Bernie Madoff's $50 Billion Fraud thru country clubs

[Craig Sweet]

Patrick....Wall Street wages are typically low?

This is from a 2006 San Diego article

Wall Street wages on the rise

October 18, 2006

Wall Street workers took home nearly $300,000 on average last year as profits from trading and merger advising fueled record earnings, New York State Comptroller Alan Hevesi said. Wall Street compensation averaged $289,664, 5.1 times the average $56,634 for workers citywide, the comptroller said. The highest-paid bankers and traders can command eight-figure pay packages.


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Bonuses totaled a record $21.5 billion, or $125,500 per person. The securities industry paid out $48.8 billion, while generating $2.1 billion of taxes for the city, Hevesi said.

Industry employment is also on the rise, up to 170,800 last year from 161,300 in 2003.

[Bill_McBride]

Current Fed. policy is killing the dollar, and is going to lead to hyper inflation within the next few years....

After a year or two of stagflation, right?  Looks to me like a deflationary spiral is underway, no jobs, no liquidity, no credit, falling prices (down 1.6% last month, gas headed toward $0.199 again).

[RJ_Daley]

For Cryin out loud Pat.  How can you say that crap with a straight face (or blue type) 

Anyone that reads this and can still be an apologist for these pirates needs a some kind of refocus and perspective readjustment. 

http://www.bloomberg.com/apps/news?pid=20601109&sid=aGL5l6xOPEHc&refer=home

Pat, you seem to know a lot of these 'masters of the universe' Wall Street crowd.  Where do you meet these hard working guys, at the golf clubs?
Why don't one of these enterprising clever reporters do a research investigative story and find out what the ratio is for the higher up the CEO or Wall Street exec and the more bonus they make, what the proportionate time spent at the club and doing the whole high society life time is?  What do you want to bet that the smaller the bonus and the further down the firms pecking order, the more time is spent working hard to manufacture this funny money paper economy, and the most well paid are the least likely to be slaving away all day at the office?  Did you see that alligator skin tan on Mozilli?  If he isn't on the yahct or golf course 8 hours a day, I'm the queen of Ireland. 

And, Poor Henry Paulson, was apparently sucking hind tit on the bonus gravy train with only a pawltry 161 million over 5 years before getting to be the toastmaster general for his old buds... What an effing Chump...

The only thing I'll concede is like Gov Patterson mentioned tonight on Jim Lehrer.  He said the State on NY made 213million on taxing the bonuses just last year and it will really hurt their budget to not have that gold mine of salaries to tax.    God, I hope they find a way to tax it all back from those pirates.

[John Kirk]

Isn't a large part of the problem that with the absence of any product actually being produced, incentives were paid for meeting short term financial targets that could be manipulated with accounting at the expense of the company's long term stability. 

Ding, ding, ding!  We have a winner. 

[Craig Sweet]

"the absence of any product actually being produced"

That sums it up....a "product"....for example a kitchen table....has incredible value added to it via manufacturing...labor generates income that creates demand...


These guys took a million dollars passed it around and around and generated nothing but a paper economy....

[Patrick_Mucci]

Craig Sweet,

You don't know what you're talking about, choosing to cite an article that confuses WAGES with SALARIES

Salaries for employees on Wall Street are LOW.

It's the performance bonuses that comprise the majority of their WAGES.

WAGES as used in the article aren't SALARIES.
WAGES are the sum total of their compensation, which is comprised of many facets, including commissions, salary, bonuses and other perks like parking, car allowances, etc, etc..

RJ Daley,

As a former police officer I find your disparagement of ALL those who work on Wall Street similar akin to someone claiming that all cops are bad because one took a payoff or engaged in brutality or a crime.

You should know better.

[HamiltonBHearst]

It is "Mozilo" not "Mozilli".  The man is an Italian-American and it would be appreciated if we did not make comments on the color of people's skin.

I wonder what percentage of those who have direct employment on Wall Street would be considered "pirates" subject to confiscation of previously paid wages in the perfect society of Governor Paterson and RJ Daley.

[Jeff Fortson]

It is "Mozilo" not "Mozilli".  The man is an Italian-American and it would be appreciated if we did not make comments on the color of people's skin.

I wonder what percentage of those who have direct employment on Wall Street would be considered "pirates" subject to confiscation of previously paid wages in the perfect society of Governor Paterson and RJ Daley.

Post under your real name.


Jeff F.

