Bluffing Into the Nuts

Sorry to go all non-poker on you but I read this article in the Financial Times and beer came out of the beer coming out of my nose.

Banker fury over tax ‘witch-hunt’

By FT reporters

Published: March 20 2009 19:39 | Last updated: March 20 2009 23:32

Bankers on Wall Street and in Europe have struck back against moves by US lawmakers to slap punitive taxes on bonuses paid to high earners at bailed-out institutions.

Senior executives on both sides of the Atlantic on Friday warned of an exodus of talent from some of the biggest names in US finance, saying the “anti-American” measures smacked of “a McCarthy witch-hunt” that would send the country “back to the stone age”. Okay, normally when you say someone is striking back it means they’re actually doing something. All these pansies are doing is making empty threats. And poor ones at that. Does anyone really think that if every investment banker in the US fell off the face of the earth that Harvard, Stanford, and the rest of the asshole factories that churn out these guys couldn’t replace the entire industry almost instantly?

There were fears that the backlash triggered by AIG’s payment of $165m in bonuses to executives responsible for losses that forced a $170bn taxpayer-funded rescue would have devastating consequences for the largest banks.

“Finance is one of America’s great industries, and they’re destroying it,” said one banker at a firm that has accepted public money. “This happened out of haste and anger over AIG, but we’re not like AIG.” We’re not AIG, we’re some other company that hedged ourselves beyond all reasonable levels and needed tax payers to bail us out. Why shouldn’t we be able to keep our six and seven figure bonuses?

If this country begins to penalize failure by moving responsibility from people stupid enough to take our biased advice and putting it on those of us who gave it, it might be the end of finance as we know it.

The banker added: “It’s like a McCarthy witch-hunt…This is the most profoundly anti- American thing I’ve ever seen.”

Second only to a capitalistic society using public funds to bail out a company that gambled its way into financial ruin.  The fact that your firm isn’t being liquidated and you are not out looking for work is what is un-American.

Vikram Pandit, Citigroup’s chief executive, told employees in a memo that some anger about executive compensation was “warranted”. But he hit out against the idea of a special tax. “The work we have all done to try to stabilise the financial system and to get this economy moving again would be significantly set back if we lose our talented people because Congress imposes a special tax on financial services employees,” he wrote.

Those silly peoples. It’s almost like they expect us to suffer for the bad decisions we made.

Some policymakers expressed concern that banks may try to break out of the government’s embrace by paying back public capital even if the price is a more severe credit squeeze.

They also fear that financial institutions may decide not to take part in public-private partnerships to finance credit markets and acquire toxic assets. No, say it’s not so. You mean if we take back your bonuses you might try to find a way to make your companies work without massive injections of taxpayer money? Not that. Anything but that.

The outcry followed Thursday’s approval by the House of Representatives of a bill that would impose 90 per cent tax on bonuses to employees whose gross income exceeded $250,000 at bailed-out firms.

Next week the Senate will also consider a hefty tax on bail-out bonuses amid calls for an investigation into who was responsible for allowing the pay-outs. Some senators are calling for a committee hearing on a bill that would impose a 70 per cent tax at bailed-out institutions, half paid by employees and half by companies, arguing that a delay would help cool political anger.

“There are three big industries where the US has global leadership: financial services, media and technology. Introducing this 90 per cent tax is like taking one of those industries out the back and shooting it,” said a top Wall Street executive. Well, other than the part where the other two industries didn’t almost bankrupt the entire US economy because they were too greedy to do what was right instead of what gave them the biggest bonuses … bonuses which Congress is trying to take away from them. My goodness, it’s all so interconnected. It’s almost like cause and effect.

Guys, it’s very, very simple.  A bonus is for good performance.  If your company is now accepting billions of dollars of tax payer money just to keep the doors open, uh, hate to tell you this dude but that’s not bonus worthy performance.

In Frankfurt one employee at a US investment bank said the new tax measures would “send [the US] back to the stone age”.

“Commodity traders are already moving to companies like BP where they can make as much money as they used to,” said another banker at a US firm.

Bankers at Deutsche Bank said it could benefit from the proposed legislation by poaching its US rivals’ most talented employees. Please don’t tell me that that it’s this easy to export our most egotistical and ethically corrupt.

What they don’t tell you is that this is a one time tax in order to penalize companies that took buttloads of taxpayer money and yet still found reason to reward people in their company for doing such a fine job. The tax is only aimed at people making over $250,000 a year in salary so don’t get the handkerchiefs out for the poor cleaning lady who won’t get her bonus. The only people getting hit are already earning a quarter of a million a year before bonuses.

Yeah, we have much to fear. Like most of these guys won’t come running back when the economy improves and they can actually get jobs back in the US.

Anybody who works for a company that has taken public funds and has the balls to complain that they might not get a bonus should be punched in the face. Seriously. Maybe that’ll snap you back into reality.

Reporting by Lina Saigol in London, Julie MacIntosh and Saskia Scholtes in New York, Tom Braithwaite in Washington and James Wilson in Frankfurt

You call that reporting?

photocred to David Paul Ohmer