9 In 10 Executives At Bailed-Out Banks Kept Their Jobs
Over 100,000 people have been laid off by banks, but 9 in 10 executives at banks that accepted bailout money are still working says the Associated Press.
Even top executives whose banks made such risky loans they imperiled the economy have been largely spared any threat to their jobs, as Washington pumped billions in taxpayer money into the companies. Less fortunate are more than 100,000 bank employees laid off during a two-year stretch when industry unemployment nearly tripled, bank stocks plummeted and credit dried up.
"The same people at the top are still there, the same people who made the decisions causing a lot of our financial crisis," said Rebecca Trevino of Louisville, Ky., a mother of three who was laid off from her job as a Bank of America training coordinator in October. "But that's what tends to happen in leadership. The people at the top, there's always some other place to lay blame."
The article specifically calls out certain banks and credit card companies that made especially risky loans, but whose executives are still happily managing away: JPMorgan Chase & Co, Cleveland-based KeyCorp, and Capital One Financial Corp..
It seems we can only hope these folks are as good at saving a financial system as they are at wrecking one.
AP: 9 in 10 execs at bailout banks remain on job [MSNBC] (Thanks, Kerry!)
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Comments:
"Congrats! You got the 'Easy Money' from the government! You get to keep your job! - Oh, lay off some peons so we look like we're trying here!"
Devil's advocate: How oppressively expensive would buying out their contracts have been? Is firing them from their own creation an improvement, or is it better to keep them on and force them into fixing the mess?
@Ash78:
#1 - it's expensive to fire these people, and difficult to replace them. Financials are tribal companies.
#2 - 9 out of 10 executives are running profitable fiefdoms within financials. The glowing toxic waste is in debt-backed assets, and all the guys responsible for that exposure are long gone.
@ADismalScience: Agreed on both counts. I've been at two banks through this mess, and most of the people who have "produced" these problems are gone. The rest are cleaning up, and it's not a fun time (ie, many of these guys would be better off with a golden parachute than to be stuck fixing the problems 12+ hours a day)
Welcome to American corporations!
Where executives are paid 3-fold what their counterparts are in other countries, and trying to let them go is like keeping a steroid-pumped, low-talent, has-been like Barry Bonds on the roster: letting them go would be outrageously expensive due to dumbass contract stipulations, nobody else wants them around or wants to pay their salary demands, and the taxpayers/customers/ticket-holders are left footing the bill.
*Waits for the "REGULASHUN IZ SOSHALIST!1!1!!11" crowd to break down the door and claim free market/trade is perfect.
Makes sense.
The ones at the top are the ones who control who gets fired. Since there's nobody above them except the shareholders (who are probably friends, or, at least, business partners) all the responsibility gets shifted down a rung.
It's like that letter posted earlier to the Best Buy employees about how they needed to work harder and expect pay cuts or whatever.
The whole business could be sorted out with a nice little revolution. It wouldn't even need to be all that bloody. Just execute the people at the very top and let the rest fall in on itself :P
And the same ones who are at the top of the food chain are the SAME ONES who have millions in the bank already, who could easily survive without a job. It's the rest of us, who have mortgages on houses that cost less than what these guys make in a day that get screwed.
@Ash78:
Hah! Heavens no. We've been "bailed out!" It's all candy and happiness, and none of us deserve our taxpayer-funded salaries. In fact, we should all be fired for doing such poor jobs and losing money! Sitting here for 80 hours a week working my ass off to generate revenue is not effective because it can't discharge debt-backed asset exposure from the balance sheet.
@Ash78: This is very true. They're also under a tiny microscope. If they went to another currently successful company (and history has shown us how often it happens) their slate would almost be wiped clean. This way at least they'll (hopefully) have some sleepless nights.
You need to do a bit more work before you can make your case. You are comparing an absolute number (100K working stiffs losing their job) and a percentage (a 10% reduction in the exec population). That doesn't work. You need to get some more data. How many people work/worked in the financial services industry? If that number is more that 1M, 100K works out to more than 10% of the industry overall and the little guy is getting screwed. On the other hand, if the total number is more than 1M, the percentage would be less than 10% and the little guy is doing better than the average executive.
Does anyone know the number of people who work in financial services, and what the overall percentage of job losses is?
Why would you wish that on others? Newsflash: banks are not full of cartoonishly evil plutocrats twiddling their wispy mustaches.
There really should be a percentage by percentage comparison of exec/non-exec layoffs. If 100,000 people equate to less than 10% of the total banking workforce, then that means that the execs have had a lower job retention rate.
@BlackMage is doing the Time Warp agaaaaaaain!!!: For a minute there I was confused - "The prez doesn't use Steroids... does he?" (before I read the rest of the sentence)
But what you guys don't understand is that the contracts with these execs were signed months ago. You can't just back out of a contract with a bad executive!
Everybody in the US house committee on financial services and the US senate committee on banking, housing, and urban affairs kept their jobs, too.
So...since the inception of subprime loans, CDS, deregulation of banking, etc. not one of those congresspeople has retired or been beaten or changed to a different committee?
Once again, nobody is watching the watchers. Of course this was going to happen.