[Phil McDade]

Craig Sweet,

You don't know what you're talking about, choosing to cite an article that confuses WAGES with SALARIES

Salaries for employees on Wall Street are LOW.

It's the performance bonuses that comprise the majority of their WAGES.

WAGES as used in the article aren't SALARIES.
WAGES are the sum total of their compensation, which is comprised of many facets, including commissions, salary, bonuses and other perks like parking, car allowances, etc, etc..

Patrick:

This article:

http://www.bloomberg.com/apps/news?pid=20601109&refer=home&sid=aVann0.cv9Tw

...suggests Wall St. salaries aren't "low," relative to salaries for workers around the rest of the country. In fact, the lowest Wall St. salary cited in the article is roughly double the mean salary in the country. See this from the article:

"Even without bonuses, Wall Street's traders and bankers typically receive salaries that range from $80,000 to $600,000 a year. That compares with the mean annual wage for the average U.S. employee of about $40,690 and a mean for CEOs of $151,370, according to a May 2007 Bureau of Labor Statistics report."

Note also this paragraph:

``When you work on Wall Street and you get no bonus, that is a huge shock to the system,'' said Bill Coleman, chief compensation officer at Salary.com, a software provider based in Waltham, Massachusetts. ``Wall Street has created this mindset that most people find obscene, which is that it's hard to live on just half a million dollars a year.''

[Richard Choi]

Oh, Mr. Mucci, you and your Straw Man tactics.

This seems to be your favorite way to divert an argument when you know you are on an indefensible position. And normally, I don't like to engage Straw Man tactics, but I am sitting in an airport with a 4 hour delay, so why not...

First, to address your specious Straw Man arguments, here are some definitions.

*"These Guys" - aka, "Masters of Universe", refers to CEO's, executives, and traders who work for Wall Street firms directly responsible for trading decisions. This does not apply to secretaries, accountant, and other support staff who may make decent salaries, but usually do not receive the 6 figure bonuses that "These Guys" command.

*"Not every Wall Street firm engaged in these tactics" - I am mainly referring to the 5 former Wall Street investment houses - Bear, Merrill, Goldman, Lehman, and Morgan Stanley that are covered under SEC authority. For your information, every one of these guys engaged in these tactics.

*"Typical Wall Street salaries are low" - I hope you weren't drinking at the time when you typed this and ruined your own keyboard. I think we can all agree that Wall Street has done enough damage without ruining your keyboard as well. For the record, if you read the article that I linked (http://www.nytimes.com/2008/12/18/business/18pay.html?_r=1&em), you will see that Dow Kim, the person who oversaw Merrill's mortgage business had a base salary of $350,000 ($35 million in bonus - 2006 alone), 20-something analysts had a base salary of $130,000 ($250,000 bonus), and 30-something trader had $180,000 base salary ($5 million bonus).

If these 6 figure salaries are "low" to you, than, obviously we have a vastly different point of view on how much money you need to have a comfortable living. And please don't drag support staff salary in to this argument, I have alredy defined who "these guys" refer to (see above).

And there is no otherway to describe these bonuses as anything other than obscene. These guys contribute nothing to production. These guys did not have any "special" skills to speakof. It does not take a Harvard Business School education to buy (supposedly) AAA rated securities and leverage the hell out of it. You could have done the same thing with average high school grad with minimal training.

*"they met their objective, so they deserve their bonus" - This is actually one of the main points of the debate. My argument (and many other on this thread) is that the compensation structure on Wall Street where it over valued short term trade profit over long term growth is exactly what caused the debacle that we are in right now. There was so much emphasis on making as much money as possible as quickly as possible (and why wouldn't you when you can earn $35 million bonus like Kim did) that all risk and exposure analysis went out the window and "these guys" gambled with investors' and banks' money. These types of "objectives" and compensation structure needs to be eliminated. If the banks won't do it themselves than it needs to be done with the law since we have already seen what kind of damage this can do when unchecked. The biggest reason why object to TARP is precisely because it make no demand to curtail this behavior for the future.

Just because your have contract does not make it right. Just as it would be wrong for me to borrow your money (through a contract) and gamble it away.

And I couldn't care less about "these guys" losing their lifetime savings in stocks. First, they should have known better than to put all of their savings in one place (seriously, how do these people get Wall Street jobs when they fail Investing 101???). I do feel worse for the support staff who were just along for the ride, but then again, I don't see a lot of sympathy right now for GM workers either.

