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Brendan Mcdermid / Reuters
No house in the Hamptons this summer for some traders. Wall Street pay is expected to drop this year for a number of reasons.
Cue the world's smallest violin? Ahead of fourth-quarter earnings reports from major banks, compensation at 34 big financial firms in 2011 is projected to plummet. Some Goldman Sachs traders could lose up to 60 percent of their pay and will get no bonuses, and the average pay at Goldman Sachs will fall to $385,000 from an average $431,000 in 2010, according to the The Wall Street Journal Monday. By contrast, a report by Sentier Research last fall found that U.S. median household income in June of last year was $49,909, down from $55,309 at the end of 2007.
Banks' earnings were crimped for several reasons: The stock market fluctuated wildly, fewer IPOs were filed and companies had less demand for banks' high-priced consulting skills. The financial industry also tends to lay the blame at the feet of increased regulations for banks, such as limits on consumer banking fees. Still, the amount of money banks set aside for compensation has inched up over the past couple of years and now stands at 36 percent of revenue.
While bonuses have traditionally made up the bulk of banking's most eye-popping pay levels, some banks have changed their pay structures to focus more on salary than bonuses. Bonus-based compensation could motivate some employees to take on potentially damaging risks because it prompts them to focus on their own rewards rather than the health of the firm or the financial system overall, say some industry observers such as Nassim Nicholas Taleb, author of "The Black Swan: The Impact of the Highly Improbable.”
The drop in compensation for 2011 is expected to be so drastic that it's likely some mid-level bank employees will wind up taking home more than the executives to whom they answer, the result of a compensation structure in which top-level workers earn much of their income via bonuses. Banking industry analysts say financial firms might have to adjust to this "new normal" in which the outsized compensation of the mid 2000s is a thing of the past. Some banks are also adjusting by giving out bonuses in stock instead of cash, which could benefit today's recipients in the future. Bank stocks struggled last year, but if the financial sector recovers and share prices increase, those bonuses could be worth more.
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Boo hoo. Even at "lower levels" TOP executives at top firms still clean up. Isn't the CFO of taxpayer funded Fannie and Freddie making $9 MILLION? Even at "This is the perfect example of why the corrupt Wall Street profit guarantee by taxpayers under Dodd-Frank "too big to fail" must end. Wall Street gambles with taxpayer money and it's "heads I win, tails you lose" because taxpayers end up "bailing out" (guaranteeing the bonuses of) the big Wall Street companies that (not coincidentally) are joined at the hip to the corrupt Washington HIGH LEVEL BUREAUCRATS and POLITICIANS.
World's smallest violin.
http://youtu.be/0tdsL4kvp_I
If you could bother to notice that the greedy come from both parties, then you'd have some merit. Let's remember both parties supported Paulson's truckload of our money to people for failing at running financial institutions.
You're breakin' my heart, here.
Hey, is that a head photo of a Barbie doll? [The Searchers' song 'Georgy Girl' starts playing]
http://www.youtube.com/watch?v=eSVfLNCW4Fs
Hey there, Georgy girl
Swingin' down the street so fancy-free
Nobody you meet could ever see the loneliness there - inside you
Hey there, Georgy girl
Why do all the boys just pass you by?
Could it be you just don't try or is it the clothes you wear?
You're always window shopping but never stopping to buy
So shed those dowdy feathers and fly - a little bit
Hey there, Georgy girl
There's another Georgy deep inside
Bring out all the love you hide and, oh, what a change there'd be
The world would see a new Georgy girl
[Instrumental Interlude]
Hey there, Georgy girl
Dreamin'; of the someone you could be
Life is a reality, you can't always run away
Don't be so scared of changing and rearranging yourself
It's time for jumping down from the shelf - a little bit
Hey there, Georgy girl
There's another Georgy deep inside
Bring out all the love you hide and, oh, what a change there'd be
The world would see a new Georgy girl
(Hey there, Georgy girl)
Wake up, Georgy girl
(Hey there, Georgy girl)
Come on, Georgy girl
[Fade]
(Hey there, Georgy girl)
Wake up, Georgy girl
better link: http://www.youtube.com/watch?v=bf8O1whEH5s&feature=related
=)
Instead of Barbie and Ken, Mattel needs to come out with Heidi Fleiss and Charlie Sheen (one of Heidi Fleiss's best customers) dolls. I think the new dolls would become very popular. So what do you think?
Both parties are guilty and many should be convicted of insider trading with the information they were privy to before the collapse.
Madison..you have it backwards..Dodd-Frank ends both bailouts and "too big to fail". The Republicans have been fighting this legislation tooth and nail. There are many changes in this legislation that are aimed at stopping the financial catastrophe we are currently going through. There is nothing in Dodd-Frank that guarantees taxpayers will pay for the bad decisions made by the banking industry. Quite the opposite, it attempts to make banking more transparent and rein in many to the instruments that are currently unregulated. It also created the department of Consumer Protection.
You're wrong about Dodd-Frank. It does just the opposite- guarantees that tax payers will never be asked to bail out big banks again. Its about consumer protection. Here's a link to a simple summary of Dodd-Frank.
