Wall Street Bankers to Receive $70 Billion in Compensations

Wall Street compensation has emerged again as a hot topic. According to British newspaper, The Guardian – financial workers at Wall Street’s top banks, are to receive pay deals worth more than $70 billion for their disastrous work so far this year. The irony of this new development is that they will get paid despite the fact of how badly their respective firms are doing or what shareholders in financial firms have lost.

But what makes the story even more interesting is that a substantial proportion of the compensation is expected to be paid in discretionary bonuses. Many companies provide discretionary bonuses at holiday time, at the end of a successful project, or if the company achieves unexpected or unusual success. Now, we do not really subscribe to the notion that banker compensation is the major issue here – perhaps, the remaining investment bankers are simply being rewarded on a meritocratic basis for their hard work and contribution to the profitability of their specific division.

However, when considering the role investment firms played in plunging the global financial system in a financial crisis that caused the financial markets to disrupt the system’s capacity to allocate capital – consequently bringing investment to a halt — awarding $70 billion in compensations is not only to completely ignore the realities of the situation but most importantly, reinforces the notion that failure gets rewarded.

In the first three quarter of this year, notes the paper – Citigroup (C), which earlier this week along with other major US banks received billions of dollars by the US government as part of its bailout plan, accrued $25.9 billion for salaries and bonuses, a 4% increase from last year. At Goldman Sachs (GS) the figure was $11.4 bln, Morgan Stanley (MS) $10.73 bln, J.P. Morgan (JPM) $6.53 bln and Merrill Lynch (MER) $11.7 bln. At Morgan Stanley, the amount put aside for staff compensation also grew in the last quarter to the end of August by 3% to $3.7 bln.

Many critics of investment banks have questioned Wall Street’s compensation philosophy in terms of why firms continue to siphon off billions of dollars of earnings into bonus pools rather than use the funds to shore up their capital position.

None of the banks contacted by the Guardian wished to comment on the record about their pay plans.

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About Ron Haruni 1070 Articles
Ron Haruni is the Co-Founder & Editor in Chief of Wall Street Pit.

2 Comments on Wall Street Bankers to Receive $70 Billion in Compensations

  1. After the goverment injected fresh capital it must get access to halt these bonuses immediately and install a new incentive system which is based on true entrepreneurial guidelines such as stable balance sheets ,staff policies and capital gains.Only if we find a way to reward success according to understandable rules and regulations based on improved business climate,enlarged customer base and sustainable growth prospects will this thing come back to its feet.
    After we allowed to turn the world upside down we must bring it back to reality.
    We don t need a supercapitalism neither any socialism just come back to normal regular morally qualified business behaviour.

  2. Just yesterday there were about 3 – 5 links that came up while doing a general topic search on Google. Now there are dozens!! Think about this, when you have to pay your taxes, you are in essence, writing out your check to the Wall Street Banks to bankroll their $70 Billion in bonuses: Goldman, Merrill, Citi, Morgan, etc.

    Spread the word, “National Walk-Out Day” Monday, November 3, 2008, 2:00 p.m. CST.

    All Americans who are disgusted with this payoff are asked to stop whatever they are doing and walk out of their jobs, stores, schools, and any other place they may be at that time to show the elected officials, of this once great nation, that we the Citizens of the United States of America will no longer tolerate these actions. Only health care and public safety are not encouraged to participate due to the nature of their positions.

    Stand up and stay united as they cannot terminate, expel and neglect the fact that over 250,000,000 Americans are saying, “Enough is enough!”

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