Let me know if you would like to be even more specific, I will be more than happy to.

P.S. I still do not see any difference between "these guys" and Madoff. There is no evidence that Madoff skimmed off the top from the investments. Madoff was already very very wealthy before he started the management business. When it is all said and done, I believe you will see that "these guys" on Wall Street (in just one investment house) took FAR more money out (via bonus) than Madoff ever took from the investments he managed. Madoff was only crime is that he was not a very good money manager and tried to cover it up. Only difference between that and what "these guys" did was that "these guys" didn't hide their loses as long as Madoff did.

[Sam Maryland]

Patrick, who do you hold responsible for the collapse of Bears, Lehmans and others?

Bloomberg magazine had an interesting article about Lehman this month.  I'm pretty sure it can be accessed on-line.  Would be interested to see how people react to the article and what they conclude about placing blame.

[RJ_Daley]

Hammy, Mozilo, Mozzilli, I couldn't care less.  As an Italian Irish American, I say the man is a 'brigante' in polite company.   But, the term 'cazzone' or "testa di cazz' " more befitting.  His skin is like an aligator's because all he must do is bathe in the lap of pirated luxuary on his yahct or at the course.  It is a wonder you get an ethinic tone from that. 

Pat, the article and my statement is pretty clear.  It is the 'pirates' at the top floors of the Wall Street houses of which I and everyone else speaks, not the janitors and secretaries... 

[Patrick_Mucci_Jr]

Hammy, Mozilo, Mozzilli, I couldn't care less.  As an Italian Irish American, I say the man is a 'brigante' in polite company.   But, the term 'cazzone' or "testa di cazz' " more befitting.  His skin is like an aligator's because all he must do is bathe in the lap of pirated luxuary on his yahct or at the course.  It is a wonder you get an ethinic tone from that. 

Pat, the article and my statement is pretty clear.  It is the 'pirates' at the top floors of the Wall Street houses of which I and everyone else speaks, not the janitors and secretaries... 

How about all the thousands of hard working people who occupied the floors between the penthouse and the basement ?

Do you really think Jimmy Cayne and other top executives wanted to lose hundreds of millions personally ?

[Patrick_Mucci_Jr]

Oh, Mr. Mucci, you and your Straw Man tactics.

This seems to be your favorite way to divert an argument when you know you are on an indefensible position. And normally, I don't like to engage Straw Man tactics, but I am sitting in an airport with a 4 hour delay, so why not...

First, to address your specious Straw Man arguments, here are some definitions.

*"These Guys" - aka, "Masters of Universe", refers to CEO's, executives[/b], and traders who work for Wall Street firms directly responsible for trading decisions. This does not apply to secretaries, accountant, and other support staff who may make decent salaries, but usually do not receive the 6 figure bonuses that "These Guys" command.

Could you NAME "these guys" ?

Your casting of an enormous blanket of guilt over every executive is irresponsible.

Lot's of hard working executives who had nothing to do with the downfall of these companies lost most of what they had, including their job.

*"Not every Wall Street firm engaged in these tactics" - I am mainly referring to the 5 former Wall Street investment houses - Bear, Merrill, Goldman, Lehman, and Morgan Stanley that are covered under SEC authority.

For your information, every one of these guys engaged in these tactics.

You don't know what you're talking about.
Once again you choose to cast an enormous, indescriminate blanket over every executive who worked for those firms.  That's irresponsible.

*"Typical Wall Street salaries are low" - I hope you weren't drinking at the time when you typed this and ruined your own keyboard. I think we can all agree that Wall Street has done enough damage without ruining your keyboard as well. For the record, if you read the article that I linked (http://www.nytimes.com/2008/12/18/business/18pay.html?_r=1&em), you will see that Dow Kim, the person who oversaw Merrill's mortgage business had a base salary of $350,000 ($35 million in bonus - 2006 alone),

Do the math.
Kim's salary was ONE PERCENT of the total pay.
I'd call that a low salary

20-something analysts had a base salary of $130,000 ($250,000 bonus), and 30-something trader had $180,000 base salary ($5 million bonus).

It would seem apparent that you don't live in New York, nor do you appear to understand the cost of living in New York.

A salary of $ 130,000 isn't outlandish.
With Federal, State and City taxes, try living in NYC and getting by on # 130,000.   A salary of $ 130,000 in Manhattan, New York, ain't like a salary of $ 130,000 in Manhattan, Kansas.

