Why Are Banks Paying Signing Bonus So Early?

I love the smell of napalm in the morning. You know, one time we had a hill bombed, for 12 hours. When it was all over, I walked up. We didn’t find one of ’em, not one stinkin’ dink body. The smell, you know that gasoline smell, the whole hill. Smelled like [sniffing, pondering]  victory.

Someday this war’s gonna end…

Robert Duvall (Lieutenant Colonel Bill Kilgore)

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I’ve recently learned from several MBAs graduating in 2010 about firm signing bonuses. They are being paid out unusually early.

I have been wondering why.

The FOMC’s Zero Interest Rate Policy has been a license to print money — literally for the Fed, and figuratively for the major banks.

Being able to borrow at near zero costs means that making billions of dollars is a no brainer, even for some of the planet’s most mismanaged bankers.

Banks are so flush, they have been repaying TARP funds, buying out toxic debt guarantees, and repurchasing preferred shares and warrants.

The most recent hint of their overflowing coffers are the class of 2010 hires. Traditionally, these new employees receive their sign on bonuses sometime in the spring. Some start work that summer; most (at least in my day) begin in September, following one last drunken promiscuous binge through Europe (Ahhh, youth).

I was surprised to learn that several firms, most prominently JPMorgan, are paying out their signing bonuses over the next few weeks.

Its not too hard to imagine why.

I doubt pending legislation has much to do with it, but who knows. Given how much cash they are throwing off, my best guess is they are trying to spend as much of it as possible in the current tax year.

The crisis, the bailouts, the obscene amount of taxpayer monies that have been usurped and wasted. One is reminded of Colonel Kilgore’s speech in Apocalypse Now:  While Duvall’s famous Napalm line gets quoted all the time, it is that last wistful sentiment that is really is the most poignant — and relevant — to the present license to steal.

Someday this war’s gonna end…

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