Wall Street bonuses to rise 40%

Analysts thought 2009 would be a good year for bankers, but it turns out it will be great

By 247 wallst Nov 5, 2009 8:05AM

CEO © Roy McMahon/CorbisThere has been plenty of evidence that firms like Goldman Sachs (GS) have had such huge profits that their bonus payouts may be at all-time highs.


The federal government has systematically begun to control bank pay packages. The Treasury “pay czar” is effectively controlling compensation at companies which still owe TARP money. The Fed is pressuring other large financial firms to tie pay to risk.


None of those efforts seems to be working well, because bankers are ignoring the signals from Washington.

A new compensation survey described in The Wall Street Journal predicts that Wall Street incentive pay will rise 40% this year. For those in the fixed-income part of the industry, the increase could be closer to 60%.


Data about pay packages will be available, in some cases, as banks release their proxies. It is safe to say that the study and other data from Wall Street show that being a financier was very rewarding this year.


What is not so clear is whether there will be a “clash of the titans” of sorts between the CEOs of Wall Street's biggest firms and Congress?

Many in Congress have taken the stance that the financial community is entirely at fault for the collapse of the credit markets. These politicians argue that greed was the key ingredient that caused bankers to take unnecessary risks.


Wall Street executives will rely on three arguments to counter Congress. The first is that only a small number of bankers were responsible for the trouble in the mortgage-backed and leveraged deal markets. Why should all of of the other bright bankers on Wall St. be punished?

The second argument is heard over and over again. Underpaid banking stars will leave for private equity firms and hedge funds leaving the largest banks on Wall Street stripped of their best talent.


The last argument the big banks will make for controlling their own pay is the most compelling. The SEC has set up governance rules that force boards to be responsible for how senior management is paid and to set the tone for the compensation of other executives. Why is Congress able to usurp the rights of sovereign boards elected by independent shareholders?


Top Stocks writer Douglas A. McIntyre is an editor at 24/7 Wall St.


Related stories:


Top 500 companies


Financial TV


Biotech stocks

Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
100 character limit
Are you sure you want to delete this comment?


Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.


StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

125 rated 1
267 rated 2
455 rated 3
612 rated 4
682 rated 5
695 rated 6
632 rated 7
472 rated 8
279 rated 9
147 rated 10

Top Picks

TAT&T Inc9



Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.