Posts Tagged ‘Wall Street’

Digging a Little Deeper On the Subject of Wall Street Bonuses

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Expert Perspective by Grahall’s OmniMedia Editorial Board

There has been a flurry of articles recently on the expected bonuses to be paid to Wall Street employees.  The record breaking number for this windfall is as high as $144 billion (with a B) despite the tireless efforts by Messers. Dodd and Frank (and our other elected officials) to reform Wall Street while protecting Main Street.  But then Dodd–Frank Wall Street Reform and Consumer Protection Act was only signed into law in July a mere 3 months ago (the eye blink equivalent for “rule-making”).  Seriously, did anyone think that Congress could focus on reform and protection with mid-term primaries and November 2 elections before them?  It would have taken a bit more than even Christine O’Donnell’s “old black magic” to get than done!

Anyway, with Wall Street year-end bonuses looming (large) and no regulations to help determine what might constitute an “inordinately large payout”, other than from William Alden’s October 17, 2010 article in the Huffington Post Wall Street May Break Pay Record – Again) where “Federal Reserve general counsel Scott Alvarez [is quoted as saying]: “It’s very nuanced… There is no number.”  It seems, to borrow a phrase from Potter Stewart, once Associate Justice of the Supreme Court of the United States, “we’ll know it when we see it”.  Leaving the real question to be: Do we see it with $144 billion?
What is going on here?  That is a question we asked just a couple weeks ago in our blog Of Banks and Bonuses where we said that there were a couple of things at play.  That was an understatement – there are many things at play, and without tweezing them apart and thoroughly examining them – it is hard to say if $144 billion is obscene or not.

Yet theories abound. Here are some of our favorities. 

Perhaps with financial services restructuring, the remaining folks (a smaller group than before) all must work harder and the cost of compensating and retaining the “High” Q individuals is increasing in the market.  This is due to the departure of “process based” jobs, leaving banks and Wall Street with many more intellectually demanding jobs requiring judgment and decision making.  And the people in these tough jobs maydeserve to be better paid.  

Or maybe since Wall Street stocks are up in value (at least over last year if not over last month) and the hard working executives who have turned around these struggling entities (some with the help of taxpayer support) deserve to get some credit or at least some cash.

Perhaps with Dodd-Frank regulations still “in the can” and a chance that favorable tax rates will be repealed in 2011 financial services executives want to cash in now.

And, finally, maybe Wall Street is simply looking to recapture what they ”lost” in bonus payments last time around. 

More likely it is all these things and many, many more.  Remain assurd,  though, that regardless of micro economic, macro economic, global, local, political or any other issues at play, Wall Street has and looks to continue to take care of themselves.

Contact edie.kingston@grahall.com

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Of Banks and Bankers Bonuses: Is the News Good, Bad or Neither?

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Expert Perspective by Grahall’s OmniMedia Editorial Board

So what is going on in Financial Services anyway?  One day you read that bankers will get their bonuses early (Newsweek: Banks May Dole Out Bonuses Early).  Then things sound grim when on another day the news is about Wall Street bracing for layoffs and lower bonuses (Huffing ton Post: Wall Street Braces For Layoffs And Lower Bonuses).  Then still more information comes out about the new banking rules and how they will reduce bank profits and therefore reduce bonuses based on profits (Wall Street Journal: New Bank Rules Good for Everything—Except Bankers’ Bonuses).

So is Wall Street suffering like Main Street or not?   There are a couple things at play here.
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Politics as Usual

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With a sad shake of our heads and an audible sigh we read the article By Jim Puzzanghera and Nathaniel Popper  Pay czar slams bonuses but doesn’t seek refund and agreed that “it’s just politics”.  Clearly our Special Pay Master, Pay Czar, or whatever you care to call him really didn’t have much influence over anything payments made by TARP companies.  The nose thumbing that makes Wall Street universally disliked by Main Street  was this time, clearly directed at Feinberg with them saying, in effect “we don’t damn about how you think we should run our companies.”  And Feinberg blinked.
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Wall Street Lost Fewer Jobs Than Forecast in Recovery