Now that Cordray has been appointed the law can work as intended. Wall Street is sending the message it's a bad law. They don't like being put in line.
Derek, Madison didn't mention any party in particular, so wtf are you on about?
Don't forget to mention what those what party those evil big income fat cats donate large sum to.
Can't hate the fat cats, then vote for the party of the fat cats, and bitch about democrats.
You meant to say taxpayer OWNED! WE, THE PEOPLE, own both Fannie and Freddie.
Another deflationary move - and - good news for the economy. It is time that, as a society, we begin spending our money on more productive activities.
Capitalism is supposed to be about rewarding WORK. The capitalist argue that 'socialism' fails to reward work, does not provide incentives to 'pull oneself up by the bootstraps'. Socialism does reward RISK - many socialist despots took great risks to achieve power.
Our 'capitalism' has been infested with financial parasites - our 'capitalism' is sick. Capitalism is NOT about rewarding risk - that is a privileged socialist value. Gambling in 'investments' requires losers for every winner - it is zero sum - it redistributes wealth on a roll of the dice. The financial parasites are not creating a larger economy - a healthier economy - not creating new wealth. They are creating an entitlement based on redistribution of wealth from workers to risk takers. The financial parasites have infected our economy - and - profit by incubating the disease.
As a society, we need to return to the capitalist principle of rewarding work - and - allow the socialist principle of rewarding risk to deflate out of existence.
Remember the good old days when journalists REPORTED the news, and didn't comment on it. "Cue the world's smallest violin?" You know, shut up. Just report the stinkin' news. Who are you, Martha C. White, to give us your opinion. Your job is to REPORT.
whats with all the hate Marla????? don't read it if you have such a problem with her style of reporting
Must be one of those who will see a reduction in compensation. Hey, Marla, all Martha did was put into writing what immediately ran through everyone else's mind upon hearing that Wall Street incomes are taking a bit of a dive. So get over it.
There is no hate-- I'm lucky if I'll see that much income like those on Wall Street make in 10 years worth of work. I'm raising kids on a shoestring. I'm tired, however, of all the whining about how much Wall Street makes. THAT'S what you people need to get over. They no doubt went to college, got an education, and got a job that the rest of you poor slobs can only hope for-- and complain that you don't have. And "I" have to get over it? Puh-- yeah, right.
And "don't read it if you don't like it?" It was kind of hard to avoid "her style of reporting," as her comment was in the first sentence. She isn't reporting. She is opining. She belongs in the op-ed, not "real" news....but then, does anyone, anymore?
That's a Lie Madison From NY. Dodd-Frank does not guarantee wall street profits. If it did you would never read that their profits fell. You need to put down the tea bags and drink common sense coffee. Clown
Did you even read the article? My guess is Hell No You Didn't.
Boo Hoo......
It's nice that they're being paid less, but shouldn't they be in prison? These people wrecked the global economy, then were bailed out with YOUR money and used that to give themselves $Billions in bonuses... Has your 401k recovered to even 60% of its former value yet?... if the government isn't willing to lock these people up it may be time for citizens to take matters into their own hands.
Agreed. It guarantees the miserable existance of the Big Wall Street Banks free to gamble again and guess right next time with all losses bourne by taxpayers when they lose the big bet.
If MF Global was one of the top banks Dodd-Frank would have bailed them out at a cost to taxpayers of over $2 Billion and Corzine would have remained employed to collect HUGE BONUSES once he turned the firm around gambling on other investments guaranteed by taxpayers.
Then Corzine can keep "bundling" and "contributing" away based on taxpayer guaranteed EVENTUAL returns and CORRUPT WALL STREET BONUSES ORIGINATING FROM WASHINGTON DC-WALL STREET CRONY CAPITALISM.
See how the corrupt system works? Washington DC has "gamed" the system in favor of BIG WALL STREET FIRMS in bed with them (NOT SMALL BUSINESS).
"Too big to fail" is utterly corrupt.
Madison..it's one thing to have the wrong information about something. It's beyond stupidity to hang on to that bad information. Do yourself a favor, simply google Dodd-Frank. There are a number of sites that break the law down into a simple synopsis. Go read those then come back and give us a link to a website that supports your current claim.
I do not see where it says a bank MUST be bailed out... are you reading a different document?
Your masters seem smart though. The two things the public hate right now are wall street profits and bailouts that resulted in them. So they send you forth to first say "it guarantees wall street profit" then when asked about that you say "it promises bail outs" successfully making anyone who believes you and your incorrect information hate it for giving two things the public can't stand. Great tactic, utter bull@!$%# and a lie, but a good tactic.
Excuse me, Madison, but how does Dodd-Frank guarantee Wall Street profit taking? By demanding transparency? Enabling share holders to vote on executive compensation and golden parachutes? (I can just see it: We, the share-holders, believe that Lloyd Blankfein DESERVES an extra $42 million in bonuses this Christmas! Yeah, right.) How about the fact that if an executive is found to have lied about the profits, he has to give the compensation back?
You need to actually read Dodd-Frank, Madison. And turn off Fox News! It rots your brain!
You have to have a brain for it to rot. "Madison" does not have a brain.
Not a tear in my beer...about time the other half knows how it feels. Then again, that may be asking too much...
Yeah. They might have to get by on 6 million a year, instead of 12.
Why, their pampered crotch fruit might actually have to attend...gasp...public school!!! Won't somebody think of the children?
That's too bad. I think we should lower their taxes. That will fix it.
With obama in for 4 more years the stock market will crash. It is time for the have and the have nots.
when was it not the have and the have nots? And why would it crash? All these bankers are going to suddenly stop caring about making a profit and just throw money away because Obama gets re-elected? Get real, they may talk a fair game about wanting Obama out (so they can get 100 times more Crony with Mittens or Grinch) but they aren't about to give up life because their guy didn't win.
My God! How can one live on only $350K/yr instead of $450K? Oh how Wall Strtrs have to suffer!
They need to revamp the bonus system entirely to make these people look to the longer term effect of their decisions. Cash bonuses should be capped at $500K tops. The remainder should be awarded in stock bought at the time of award. The stock can be released from years 5 to 10. If the the share price went up, then they get rewarded. If the share price went down they get a reduced bonus.
This is bad news for ALL Americans. Many people have 401K's in the stock market, the pay supports many people in the New York area...from restaurant waiters, hostesses, entertainment industry, fees for cars, houses, real estate, taxes, I could go on and on....I abhor the political rhetoric against Wall Street making it the bad guy....fact is, we need Wall Street to perform well for our economy and not just in New York. Stop the class warfare now.
Jennifer..Wall Street is small in the grand scheme of 401k's. Mutual Funds are made up of thousands and thousands of honest, stable and responsible companies across America. You are giving the Wall Street crowd too much importance. Goldman Sachs, for example, makes the majority of it's money through high frequency trading. Which should be outlawed. These companies do not add value to our economy.
I got your "class warfare" right here.
There is always a flip side. Lower pay in financial firms means less federal, state and city tax revenue collected. That will mean either higher taxes for cities and states, or more cuts in services plus layoffs of public employees, or a combination of the two. It will also mean a higher level for our national debt.
I don't know about that. If it's money that the company is not paying, it will end up on the bottom line of the company and they will pay higher taxes. If the overall revenue is down, that means their customers aren't spending the money and it will end up in their bottom lines and they will pay higher taxes.
Taxation is the fee the government applies for the shifting of money from one person (or company) to another. If the same total money continues to move around, the overall value of taxation should remain somewhat constant. It's when the circulation of money slows down that taxation levels drop off.
You could argue that as more and more of the money is tied up in savings for all people and businesses, taxation levels drop and yet we require the same goods and services from our government which means something hurts somewhere (for us, it's our government debt).
Peter is referring to the Republican Mantra of "tinkle down" economics.
It s about time. Occupy Wall Street!
"The financial industry also tends to lay the blame at the feet of increased regulations for banks, such as limits on consumer banking fees."
Aww. Its all our fault. We should enjoy getting ripped off and raped by the banksters. I think they are vying with lawyers and our politicians for the title of Least Trusted, Least Admired and Least Honest people in the US.
"Behind every great fortune lies a crime". Honore de Balzac
Unfortunately for America, the powers-that-be condone this state of affairs.
Pay them what they're really worth, about a dollar-fifty. Go out and earn a real living. *Bleep* 'em, I have no sympathy.
What will go down in time as the Biggest Crime Organization ever, "WallStreet".....
Yeah, yeah. The only folks who deserve those outrageous salaries are the media folks. Right.
I'll try to suppress my crocodile-tears... The thought of those poor Wall-Streeters having to get by on $350K instead of $450K; or buy one less Mercedes this year; or...gasp...send their sweet Buffy and/or Biff to a slightly less-prestigious university this year... well, it's more than I can bear...
But, I'll struggle through....
Of course these high-priced financial folks will now pay lower taxes and spend less, so that means some retail and resturant workers will lose their jobs as well as some public sector employees. Perhaps you can feel a little bit sorry for them.
Pure bullsh!t Peter, and you know it.
See post 15.1 above. It sums it up pretty well. Peter, your tinkle down economics has long been proven a joke.
Wall St may be corrupt, but the idea that somehow all of the economy's problems result from Wall St employees' high pay is misguided.
The American economy has a lot of long-term structural issues. Globalism is hurting the average American employee. Simply put, there is cheaper labour overseas. Why would any manufacturer not produce their products in countries where they can pay 1/3 of the average American wage and then ship it to America at ever lowering costs?
There is a global re-balancing happening for Western economies. Gone are the days where America enjoys economic prosperity at the expense of others.
The Democratic Party's plans for spending our way back to economic stability is only delaying the inevitable, and the Republican Party's plan to de-regulate and cut costs all over is only quickening the inevitable.
My advice would be: start your own business, or get a good education in industries that are projected to improve in the future.