Panic at Goldman Sachs--No Bonuses?

How venal to think that anyone on Wall Street would be panicked or even slightly upset because they did not get a bonus (especially at Goldman Sachs)! I would like all the execs and employees at Goldman Sachs to explain exactly how they earned the bonuses, or even salaries, that they got this year. Did they contribute to the societal well-being of the US? Did they invent something new? Did they pay their share of income tax?

Did they recognize their central role in bringing down the financial system of the US and the world? That lack of acknowledgment of their role, by itself, should tell us that GS does not deserve either large salaries or huge bonuses because they have already widened beyond belief the gulf between the poor and the extremely rich. For their contribution to the unequal distribution of the wealth of America, GS should be doing penance with no bonuses and minimal salary.


Oh, no, when the bonuses grew smaller, the salaries grew larger! Goldman Sachs, have you no shame.

This Bonus Season on Wall Street, Many See Zeros
by NELSON D. SCHWARTZ and SUSANNE CRAIG - The New York Times

Published: December 19, 2010

Bonus season is fast approaching on Wall Street, but this year the talk does not center just on multimillion-dollar paydays. It’s about a new club that no one wants to join: the Zeros.

Drawn from a broad swath of back-office employees and middle-level traders, bankers and brokers, the Zeros, as they have come to be called, are facing a once-unthinkable prospect: an annual bonus of ... nothing.

“It’s going to a cause a lot of panic on Wall Street,” said Richard Stein of Global Sage, an executive search firm. “Everybody is talking about it, but they’re actually concerned about it becoming public. I would not want to be head of compensation at a Wall Street firm right now.”

In some ways, a zero bonus should not come as a surprise to many bankers. As a result of the 2008 financial crisis, Wall Street firms like Goldman Sachs and banks like Citigroup raised base pay substantially in 2009 and 2010. They were seeking to placate regulators who had argued that bonuses based on performance encouraged excessive risk.

At Goldman, for instance, the base salary for managing directors rose to $500,000 from $300,000, while at Morgan Stanley and Credit Suisse it jumped to $400,000 from $200,000.

Even though employees will receive roughly the same amount of money, the psychological blow of not getting a bonus is substantial, especially in a Wall Street culture that has long equated success and prestige with bonus size. So there are sure to be plenty of long faces on employees across the financial sector who have come to expect a bonus on top of their base pay. Wall Streeters typically find out what their bonuses will be in January, with the payout coming in February.

One executive, whose firm prohibited discussing the topic with the news media, said the bump in base salaries had confused people, even though their overall compensation was the same. “People expect a big bonus,” this person said. “It is as if they don’t even see their base doubled last year.”

Dealing with the Zeros can be complicated. “It’s a real headache,” said another senior banker, who asked not to be identified because the topic is so volatile at his company. There has been so much grousing that in some cases, he said, “we’ll throw $20,000 or $25,000 at each of the Zeros so they’re not discouraged.”

“No matter what we pay people, it is never enough and they always find something to complain about,” this banker said.

While Zeros are turning up in the ranks of back-office employees and midtier bankers and traders who typically earn $250,000 to $500,000, their bosses way up the compensation ladder are still expected to notch handsome paydays in the millions.

In terms of overall profit, Wall Street is on track for one of its best years ever, although it will trail 2009, which was pumped up by federal bailout money and the rebound from the financial crisis.

In the first three quarters of the year, Wall Street earned $21.4 billion, putting it on track to easily outpace 2006, when the economy was booming, and well ahead of the New York City government’s initial estimate of $20.6 billion for profit in all of 2010.

This year, Wall Street’s five biggest firms have put aside nearly $90 billion for bonuses.

But bankers and compensation experts say that bonus payouts will vary widely this year, much more than in the past when a rising tide lifted all boats. And just as junior and senior bankers face varying fates, so some departments are expected to fare better than others.

At JPMorgan and Bank of America Merrill Lynch, for example, the leveraged finance group could receive a 10 to 20 percent bump from last year, because of record issuance of junk bonds. Equity traders, on the other hand, are looking at a 10 to 20 percent drop because stock trading tailed off during the second half of the year.

At Morgan Stanley, equity trading was stronger, but bond traders are most likely looking at smaller pay packages.

To be sure, the best performers on the most profitable desks will still receive substantial bonuses. At Bank of America, top directors might earn a $1 million bonus while top vice presidents could net $600,000, according to one banker there.

Read the article here

But more importantly, read The great bank heist of 2010 by Brett Arends, MarketWatch here