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http://www.bloomberg.com/apps/news?pid=20601103&sid=arTfuqVz33aA
Wall Street Lost Fewer Jobs Than Forecast in Recovery (Update2)
By Henry Goldman
Nov. 17 (Bloomberg) — Wall Street is recovering faster than the national economy, with New York City’s four largest investment firms reaping profits of $22.6 billion through Sept. 30 after losing more than $40.3 billion last year, state Comptroller Thomas DiNapoli reported.
DiNapoli’s annual report on the city’s securities industry also found that job cuts following the worst credit crunch since the Great Depression may not exceed 35,000. The total is about what Wall Street lost following the 2001 recession and terrorist attacks and less than the 47,000 officials predicted when preparing the city’s June financial plan

Published in Bloomberg November 17, 2009 by Henry Goldman

Wall Street is recovering faster than the national economy, with New York City’s four largest investment firms reaping profits of $22.6 billion through Sept. 30 after losing more than $40.3 billion last year, state Comptroller Thomas DiNapoli reported.

DiNapoli’s annual report on the city’s securities industry also found that job cuts following the worst credit crunch since the Great Depression may not exceed 35,000. The total is about what Wall Street lost following the 2001 recession and terrorist attacks and less than the 47,000 officials predicted when preparing the city’s June financial plan.

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Virtuous Bankers? Really!?!

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Published in The New York Times November 11, 2009 by Maureen Dowd

The Great Vampire Squid has gotten religion.
In an interview with The Sunday Times of London, the cocky chief of Goldman Sachs said he understands that a lot of people are “mad and bent out of shape” at blood-sucking banks.
“I know I could slit my wrists and people would cheer,” Lloyd Blankfein, the C.E.O., told the reporter John Arlidge.
But the little people who are boiling simply don’t understand. And Rolling Stone’s Matt Taibbi, who unforgettably labeled Goldman “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money,” doesn’t understand.
Banks, Blankfein explained, are really serving the greater good.

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Goldman chief defends employees’ pay

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Published in Financial Times November 10, 2009 by Greg Farrell

Goldman Sachs pays its employees more than other financial groups because its employees are more productive, declared Lloyd Blankfein, Goldman chief executive, at an industry conference on Tuesday.
Mr Blankfein offered a wide-ranging defence of his company on Tuesday to an audience of banking analysts at a conference sponsored by Bank of America. His comments came as public debate continues over Goldman’s power and bonuses, prompting the comedy programme Saturday Night Live to ask the bank: “Can you not read how mad people are at you?”.

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Let Them Eat Cake

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Storm the Bastille!
Expert Perspective by Grahall’s OmniMedia Editorial Board

expert perspective telescopeTwo articles last week draw stark attention to the growing economic disparity that exists in America between Main Street and Wall Street. 
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Anger Over Wall Street Pay Puts Spotlight On Directors

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Published on CNBC October 23, 2009 by Reuters

Outrage over the lavish compensation that Wall Street has awarded itself for doing a crummy job is likely to increase the focus and burdens on the people who set and monitor how pay is doled out: corporate directors.
The financial crisis has prompted demands by shareholders and politicians to rein in out-of-control pay, especially when it spurs bankers and traders to take too much risk.

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Who cares if Wall Street ‘talent’ leaves?

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Published in CNN Money October 23, 2009 by Colin Barr

There’s no need to fear a Wall Street brain drain — despite the crackdown on pay by Washington.
On Thursday, White House pay czar Kenneth Feinberg outlined compensation restrictions at seven firms that got special bailouts, and the Federal Reserve proposed to review pay practices at 28 unnamed giant banks.

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Fed Hits Banks With Sweeping Pay Limits

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Published in The Wall Street Journal October 23, 2009by Aaron Lucchetti, David Enrich and Joann S. Lublin
In a one-two punch at the pay culture of banks and Wall Street firms blamed for the financial crisis, the U.S. government announced plans to aggressively regulate compensation at thousands of lenders and impose steep pay cuts at seven companies that received billions in federal aid.

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