Rewarding failure is not good long-term.
@ADismalScience: Aren't we still talking about the execs? I wasn't referring to the entire employee list.
::dies of shock::
Weren't we being told just a little while ago that executive compensation had to be so high because of how "risky" the job is?
Based on this evidence, I guess we need to better compensate the people who work under these executives, since obviously it's *their* jobs that are "risky"!
@chris_d: Given that the economy already sucked months ago, I think a primary question would be why the Board would offer a CEO of a company already struggling a contract which did not give the company any way of ensuring improvements in performance or the ability to find someone else who could attain them.
Someday the shareholders, those pesky owners, might get in a say in this.
This is just how business works. The guys at the top get the fat checks even if they screw up, and the guys at the bottom "take one for the team."
A few months ago I was at a division meeting for my company and the division leader gets up and starts talking about how times are tough, but that things would be OK in the company because ours is fairly stable in this type of market. However, we would have to work extra hard and we should take pride in our hard work and customer satisfaction because.. wait for it.. group leaders had to fight over the money for raises, and many groups didn't get very much, but still, it'd be OK and just be proud of the work that you do!
Ok, great, thanks for the pep talk, I'm sure you're not worried about your raise there division leader. I instantly realized that I would likely not be getting ANY raise this year, and low and behold the new year has come and gone and, while all the other groups got their 3%, none of my group got anything.
But the company is doing soaringly well! Crazy profits! Everything is great! Be proud of your company and the money you've made for it, because that's all you fucking got.
It's time to drop your pants and grab your ankles again, America!
@Mary Marsala with Fries: Exactly, they tried to validate reason for why they pay so much but they have proven that a lie. These guys all screwed up big time and yet there was no risk to their job. They cost thousands of people way more than their job is worth and yet they keep it. That's messed up.
People who had stable normal jobs that were supposed to have no risk got cut to save the company money, and the execs get a bonus because of it. Yet it's exactly the executives' faults that they lost all that money. The wrong people lost their jobs and obviously shareholders are doing nothing about it.
This is a bit misleading -- has Capital One announced any layoffs?
@ADismalScience: I guess they are full of people posting on the consumerist, instead of people busting ass for 12 hours a day.
@chris_d:
Actually, black letter law, the government can. They've gotten away with it before, during the cold war if I remember proper.
They should have made it a shareholder vote to accept the bailout. Accepting it nulls all employment contracts, anyone fired gets the governmental limit (US$10k I believe is the current) and is told to hit the road. While we're at it, take the companies that are "too big to fail and break them up into smaller companies (splitting stock appropriately), et al.
those poor hourly wage bastards didn't work hard enough to make synergy congeal with the planned melding of backoffice systems as the corporations grew larger by acquisitions and the use of economy of scale growth schemes to produce stock growth and dividend maturation.
blah blah blah.
9 out of 10 execs is probably proportional. This is classic sensationalism. A company lays off 10% of all its staff, 9 out of 10 execes will still be around and thousands of employees will be gone.
The numbers are layed out to shock when both stats are saying the same thing.
Keep in mind that most of these companies (perhaps most of them) are public. Thus, the shareholders through the board of directors can fire the CEOs at any time. What do you people want? For the government to demand that these CEOs be fired? Demand wage levels for CEOs? That'll make sure you get the cream of the crop at the top of these companies...
@jeadie5: Shouldn't 100% of the leadership of such banks have been fired... after they we arrested. With responsibility comes blame.
@trrwilson: but "PEOPLE WHO CAUSED EXONOMIC COLLAPSE GET FIRED WHILE PEONS KEEP THEIR JOBS" isnt as exciting...
in reality, many "financial" jobs could be done by trained chimps. The people making 10/hr can be fired and new people can go be hired from any college/high school where people want jobs. Finding a high level exec with the experience and skill to run a multi-billion dollar company is a hell of alot hard than hiring a new mail boy, copy clerk, customer service rep, etc.
It has always been so, that those who toil and create wealth are disposed of so that those who benefit from the laborer's efforts are sustained. The bosses who drive a company into the ground are kept and if let go given a golden reward. If you want to know just why we are no up "s..t creek" this is the reason.
@wagenejm: Come on. That's disingenuous. Anybody paying attention knows that perfectly healthy financial institutions were forced to accept bailout money so the markets wouldn't rattle the recipients too badly. I would expect that 9 out of 10 financial institutions are performing just fine and have no good reason to fire their CEOs. Unless you consider populist cries for blood on Wall Street a reason.
@xtc46: well that certainly explains what went wrong - instead of executives the board of directors should have been hiring monkey trainers & organ grinders.
please tell me that you don't actually believe this.
@xtc46: I'm willing to bet that 8/10 of those "executives" also have "0 clue as to how to runa multi billion dollar company". If by "run" you mean "keep it financially solvent".
@chris_d: I agree .The question is who is writing and approving these win-win contracts .Probably the company's stacked boards .
Read the book, "The Peter Principle." The higher up the ladder, the higher the idiot ratio.
Ah the corporate ladder. Folks on top whizzing on the heads of those down below.