If these 6 figure salaries are "low" to you, than, obviously we have a vastly different point of view on how much money you need to have a comfortable living.

Those are low salaries in NYC, considering that they're not making Widgets.
In what city/town do you reside ?

And please don't drag support staff salary in to this argument, I have alredy defined who "these guys" refer to (see above).

You didn't define them, you cast a broad, vague reference to a nebulous group.  If you can't name them by name, just name their job titles for us, along with the companies they work for.

And there is no otherway to describe these bonuses as anything other than obscene. These guys contribute nothing to production.

How do you know that ?
You can't even name their names, nor can you name their specific titles at the companies they work for.

I KNOW guys who work/ed on Wall Street who have/had employment contracts that specifically stated what they would make based on their production.  I've seen some of those the contracts.
Years ago, I had a hand in crafting some of those contracts.

What's your personal, first hand experience with employment contracts on Wall Street ?

If you have none, how can you responsibly and accurately comment on compensation arrangements between companies and hard working, successful employees ?


These guys did not have any "special" skills to speak of.


Oh, I see, guys could give up their jobs caddying and driving a cab, walk in off the street, be successful and make a lot of money.  Now I understand.

It does not take a Harvard Business School education to buy (supposedly) AAA rated securities and leverage the hell out of it. You could have done the same thing with average high school grad with minimal training.

So that's what happens and what happened on Wall Street.

What about the Government Bond Brokers ?
Did they do that too ?

Did EVERYBODY on Wall Street buy AAA rated securities and leverage the hell out of them ?

*"they met their objective, so they deserve their bonus" -

This is actually one of the main points of the debate. My argument (and many other on this thread) is that the compensation structure on Wall Street where it over valued short term trade profit over long term growth is exactly what caused the debacle that we are in right now.

I have news for you.
The profit motive has been on Wall Street for decades upon decades.

Could you also elaborate on the "compensation structure" since you seem to know so much about it ?

Could you detail it for us, not just on a firm by firm basis, but, on a department by department basis, so that we can better understand how honest, hard working employees, who met their contractually determined goals, aren't really entitled to the compensation under the agreements they entered into with their employer.

There was so much emphasis on making as much money as possible as quickly as possible (and why wouldn't you when you can earn $35 million bonus like Kim did) that all risk and exposure analysis went out the window and "these guys" gambled with investors' and banks' money.

There you go with "these guys" again.
Could you identify them, by name or job title at each firm, and, if you can, on a department by department basis.

Tell us how the Government Bond Traders, especially those who act as brokers and take NO position, gambled with investors' and banks' money.

These types of "objectives" and compensation structure needs to be eliminated.

Are you nuts ?
Do you really understand the compensation structure for each department, or have you just read about it ?

If the banks won't do it themselves than it needs to be done with the law since we have already seen what kind of damage this can do when unchecked.

Now there's a great solution.
Do it by law.
Whom do you suggest should be the author of the law.

Did you ever hear of the "Brain Drain" in the U.K. ?
Research it and let us know what happens when talented people exit a business/industry/country

The biggest reason why object to TARP is precisely because it make no demand to curtail this behavior for the future.

Might I ask what your occupation is ?

Do you also favor regulating what doctors and lawyers can earn ?

Just because your have contract does not make it right.

I no longer suspect that you don't know what you're talking about, I know that you don't know what you're talking about and that you have little if any personal experience with the area of compensation when it comes to the vast array of thousands of people who work on Wall Street.

The next time you have time to kill in an airport, try spending that time researching and analyzing the compensation arrangements of the great majority of the thousands of people who work on Wall Street, and not just "those guys" that nebulous group you've read about in a local newspaper 


Just as it would be wrong for me to borrow your money (through a contract) and gamble it away.

You can bet, that if you borrowed money from me, it would be collateralized, and, you'd sign for it personally.  Secondly, the contract would spell out your obligation with respect to the use of the funds.  Gambling them away, would be a criminal breach of that contract, and I'd make sure that you were pursued to the fullest extent of the law, and civilly.

And I couldn't care less about "these guys" losing their lifetime savings in stocks.

First, they should have known better than to put all of their savings in one place (seriously, how do these people get Wall Street jobs when they fail Investing 101???).

Obviously, you don't have a clue with respect to how firms like Bear Sterns operated.  Why don't you research the issue of stock options, etc., etc. at Bear Sterns and then you can explain to us how those employees HAD to keep their "savings" in one place.

