October 25, 2009
– Comments (2) |
RELATED TICKERS: SLV
Why don't the Banks use the Bonuses to get the off the book accounts amounts paid off? I am just looking for some thoughts.
From what I understand, the toxic assets are astronomical compared to even what the banks have been pulling down with their record "profits." Furthermore, in the cutthroat, money-is-all attitude in the investement portion of these remaining banks, there is little reason for any individual to contribute to the long-term health of the bank. Because:
1) It seems rather unlikely at this point that the Goverment will let them fail. Why worry about bad assets you can hide away or get the taxpayer to cover? TBTF simply causes moral hazard.
2) If you can grab 6 or 7 figures a year, knowing that you'll be out of that bank doing something else in a few years, why would you have any altruitic tendencies? I gurantee very few people work for GS because they want to see the comany last another 100 years. Investment banks exist to make money. Period. It's not like some companies out there where you believe in a long-term product or vision and you're in it for the long haul. I mean, if I were to go work for GS today, and were told I could either work for bonuses or work to help pay off the ungodly amounts of debt caused by previous employees, I choose the former...
In my opinion, we need to first follow Volcker's advice and split up the safe, goverment-insured banks from the hedge-fund-like, investment banks. Then allow the latter fail into oblivion when they make bad bets.
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