Even as Wall Street overall is set for a record-high payday, