25B bailout...before they acquire the new planes. I guess renting a jet from netjets is too much trouble for the execs.[quote=Sam Houston][quote=mnbondguy]
http://www.foxnews.com/politics/first100days/2009/03/22/administration-changes-needed-percent-tax-aig-bonuses/
He won't sign the bill. [/quote] He is doing many things people thought he wouldn't and he said he wouldn't do. I have no faith in the man.[/quote] This bill is going to die in the senate, it won't even make it to Obama's desk.Source URL:https://www.wealthmanagement.com/forums/whats-firms/tax-retention-bonus