And I do agree that the compensation system is flawed in many cases. At some banks executives are paid on the prior quarter’s stock price, causing them to have a very short term outlook. Also, when bonuses are linked to volume instead of profitability, it encourages sloppy lending.

I like how our bankers are compensated because it’s tied directly to bank profitability – and if one of your loans goes bad your compensation is directly affected (and you’re probably fired unless it was totally unforseeable). It’s much more difficult for the individual bankers, but it only seems fair.

@ Deanna, I’m not sure how anything I said is hypocritical- and I am happy that I have a job; I’ve had several friends get laid off this month. And my bank is not accepting any bailout money, so I’m not sure how I’m being hypocritical. Just offering another point of view.

I read nothing self-centered in Meg’s post. She was offering her perspective.

Buck up and be happy you have a job

Deal with it and move on

No money, no bonuses
Let’s not be a hypocrite, ride it out like the rest of us

I understand your points and they make sense.

However…

If a company’s finances are so dire that they must receive bailout help from the government, then they really have no business paying out bonuses. Afterall, shouldn’t bonuses be based on the overall health of the company?

If the choices are (A) Bank goes under and you can lose your job or (B) bank gets bailout money, I’m sure many employees might take option B without bonuses. Or am I off base?

I think that statement is the crux of the argument, due to management’s setting of bad goals the banks have created a huge mess that threatens the entire economy.

I fail to see how the bailout should be used to pay for bonuses. Bonuses should only be paid if the company is profitable which in these cases they are not.

This is the problem of people using bonuses as must haves. When we make bonuses an entitlement they go against why they were created in the first place to give incentive to profitability. Sorry no profit, no bonus, no bailout money.

Make some great points that are easily missed in the route of emotion when it comes to examining this crisis. Perhaps it is not the bonuses, but the incentive structures we need to look at. You mentioned bonuses can be tied to the volume of loans approved.

When I studied corporate crime in some of my undergraduate work, a lot of time we look at the situation as the result of a few “bad eggs”. But by just punishing a few bad eggs, the system in which they were working is not fully examined and in effect for the 2-5 headline court cases, there are 100′s if not 1000′s of others who get off the hook.

In short I think George Soros is really on to something with his view of the market…and I also like Robert Kiyosaki because most of these problems stem off the fact that when the dollar was taken off the gold standard, it seems all bets were taken off in terms of what things are really worth.

I am a believer in being fully responsible for myself and making sure I read any and all fine print when it comes to signing documents, especially those that pertain to my finances.

As a future healthcare provider, I’m required to give informed consent before I give any treatment to patients. As financial decisions have comparable weight to health decisions in terms of potential outcomes, perhaps there should be some form of informed consent in financial consultations. As a healthcare practitioner, just because I had a patient sign a form doesn’t mean I’m protected. Shouldn’t a financial advisor/bank employee be held to a similar standard?

Most people view banks not as products of any sort of market dynamics but as a protective institution for their assets. The same goes for healthcare, with the asset being health. Is it any wonder that when you apply market dynamics to these institutions that the system finds it difficult to sustain?

I really think the scariest part about our current economic climate is you have so many disasters working at once, banking, healthcare, energy….The financial sector was the first to go. I think we haven’t found answers because we are unwilling to make the choices that will result in short term loss, despite the longterm benefits.