HINT
It was a cultural issue, not a financial issue.

I do feel worse for the support staff who were just along for the ride, but then again, I don't see a lot of sympathy right now for GM workers either.

I don't like to see anyone lose their job, their savings or their dignity.

But, GM workers were amongst the highest paid workers in the auto industry.

Let me know if you would like to be even more specific, I will be more than happy to.

More specific ?
You've been nothing but vague, choosing to paint everyone who worked on Wall Street as unqualified and unentitled to their pay and pointing the finger of guilt to an enormous, anonymous group known only as "those guys"

P.S. I still do not see any difference between "these guys" and Madoff.

Then have someone who understands the difference explain it to you.

There is no evidence that Madoff skimmed off the top from the investments.


I've come to the conclusion that an escapee from a local asylum has broken into your computer and is posting on GCA.com under your name.

Madoff was already very very wealthy before he started the management business. When it is all said and done, I believe you will see that "these guys" on Wall Street (in just one investment house) took FAR more money out (via bonus) than Madoff ever took from the investments he managed.


Wait, I can hear the sirens.
You'd better beat it out the back door before they strap you in those jackets with all the fancy buckles.

Madoff was only crime is that he was not a very good money manager and tried to cover it up.

Now that is funny.
Now I clearly understand how you arrived at your other positions.
Your statement has to be one of the most bizarre, if not idiotic statements made on this thread/site, and a clear indication that you just don't know what you're talking about.  But, that shouldn't surprise me.

And you spent 4 hours in the airport thinking about and crafting your response.  You'd have been better off consuming vast quantities of alcohol.

Only difference between that and what "these guys" did was that "these guys" didn't hide their loses as long as Madoff did.

According to you, Madoff was just a bad money manager for the last 30 yeas. 

Your definition is hard to come to grips with for a guy who was so ingenuous that he fooled sophisticated institutions, savy money managers and sophisticated financial people for 30 years.

Is it another theory of yours that maybe he was just lucky for the last 30 years.

One last thing, could you describe for us exactly how "those guys" hid their losses ?
 

[Patrick_Mucci_Jr]

Craig Sweet,

You don't know what you're talking about, choosing to cite an article that confuses WAGES with SALARIES

Salaries for employees on Wall Street are LOW.

It's the performance bonuses that comprise the majority of their WAGES.

WAGES as used in the article aren't SALARIES.
WAGES are the sum total of their compensation, which is comprised of many facets, including commissions, salary, bonuses and other perks like parking, car allowances, etc, etc..

Patrick:

This article:

http://www.bloomberg.com/apps/news?pid=20601109&refer=home&sid=aVann0.cv9Tw

...suggests Wall St. salaries aren't "low," relative to salaries for workers around the rest of the country. In fact, the lowest Wall St. salary cited in the article is roughly double the mean salary in the country. See this from the article:

Phil,

How would you compare the cost of living in Manhattan to the cost of living for the rest of the country ?

"Even without bonuses, Wall Street's traders and bankers typically receive salaries that range from $80,000 to $600,000 a year.

Phil, how are traders compensated ?
Bankers is far too nebulous of a term.
Could you define the job title of those who work in banking who had annual salaries of 80K to 600 K ?

Could you tell us about the salary levels of those not defined as traders ?

Are surgeons paid more than orderlies ?

Why do you think that is ?

That compares with the mean annual wage for the average U.S. employee of about $40,690 and a mean for CEOs of $151,370, according to a May 2007 Bureau of Labor Statistics report."

It's disengenuous to compare salaries in Manhattan with average salaries throughout the country.  You know it and I know it.

Just look at what it costs to rent a one room closet in mid-town Manhattan and you'll quickly get the picture.

Note also this paragraph:

``When you work on Wall Street and you get no bonus, that is a huge shock to the system,'' said Bill Coleman, chief compensation officer at Salary.com, a software provider based in Waltham, Massachusetts. ``Wall Street has created this mindset that most people find obscene, which is that it's hard to live on just half a million dollars a year.''

As if everyone who works on Wall Street makes $ 500,000 per year.
But, if you think that's a lot of money net of Federal, State and City taxes in conjunction with the cost of living in Manhattan, there are those who would disagree.

