Despite Economic Disaster, Wall Street Collected $18.4 Billion In Bonuses
Bonuses are for a job well done, right? Well, despite the economic disaster, it seems that the folks on Wall Street rewarded themselves with $18.4 billion in bonuses in 2008, which is around the same amount as they received in 2004 — when the Dow was "flying above 10,000, on its way to a record high," says the New York Times.
Of course, that $18.4 billion is much less than 2007 — the record year for bonuses. The Times points out that while things may have been going well in the past — the "gains" of those boom years have vanished — leaving only the bonuses.
Granted, New York’s bankers and brokers are far poorer than they were in 2006, when record deals, and the record profits they generated, ushered in an era of Wall Street hyperwealth. All told, bonuses fell 44 percent last year, from $32.9 billion in 2007, the largest decline in dollar terms on record.
But the size of that downturn partly reflected the lofty heights to which bonuses had soared during the bull market. At many banks, those payouts were based on profits that turned out to be ephemeral. Throughout the financial industry, years of earnings have vanished in the flames of the credit crisis.
More troubling than the blockbuster bonuses of the past are the bonuses of the future. Why are companies that are taking taxpayer money paying bonuses at all?
The companies say that they need to pay their best workers well in order to keep them, even as the job market becomes flooded, says the Times.
In case you were wondering, the average Wall Street bonus is currently $112,000.
What Red Ink? [NYT]
(Photo:Breslow)
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I like how their bonus is more than I make in a year. Seesh. :(
Are they hiring? That pay is way better than my current job; tier 2 Wall Street Sucker.
If it wasn't illegal, I'd go on a tire-slashing, car-keying crusade.
This is just absurd.
And I read that because these bonuses were about half of last year, NY State is facing a serious tax shortfall. Like a billion dollars from this difference alone.
I work for a bank that took TARP money but we're still all getting bonuses (small though). I don't know if we're in a unique position, but my bank has strong capital ratios and we're financially sound (we posted our first quarterly loss in Q4, but we were profitable for the year in 08). We took the TARP money because the Fed doesn't like it if you don't play nice and do what they "suggest" you do (it dilutes share price and it's not cheap money, so we didn't want to take it). Also, bonuses could be going to the profitable divisions, not people that caused huge losses. I'm not naive though, I realize there are a lot of sleazeball execs getting huge bonuses too.
Um, really? My hedge funder fiance didn't get a bonus at all this year. And his fund was up for the year - one of only 3 funds of its type in the WORLD to finish up for the year. Where are all these bonuses coming from?
Seriously, we would be really screwed if we hadn't been living within our means the whole time anyway. His income this year is 1/6 of what it was in '07.
More importantly, I thought we all voted on new year's eve boob girl for the flickr pool entry, not 7th grade social commentary graffiti.
My favorite slap-forehead-in-disgust moment was hearing that Limbaugh said that, since we're not in their position, we have no right to question Citibank's purchase of that $50m uber-lux private jet. "Let 'em keep it," was the self-proclaimed Voice of Conservatism.
Sure, Rush, us proles should just meekly hand out our billions then not question their extravagant purchases.
Every day, my stomach feels a bit more sick. How much is enough?
FYI: Average American income is $50,233.00 in 2007. (wiki:[en.wikipedia.org]).
These bonuses equal 366293 American household incomes combined.
Forget coffee and drinking on an empty stomach. The news of greed from wall street is enough.
@concordia: In fact, it's more than double the median household income, much less a single person's salary.
The problem is a lot of Wall Street jobs pay next to nothing for a yearly salary. Most of the employees income is in the yearly bonus. This saves the company money because a salary requires the business to match medicare and other taxes that the employee pays. With a bonus the employee pays their portion AND the portion the business owes. So paying out a $100,000 bonus costs the company less $$$ than paying a $100,000 salary.
Someone making a $100,000 bonus may only be making $20k a year in salary. Yeah $120,000 is a lot, but I'm sure it doesn't go very far when you have to live in or around NY City.
@jklug80: Yep. Fiance's salary is in the mid-5 figures. His bonuses varied from year to year significantly but always pushed his income into the 6-figure range. In Manhattan, 5 figures is barely enough to survive on.
@jklug80: hmm I would almost agree with you EXCEPT for the fact that alot of these guys out there make $150k - 200k per year not including bonus. Trust me I know, I work with them!
@Trai_Dep: I'd say we need him, as an example of primal, near-absolute doucheiness, if he weren't such a douche.
He is, I don't.
They need to pay bonuses to keep their "good employees"? When everyone else is laying off, they are worried their employees might jump ship?
