Where is the US economy headed?

Those with little to lose are certainly more likely to take greater risks than otherwise would be the case. But to assume that any executive wants to 'retire' as a failure or with the stigma that he drove his company into the ground flies in the face of everything I know about human nature.

And what is the CEO to do? Just ignore the massive profits and prospering stock of their competitors and lose their own stockholders who are impressed by those big profits? Or do they get on the bandwagon and ride the tide?

I do not think I am misplacing the blame at all. Yes we could expect all those executives to ignore assurances from their government that all was well.

We could expect them to be smarter are more on top of things than the people we elect to provide oversight. Or we could expect the government to do its job and tell it like it is and THEN blame the executives if they ignored the warnings.

Those with little to lose are certainly more likely to take greater risks than otherwise would be the case.

P.S. Why is oe so hellbent on making the case it was not the Democrats fault? After all, he lives in Germany, and why should he actually care?

The beneficiaries of the government's bailout of American International Group Inc. include at least two dozen U.S. and foreign financial institutions that have been paid roughly $50 billion since the Federal Reserve first extended aid to the insurance giant.

Among those institutions are Goldman Sachs Group Inc. and Germany's Deutsche Bank AG, each of which received roughly $6 billion in payments between mid-September and December 2008, according to a confidential document and people familiar with the matter.

Foxfyre wrote:

Those with little to lose are certainly more likely to take greater risks than otherwise would be the case.

Exactly. If people could go out and buy loans right now, knowing they could sell them to Fannie and Freddie at a profit, alot of people would do it.

If I could go out and buy junk cars and sell them to a junk dealer for a profit, why not? If the junk dealer later finds out he made a miscalculation and the junk cars weren't worth anything, is that the middle man, or is that the junk car dealer? I think its the junk car dealer. And in this case, the junk car dealer was the government, Fannie and Freddie, and the junk car dealer was paying huge bonuses to Franklin Raines, Jamie Gorelick, etc., and also paying big campaign donations to Obama, Dodd, etc.

And did I hear they are still paying out bonuses? When are these organizations going to be investigated in detail and the crooks thrown in jail?

P.S. Why is oe so hellbent on making the case it was not the Democrats fault? After all, he lives in Germany, and why should he actually care?

SO, I AM WONDERING how you in Europe (or elsewhere) feel about the situation there.

After Off Year, Wall Street Pay Is Bouncing Back
By LOUISE STORY
Published: April 25, 2009

The rest of the nation may be getting back to basics, but on Wall Street, paychecks still come with a golden promise.

Workers at the largest financial institutions are on track to earn as much money this year as they did before the financial crisis began, because of the strong start of the year for bank profits.

Even as the industry’s compensation has been put in the spotlight for being so high at a time when many banks have received taxpayer help, six of the biggest banks set aside over $36 billion in the first quarter to pay their employees, according to a review of financial statements.

If that pace continues all year, the money set aside for compensation suggests that workers at many banks will see their pay " much of it in bonuses " recover from the lows of last year.

“I just haven’t seen huge changes in the way people are talking about compensation,” said Sandy Gross, managing partner of Pinetum Partners, a financial recruiting firm. “Wall Street is being realistic. You have to retain your human capital.”

Brad Hintz, an analyst at Sanford C. Bernstein, was more critical. “Like everything on Wall Street, they’re starting to sin again,” he said. “As you see a recovery, you’ll see everybody’s compensation beginning to rise.”

In total, the banks are not necessarily spending more on compensation, because their work forces have shrunk sharply in the last 18 months. Still, the average pay for those who remain " rank-and-file workers whose earnings are not affected by government-imposed limits " appears to be rebounding.

Of the large banks receiving federal help, Goldman Sachs stands out for setting aside the most per person for compensation. The bank, which nearly halved its compensation last year, set aside $4.7 billion for worker pay in the quarter. If that level continues all year, it would add up to average pay of $569,220 per worker " almost as much as the pay in 2007, a record year.

“We need to be able to pay our people,” said Lucas van Praag, a spokesman for Goldman, adding that the rest of the year might not prove as profitable, and so the first-quarter reserves might simply be “sensible husbandry.”

Indeed, last year, when Goldman lost money in the fourth quarter, it did not pay out some of the compensation it had set aside when earnings were stronger.

At other banks, pay scales tilt in favor of particular units. JPMorgan Chase, for example, is setting aside what would total $138,234 on average for workers. But in the bank’s trading and investment banking unit, if revenue stays at first-quarter levels, workers are on track to earn an average of $509,524 over the year. That figure was $345,147 in 2006.

To try to blunt criticism of high pay, some banks have introduced reforms to take back bonuses from individual workers whose bets later lose money. Moreover, executives say that for many well-paid bankers, a good portion of their bonus compensation is in stock, whose value can decline if the performance of the bank lags.

Representatives of several of the largest banks said much of their compensation budget covered expenses other than bonuses, like salaries, health care, pension plans and severance.

Still, the compensation expense is the only publicly disclosed figure related to pay at the banks, and it is the best figure for calculating pay per worker.