What do you think it might cost to garage two cars in Manhattan.
$ 50 per month ?
$ 500 per month ?
$ 1,000 per month
$ 1,500 per month
$ 3,000 per month

What do you think it costs to send  three kids to private schools ?
$ 5,000 per year
$ 15,000 per year
$ 25,000 per year
$ 50,000 per year
$ 75,000 per year
$ 100,000 per year

The next time you get the opportunity, look into buying a residence in Manhattan. 

What you'll get for $ 1,000,000 will shock you.
What do you think it costs to maintain that residence ?

It ain't cheap.

So, please don't tell me about the National averages, because the cost of living in Manhattan ain't about National averages, it's extremely expensive, which means that employers in Manhattan have to pay higher wages than indicated by the "national average"

[Doug Siebert]

You hold Cayne up as a subject of pity?  Are you serious?  His claims of ignorance about what was really going on with Bear Stern's mortgage business are far worse than if he had said he knew all along it was a sham and he was just chasing short term profits.  If he really was ignorant about what was going on in his own company for something that was generating a large portion of its profits, then he not only didn't deserve any bonuses he shouldn't have even been running a coffee shop!

I find it interesting that a lot of the rank and file employees in corporate America who receive stock options as part of their compensation typically have to wait a few years for them to vest or to be able to exercise them.  They have an incentive for the company to do well in the longer term, and to stick around if they want to keep those options.

CEOs who get stock options or large cash bonuses based on a single year's results do not have such an incentive.  Isn't the CEO exactly the guy you want to thinking about the long term health and not the year end results?  Isn't he exactly the guy you want to have incentivized to stick around a few more years if he has brought good results to the company in the past?  Instead the CEO is incentivized with the severance package, where you collect millions as you walk out the door, even if you are fired for doing a terrible job (see Carly Fiorina for a good example of this)

[Sam Maryland]

$1000 a month to garage 2 cars, minimum.

$75,000 to send 3 kids to private school, mnimum, but $100,000 easily.

$1,000,000 will get you about 1,100 sq ft with monthly maintenance costs of $1,700++, that usually includes taxes.

[Doug Siebert]

Patrick,

One of the reasons Manhattan costs what it does is because of all the money on Wall Street.  I would expect we'll see the same type of price drops there that many other over-inflated areas have seen with some of the Wall Streeters out of work and less bonus money for those who do.  They won't be able to upgrade to a large place, or buy that weekend home in Long Island.  Some will be forced to sell, and with fewer buyers they will have to cut prices.  I wouldn't be surprised if it isn't already happening, though I'll be NYC realtors would deny it if asked, just like the realtors in other overpriced areas denied it at first.

The real estate prices there are partly because there were so many people with so much money.  The island is only so big, so the more money people make the higher they will bid the prices up.  But that will equally make them fall when people are making less money.

New York City is going to be really hurting financially, not just directly because of the loss of tax money on their salaries but all the money they spent around town.  But I suppose the city will ask the government for a bailout, just like some states are already trying to do.

[Patrick_Mucci_Jr]

Doug,

Long before the Wall Street money there was the Japanese money, European money, Middle Eastern money, then it was dot.com money, etc., etc...

Miami's real estate was driven up by similar forces plus South American money.

It's interesting how everyone just thinks about the last few seconds in the spectrum of time.

[Jeff Fortson]

Phil,

How would you compare the cost of living in Manhattan to the cost of living for the rest of the country ?


It's disengenuous to compare salaries in Manhattan with average salaries throughout the country.  You know it and I know it.

Just look at what it costs to rent a one room closet in mid-town Manhattan and you'll quickly get the picture.

Pat,

I am not going to debate the Trader bonuses and their legitimacy.  However, let me ask you this...

What entitles a Wall St. trader to have the privelege of living in mid-town Mahattan?

Granted I moved in 2005, but I lived in a one-bedroom Brownstone flat in Brooklyn for $1200/month, and it was not rent controlled.  It was @ 900 sq. ft. in a safe neighborhood, one block from an R Train subway stop.  The subway ride was less than 30 minutes to a block from the stock exchange on Wall St.  That is no more, if not less, of a commute to Wall St. from mid-town Manhattan. 

Are these Wall St. workers entitled to live in Manhattan?  Why can't they search out more affordable living arrangements in other burroughs with similar commutes in safe neighborhoods?

Just a thought.


Jeff F.

[Patrick_Mucci_Jr]

You hold Cayne up as a subject of pity?  Are you serious?


Yes, I hold EVERY ONE who worked for Bear Stern, Lehman Bros and Merrill Lynch up as a subject of pity.

