Wall Street bonus average falls to $101K

Major banks are seeing lower returns and economic instability in the US and Europe. And employee rewards are taking the hit.

By Kim Peterson Dec 10, 2012 2:44PM
Wall Street signBring out the violins. The average Wall Street bonus will come in at just $101,000 this year.

That's the estimate of State Comptroller Thomas DiNapoli, according to the New York Post. And while it seems like an incredible amount to most of us, it's actually a 16.5% drop from last year and nearly a 50% drop from the high-rolling days of 2006.

Some traders are waiting out these lean years in hopes of a return to the golden days. After all, Wall Street is more adept at making bundles of cash than just about anyone. It's well-positioned to capitalize on an economic recovery.

But others think Wall Street will never get back to those days of huge bonuses and thousand-dollar meals billed to the company expense account. "I don't believe the typical bonuses, as we used to know them, exist anymore," the CEO of one investment group, Shaffer Asset Management, told the Post.

Why the big banks being so tight-fisted? Four reasons:

1. The fiscal cliff. Although it appears that lawmakers are heading to some kind of solution, there is still too much up in the air. Wall Street has no clue what will happen after Jan. 1, and bankers are worried about what impact the fiscal cliff, with its significant tax increases and spending cuts, will have on the economy's growth.

2. The Federal Reserve. As Operation Twist expires, will the Fed move to another round of quantitative easing?

3. Europe. The neverending drama has impacted Wall Street all year as traders wait nervously for developments in the European debt crisis. This weekend, Italian prime minister Mario Monti said he would resign after the 2013 budget is approved.

4. Lower returns. A market downturn has made it much harder for banks to make money. The banking industry's return on equity slid to 7.6% in 2011 from 8.4% in 2010, Bloomberg reports. The average cost of that equity is around 10% to 12%.

All of those issues are creating uncertainty, which is Public Enemy No. 1 for Wall Street. And until banks feel a little more sure about what's going on, the spigot of bonus cash will be turned down.

The workforce is getting trimmed as well. Citigroup (C) is cutting 11,000 positions across the board, while UBS is getting out of fixed-income trading altogether. The Wall Street Journal reports that investment-banking and trading revenue at the 10 largest banks may only rise by 2.8% this year to $148 billion. That's a 32% drop from 2009 and a 13% drop from 2010.

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Tags: Economy
Dec 10, 2012 3:18PM
we need to restructure our money system and our pay scales!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Dec 10, 2012 4:17PM
How sickening. What a total rip-off. These people should be paying a $100,000 fine each for bilking the system and bidding up commodity prices. They are scum.
Dec 10, 2012 3:54PM
we need to start a collection for these people.......will they be ok?........
Dec 10, 2012 5:08PM

These are probably the same people bitchin' the most about paying a little more tax, like 28% or so.

GO FIGURE........

Most probably write their Suits, shoeshines, haircuts,cabfare and lunches off as a business expense. 

Dec 10, 2012 6:04PM
Are you telling me some of these guys will have to buy the lower end private planes without surround sound............ maybe have 2 "escorts" instead of 3?  This is not fair, how did it come to this?  This is not how capitalism was supposed to work.  These guys should not have to sacrifice anything, that's for those little people to worry about.  You know 95% of America, you know little people.
Dec 10, 2012 6:29PM
Let`s have a pity party for them.If they knew how hard most of us work for 101K they`d cry.
Dec 10, 2012 4:42PM
What do you expect in a country which not only worships the accumulation of wealth, but further assigns power with it!
Dec 11, 2012 8:01AM
A Waiter or Waitress brings us food and drink. The wage is $2.51 an hour plus tips. A Financier takes our assets and buries them in bad European Bonds and in Chinese businesses that undermine our nation's economy. How much should someone like THAT make? $10 million annually and most going into offshore accounts? Now THAT is Republican math! The only bonus deserved is a choice: your money or your life.
Dec 11, 2012 8:06AM
"Let`s have a pity party for them. If they knew how hard most of us work for 101K they`d cry."
Wall Street would go catatonic if they watched how hard REAL people work for $18,000 these days. A sober reality would be to order them to do the same work for the same pay. Most couldn't, which is a bigger problem.
Dec 10, 2012 7:36PM

HEY JIM...68...We all paid those taxes, that worked...Not 36% Federal,unless you make BIG BUCKS, but then you pointed out MINUS DEDUCTS of course...YES plus those...AND if you invested in certain things like a Farm/Ranch/home office&space or other items, YOU COULD write off more...

Yeah I know the game, Jim....I know the game.

Dec 10, 2012 5:22PM
Whiles it seems like a lot of money to many people reading this, we must not forget that this is a land of opportunities and everyone has a chance at attaining the american dream - I respect these people who are successful and are able to support their families without looking for government handouts. Obama has created an atmosphere in this country where being rich and successful seems like a crime and a shame, but this is what makes this and all other free nations a wonderful place to live and where dreams can come true for anyone.

Dec 10, 2012 7:43PM
BTW.....With all taxes included I always started at 52-57% and started working down..
Dec 10, 2012 10:43PM
Oh well, there is one good thing about a lower bonus.  Obama's tax increase will take half of it, so, they will be giving the BANKRUPTOR-IN-CHIEF less money for his vacations.
Dec 10, 2012 5:22PM

This is a crap story.  First, they are generating a story off of estimates from earning analysts.  Second, they are telling you the estimated average.  You don't know if this is an estimate that'll happen - or not happen; you don't know if this average is for 10 bonuses or 1,000... this is a crap load of crap designed to inflame public sentiment again.


Well guess what - if you really want change on Wall Street and feel there are transgressions - do what I do - buy shares in each company you have an issue with and make your voice be heard... don't just vote for the proxy - make a statement!  Wall Street listens to its investors more than bloggers that are simply getting worked up by a liberal media that wants divisivenss.

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