"Hey, you either pay me 1 million or I will go work for...well...no one is hiring...guess I'll just sit tight. But I won't like it...having to scrimpy by on a measly 5 million dollar salary...sheesh"
@jklug80:
Sounds like they are using some kind of tax dodging system. My measly 1k bonus last year turned into 600 after uncle sam got his mits on it.
@qwickone: Aww, I really feel bad for your small bonus. I mean, if the Federal government forces you to take their money, who are you to say no?
Hold on, here's a novel idea- take the TARP money, and actually put it toward- the customers!
@nicemarmot617: not to bash you but there are other boroughs you can live in. Manhattan isn't the end all be all of living especially when it is above your means. I don't make a lot but I was able to maximize my income by moving to Brooklyn. Also with a two income household and no kids living in NYC should be a breeze.
@Saboth: My bonuses suck if I even get one. I'm by no means getting anything above $2k if I even get one. Of course I live in the midwest where one can actually live off of $40k with a family of 4 and live decently. Also a nice house can be had for less than $100k.
A lot of this would depend on what the employment contract stated. If, as a salesman, they get a specific % tied to whatever they sold, then they SHOULD get whatever bonus the contract entitles them to. Commissions are commissions. They aren't just handing them out, they're paying an agreed upon amount.
$112 is more than double my gross salary. Fuck these guys.
@qwickone: I think we work for the same company. People like "thinker" would have the banks lend to anyone and everyone but that will just make the problem worse
@nicemarmot617: So based on your other post, your fiance made $300,000 in '07. How about giving back some of that undeserved money to the people's lives he destroyed?
This ought the create a little, shall we say, hole in New York's budget. A bit of a blank spot where there used to be money, if you know what I mean. At least we spent it wisely when we had it! Uh, right...?
It's utter BS. I know guys that work the equivalent of "regular" 9-5 trading jobs. They have specific tasks, anyone of decent intelligence could do it (so read that as someone decently college educated who doesn't hate finance and match). These stock and trade types typically make 50-90K in salary and bonus can range up to hundreds of thousands of dollars - that's for jobs that there are NO shortage of qualified people to do. These are the jobs your typical idiot business major college student gets through his father's connection. This is where the money is going where it shouldn't be. if you have an easily quantifiable job that many people can do you should not be receiving hundreds of thousands of dollars in bonuses - it is only this way because the finance industry rode a wave the last decade, it wasn't always like that. Now the banks feel if they don't keep paying these insane bonuses they will lose workers, but they can easily replace them.
No bonus and no raise for me this year. Nice to know that our tax dollars are paying for your bonuses though.
I got a $250 bonus this year at christmas. Yes, Two Hundred Fifty Dollars.
Your average number is correct. Just important to point out - it's INCREDIBLY top-weighted. As in, most of the people in the back office that form the bulk ofa bank's workforce aren't making half that average bonus in total annual compensation.
@lannister80: Wow so everyone who worked on wall street is guilty? Did I miss some sort of trial of the century?
I got a rock.
@Oranges w/ Cheese: I am sorry, but your comment was funny. I had to laugh a bit. My bonus is still in question...I'll know in less than 2 weeks if I get a goose egg or not.
@Saboth:
Most of their employees are basically independent advisory contractors with direct relationships to clients. This means they can take key clients - and all supported revenue - with them if they get pissed off.
They need to pay bonuses to keep their best people? Aren't these the same people who screwed everything up in the first place?
@Oranges w/ Cheese: My company did not do bonuses this year. Which sucks, but I wasn't counting on getting one so it wasn't an unexpected financial hit.
@TideGuy: Yeah, but I actually make real stuff, not just shuffle around imaginary numbers between databases. These guys are leeches.
I suck at month, but wouldn't the size of the bonuses given out provide nearly everyone laid off in the last 6months a good size yearly salary?
I mean sheesh, in my area that $112,000 average bonuse would be enough to keep 3-4 people with enough money to put a roof over their head and provide enough disposable income to help the ecomony.
@Oranges w/ Cheese: wow. i get to eat hibachi with my co-workers this saturday.
that's right. saturday nite with the co-workers. woohoo!
@nicemarmot617: If you think someone is trolling, please contact me directly - posting potshots at other users isn't acceptable.
Let's play nice in this thread, folks.
If you read nicemarmot's earlier comment, you'll see that the fiance's hedge fund was up for the year, which means he didn't destroy any people's lives.
Hyperwealth. Seriously? Was "filthy stinkin rich" not good enough of a term?