These people lost almost everything.

Do you think there was this giant conspiracy where every one at Bear Stern, Lehman and Merrill knew exactly what was going on ?

His claims of ignorance about what was really going on with Bear Stern's mortgage business are far worse than if he had said he knew all along it was a sham and he was just chasing short term profits.  If he really was ignorant about what was going on in his own company for something that was generating a large portion of its profits, then he not only didn't deserve any bonuses he shouldn't have even been running a coffee shop!

Let's see, for about 30 or more years he seemed to have done an outstanding job, didn't he.

Who did know exactly what was going on ?
Did any of the execs at Bear Stern dump all their stock right before the crash ?  Or, were they as surprised as every one else ?

And, if it was so easy to see coming, why didn't anyone in the private or public sector say something and fire a warning shot ?

I find it interesting that a lot of the rank and file employees in corporate America who receive stock options as part of their compensation typically have to wait a few years for them to vest or to be able to exercise them.  They have an incentive for the company to do well in the longer term, and to stick around if they want to keep those options.

Wouldn't you want to attract and retain valuable employees by giving them ownership in the company and a chance to capitalize on the increased price of the stock ?  That sounds like a fairly sound compensation system.
Employees of many companies, from janitors to secretaries to execs have made a lot of money by working hard and staying with a company for a long time.

CEOs who get stock options or large cash bonuses based on a single year's results do not have such an incentive. 

The IRS surtaxes cash compensation in excess of $ 1,000,000, hence, the government incentivized companies to seek other methods of compensation.  Enter stage left, stock options.

As to large stock options, you're wrong.
They do incentivize execs to work hard and stay with the company a long time.  What are they going to do, exercise an option of $ 20 for $ 20 ?

Isn't the CEO exactly the guy you want to thinking about the long term health and not the year end results?  Isn't he exactly the guy you want to have incentivized to stick around a few more years if he has brought good results to the company in the past? 

Doug, do yourself a favor.
Read a few proxy statements, especially the compensation sections, then let me know what you think.

Instead the CEO is incentivized with the severance package, where you collect millions as you walk out the door, even if you are fired for doing a terrible job (see Carly Fiorina for a good example of this)

Severance packages served a useful purpose when change in control issues arose.

However, I've never been a fan of severance packages where POORLY performing CEO's or EXECS were fired or left the company.

I do believe in severance packages when GOOD performing CEO's and EXEC's are fired or forced out.

You and others seem to view or want to understand the issues in the simplest of terms, a black and white approach.  Things aren't always as you they appear or how you read them in the newspapers.

My view of compensation is that the government NEVER should have placed a surtax on compensation in excess of $ 1,000,000.

It helped foster stock options.
Not just for the top execs, but, for tiers of execs.
Thus, they became systemic, and everyone seemed to have, as one of their primary objectives, running the price of the stock up, instead of running the company efficiently for the long term.

If America doesn't start making things again, we'll be doomed to mediocrity.

A service oriented society doesn't bode well for our children.

As you drive near Newark Airport you see abandoned factory after abandoned factory.  Empty, with their windows smashed.
At one time they were thriving companies, employing thousands of workers.
Generating taxes for the city, county, state and federal government.
Now, they're all gone.

Who forced those companies out of business ?
The various governments ?
Unions ?
Bad Management ?
A lack of Nationalism ?
A combination of the above ?

If we don't rekindle industry, we'll be cooked.

End of rant.

[Patrick_Mucci_Jr]

$1000 a month to garage 2 cars, minimum.

$75,000 to send 3 kids to private school, mnimum, but $100,000 easily.

$1,000,000 will get you about 1,100 sq ft with monthly maintenance costs of $1,700++, that usually includes taxes.

Sam,

That's a sad state of affairs isn't it.

I love New York City, but, it's awful expensive to live there.

[Patrick_Mucci_Jr]

Jeff,

Everyone doesn't live in Manhattan, many commute.

Having commuted into New York for a short time, mostly by bus or car, I can tell you that it's no bargain and takes a good deal of time.
Leaving at 6:00 am and getting home at 6:00 pm, 8:00 pm or 11:00 pm can take a toll on your family life.

Many brokers/traders entertain after work, taking clients/contacts to dinner, so, days can be long.  I don't think you'd choose that line of work if you were getting paid minimum wage.  There has to be a financial incentive.

