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Citi asking Treasury for bonus power
A man checks his cell phone as he passes by a branch location of Citibank in Washington, D.C.
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Steve Chiotakis: As if we haven't had enough bonus business to talk about lately, there's more. The Wall Street Journal reports this morning that Citibank is asking the Treasury Department for permission to pay out retention bonuses to certain employees. As Marketplace's Steve Henn tells us, Citi's worried if it doesn't, some of its most profitable businesses could fall apart.
Steve Chiotakis: Phibro isn't a household name, but last year this little division inside CitiGroup made hundreds of millions of dollars trading commodities.
Pete Hahn is a former Citi executive who's now at the Cass School of Business in London:
Pete Hahn: Gold, grain oil, you name it. And this is an area in Citi that's doing quite well.
The head of Phibro, Andrew Hall, took home close to $100 million last year. But now that the feds have a $50 billion stake in Citi, paydays like that are politically unpalatable.
Hahn says it makes sense for Citi to keep Hall happy and keep Phibro intact. But government pay caps are a problem.
Hahn: These individuals are generating large profits, and frankly that's going to help share price and help repay taxpayers.
Citi's reportedly asking to pay top executives like Hall stock bonuses that would vest over the next three years, and in some cases could be worth hundreds of millions of dollars.
In Washington, I'm Steve Henn for Marketplace.
100 million? Really? That doesn't seem ridiculous to anyone else? Even if they didn't have bailout money, it is still ridiculous. The money that they pay them isn't made out of thin air, it comes from the pockets of every one of us. There is no excuse for anyone to make 100 million dollars for a bonus. Yes, there are people who make more, but it doesn't help the fact.
Keep in mind that other people (tens of thousands) are losing money or paying high interest rates to subsidize this sort of non-sense.
I would be willing to wager that there are a great many people in this country that could perform his job nearly as well for less than one percent of his bonus.
Shameful.
Commodities trading, as done by Phibro, is of NO VALUE to the general public as it will only raise costs of the product traded. Hence the enormous profits related to last years speculative run up in commodities prices. It is similar to claiming that a Realtor's hefty fee benefits the buyer and seller.
IF hey are so good, they can always start their own trading business. The trading of commodities is really legalized gambling for companies who are in it for the money only. There is always the case where, when employ help company make lots of money, they want huge bonuses. However, when the company loses money, someone else is left holding the bag. I say, if the employee is so good, go start your own business.
