Citibank - just another example ...

[riddler 0]

of how our current government cares about rich corporations, and not about their own people.

Adding up the numbers - Citibank will receive $45 billion dollars from the government, just announced today, another $20 billion, on top of the $25 billion they were already promised.

Citibank, so far this year, has announced 53,000 layoffs, about 1/7 of their workforce. 53,000, times an estimated salary (this part, I'm just making up), let's say $50,000 per year = 2.65 billion.

Now, if the government just gave Citibank $45 billion, and it only costs $2.65 billion to keep those people employed for one year, the government should force them, as part of their bailout, to give all those people their jobs back! No, that ain't socialism, it's the best way to ensure that the taxpayers are employed, the government gets money back, and the velocity of money increases again.

And yet, that doesn't appear to be one of the terms of the bailout. The government wants to ensure that the stockholders get minimal dividends, and that the mortgagees are helped out (it doesn't say how), but what about the 53,000 people that are on the street this holiday season?

The people of the US government don't trust the government, and they wonder why. Still looking out for your rich friends, Uncle Sam? Edit for spelling.

Trapped on the surface of a sphere. XKCD

[normiss 892]

The AIG bailout isn't happening as was promised either, why should this one be any different.

I'm looking forward to national health care - I expect the money will go to the insurers and never make it to the citizens.

[DJL 235]

It isn't that simple. If you don't help the rich companies in your country then they go elsewhere. What would you like the other 6/7's of that workforce to do along with all the businesses who put their money into Citibank?

"I encourage all awesome dangerous behavior." - Jeffro Fincher

[riddler 0]

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If you don't help the rich companies in your country then they go elsewhere.

Well, good luck to a US bank that is trying to do business overseas. Maybe they want all their US customers to mail their deposits to South America?

I'm not saying it's simple - I'm saying look at the numbers. If the government gives $45 billion to a company, they can very easily tell them to make sure that $2.6 billion goes to keeping 53,000 people employed - that's well worth 5% of the cost of the bailout.

Trapped on the surface of a sphere. XKCD

[billvon 3,111]

>of how our current government cares about rich corporations, and not about their
>own people.

Nonsense! All those people need to do is start their own banks, immediately declare bankruptcy, and ask for a few billion. They'll be rolling in dough before Christmas.

[SkyDekker 1,465]

With all these bail out dollars being handed out, it should be a general condition that senior leadership gets terminated. They obviously have done a piss poor job in managing and leading the companies that employ them.

[riddler 0]

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With all these bail out dollars being handed out, it should be a general condition that senior leadership gets terminated. They obviously have done a piss poor job in managing and leading the companies that employ them.

Like the WaMu CEO (Alan H. Fishman) that was in place for three weeks before they went under? That guy is a hero, IMO, and deserved at least $50 of the $18 million golden parachute that he got. What about the previous CEO that was paid $14 million for one year's work?

They need to go all the way back to when the banks started gambling your money with risky investments (think Graham-Leach-Bliley). Sure, the crooked politicians made it legal, but the people that actually did it should be fined first, fired second, and a few of them probably need to be put in prison. But oh yeah, they're friends with Uncle Sam, so they get off without even a slap of the wrist.

I wonder how the FBI "investigation" is going?

Trapped on the surface of a sphere. XKCD

[nanook 1]

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Now, if the government just gave Citibank $45 billion, and it only costs $2.65 billion to keep those people employed for one year, the government should force them, as part of their bailout, to give all those people their jobs back! No, that ain't socialism, it's the best way to ensure that the taxpayers are employed, the government gets money back, and the velocity of money increases again.

Here's my belief on this: It would cost more than the 2.65 bills. That's salary only. There's also insurance an other amenities that they previously may have had. Also, they would have to reexpand that part of the busines that shrunk up. The spaces, equipment, communcations, buildings, infastructure ect. ect. Then because of that, there would be less profit, (or realistically, less capability to climb out of the red, which is the whole purpose of this bailout in the first place) because there is just so much clients but a considerable amount of employees and infastructure.

it seems to me the amount of money needed to keep them employed with the same business load would cost more than what the employees can put back into the economy. Even if two thirds of them had mortgages that will default.

I'd say, keep all laid off people on file and make them first priority when things hopefully rise up to the "black".

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"The trouble with quotes on the internet is that you can never know if they are genuine" - Abraham Lincoln

[kelpdiver 2]

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Here's my belief on this: It would cost more than the 2.65 bills. That's salary only. There's also insurance an other amenities that they previously may have had. Also, they would have to reexpand that part of the busines that shrunk up. The spaces, equipment, communcations, buildings, infastructure ect. ect. Then because of that, there would be less profit, (or realistically, less capability to climb out of the red, which is the whole purpose of this bailout in the first place) because there is just so much clients but a considerable amount of employees and infastructure.