Brooklyn is part of NYC.
Coming from Long Island always raises the possibility that you could be on the LIE for two consecutive birthdays, Westchester and CT might be a little better, and NJ is no bargain.

Well, it's after 2:00 am and I have to be up at 7:00 am, so, I'm off to bed.

[Jeff Fortson]

Jeff,

Everyone doesn't live in Manhattan, many commute.

Having commuted into New York for a short time, mostly by bus or car, I can tell you that it's no bargain and takes a good deal of time.
Leaving at 6:00 am and getting home at 6:00 pm, 8:00 pm or 11:00 pm can take a toll on your family life.

Many brokers/traders entertain after work, taking clients/contacts to dinner, so, days can be long.  I don't think you'd choose that line of work if you were getting paid minimum wage.  There has to be a financial incentive.

Brooklyn is part of NYC.
Coming from Long Island always raises the possibility that you could be on the LIE for two consecutive birthdays, Westchester and CT might be a little better, and NJ is no bargain.

Well, it's after 2:00 am and I have to be up at 7:00 am, so, I'm off to bed.

Pat,

Fair enough.  I guess my point is that it appeared like you were justifying high salaries and bonuses on the fact that "these guys" need the money because they live in Manhattan.  I do know many live in other borroughs, counties and states.  I was simply saying that justifying these astrominical salaries based on living in Manhattan doesn't include the reality of finding much better bargains in safe areas fairly close to Wall St. in relative terms.

I lived in Brooklyn and worked in Manhasset and had to commute in the morning via the Belt Pkwy, to the Cross Island Exp., to the L.I.E.  That is a 30 mile commute by car and it could take anywhere from 40 minutes to 2 hours depending on traffic.  At night I took the L.I.E., to the B.Q.E.  That commute was 24 miles and took anywhere from 35 minutes to 2 hours depending on traffic.  I know the ills of leaving early and getting home late due to NYC metro traffic.  It was brutal.  I ended up selling my car and commuting by train to the nearest LIRR stop in Manhasset and took a cab from there daily. 

Living in Brooklyn and commuting to Wall St. was simple though.  My wife did it for years.  It took no more than 30 minutes without changing trains and a two block walk.  Her monthly subway pass cost $60-$70.  That's quite a bit cheaper than having to own a car, insure it, and find parking.  You don't even need a car in NYC.  You can hire a car when necessary and use the mass transit for most of your transportation needs and save a TON of dough. 

I know you know all this.  I guess I am just trying to say that there are plenty of ways to live in the NYC metro area and make it work without having to make $1,000,000+ a year.  If you want to live in Manhattan, then be prepared to pay the price.  Using the cost of living in Manhattan as an argument to make risky investments so that you get paid more falls flat on its face when faced with the reality that you can live a very safe, comfortable life in one of the other borroughs or neighboring counties and states.

Good night.


Jeff F.

[Mike Sweeney]

A service oriented society doesn't bode well for our children.

As you drive near Newark Airport you see abandoned factory after abandoned factory.  Empty, with their windows smashed.
At one time they were thriving companies, employing thousands of workers.
Generating taxes for the city, county, state and federal government.
Now, they're all gone.

Who forced those companies out of business ?
The various governments ?
Unions ?
Bad Management ?
A lack of Nationalism ?
A combination of the above ?

If we don't rekindle industry, we'll be cooked.

End of rant.[/b]

Patrick,

The stapler factory in Newark is now a Pharmaceutical company in New Brunswick:

http://www.thelabrat.com/jobs/companies/BiotechNewJersey.shtml

America, New Jersey and Wall Street has re-tooled and will continue to re-tool.I also hope that Cory Booker can continue to help Newark.

I paid $ 4.85 for gas last summer in New Hampshire and $1.47 this week near Hidden Creek. At both price points, I continue to believe that we need to invest in green energy and diversify away from oil for multiple reasons including national security. Our energy choices need to be more like walking into a 7-11 store and choosing a drink. It needs to be a consumer driver rather than a supplier driven market.

The car companies are a tough one. We need a domestic industry for lots of reasons including national security. I believe that they can compete with "Toyota of Tennessee" if they can get rid of the old baggage that Mitt Romney speaks of. Problem is that baggage is the pensions of people, so it is a political and social issue on top of an economic one. Tough call and as much as I have been critical of Bush, I think he made the right call this week on the car companies. Reality is he passed the buck to Obama, but that is all he could do right now.

2009 will be a better year.