The number is really a WAG. Certainly if their salaries are 50k, their true costs are much higher, but I also imagine the tellers are getting a lower salary (?). I have no idea what the breakdown of the 53,000 people are. Their average cost could easily be double, though I don't think that actually erases his argument.

It's true that the capital costs (office space) can be high, but those are the hardest to recapture in a layoff. If a quarter of your cubicles are empty, you're still stuck with them. If 3/4s are, you move to a smaller office and reclaim that, but incur moving expenses. And you also incur the costs of layoffs - generally you have to give packages to the people.

I suppose what bothers me about all this is that over the past decade, Citi has gobbled up a number of the nice local banks in SF - ones that used to give good service. Now it's going to give shitty service, and be nearly bankrupt anyway. After an era where essentially all mergers were permitted, seems like we do need the government to prevent the formation of companies that are 'too big to allow to fail.'

[nanook 1]

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I suppose what bothers me about all this is that over the past decade, Citi has gobbled up a number of the nice local banks in SF - ones that used to give good service. Now it's going to give shitty service, and be nearly bankrupt anyway. After an era where essentially all mergers were permitted, seems like we do need the government to prevent the formation of companies that are 'too big to allow to fail.

Do you believe we should reinstate the interstate banking laws that were relaxed some years ago? That may prevent future issues again. Nowadays, a bank is able to own branches over the U. S. Gives them the ability to buy a lot of smaller banks up and crash and burn in a grand scale rather than locally. This relaxation probably gave the banking systems confidence to offer grand-scale risky loans will less fear.

_____________________________

"The trouble with quotes on the internet is that you can never know if they are genuine" - Abraham Lincoln

[riddler 0]

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Here's my belief on this: It would cost more than the 2.65 bills. That's salary only. There's also insurance an other amenities that they previously may have had. Also, they would have to reexpand that part of the busines that shrunk up.

Yes - that is all true. Say the average really is $50,000 - sure, some people would make more, but most bank tellers don't make that much. Then overhead is another $25K (another estimate, but not an unreasonable one). Then retraining is another $25K (I'll get to that below). Then the true cost of each employee is $100K per year. So the cost of reinstating employees is $5.2 billion.

Still the size of the numbers is overwhelming. $45 billion bailout, minus $5 billion to keep everyone employed leaves $40 billion to let the execs pay some debt, keep their corporate jets, have an executive retreat in the Bahamas every month. Hell, require CitiBank to hire another 50,000 people that have been laid off at GM, and it's only $10 billion, leaving $35 billion for them to play with. Or even better, guarantee all of the original employees keep their jobs for the next three years, instead of one.

The bigger problem, as you already stated, is what do you do with people that work in buildings that you are closing? That's where the $25K in retraining goes to. Joe the Bank Teller becomes Joe the backup network admin in the IT dept, follows the network admin around for a year and fills in when there's a resource shortage. Have you ever met a network admin that didn't want help? Then, after a year, you've got a lot of people in the economy with new skills. All paid for with your tax dollars (which has already been given to the banks, anyway).

Trapped on the surface of a sphere. XKCD

[happythoughts 0]

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Then, after a year, you've got a lot of people in the economy with new skills.

All nice except for two things.
- Citibank is a multinational, it doesn't truly care about US citizens or the economy of a given country.
- Citibank can replace these employees with cheaper employees elsewhere and their bottom line looks better.

All these actions were probably part of a 3-year plan, not a result of the economy.

Example -
A New York bank does some math on moving to Tampa.
- They get a tax break if they move to Tampa and keep the jobs there for 5 years.
- They replace $120K employees with $70K employees and the new employees will not be vested in the pension fund for 5 years. Buy out the pensions of the old employees.
Less long-term debt = better Wall Street rating. Stock goes up, CEO compensation is tied to stock price = bonus.
- November 2008 - announce that 300 Tampa employees are replaced by 300 in Manila. $70K employees replaced by $25K.

Verizon once estimated that by doing the 2003 pension buyout for 21,000 employees, it would cost $1.5B.
They also estimated that the cost would be recouped in less than 2 years.

[riddler 0]

These are fair points.

Vikram Pandit took over Citi at the end of last year, and it's typical these days for a new CEO to come in, make massive layoffs, and boost the quarterly profit to look good. However, it should be noted that previous CEO was ousted because of the subprime lending, so it is directly a result of the economy - the fact that they brought in a new chieftain with an axe, vs. giving an axe to the old CEO, is irrelevant.

The fact that only a portion of the layoffs will be in the US is a good point. Obviously, US tax dollars shouldn't go anywhere near offshore ventures or employees. But that just lends more credence to the rehire argument - fewer employees, fewer dollars, easier to justify a forced rehire of US employees as a stipulation of the bailout.

Trapped on the surface of a sphere. XKCD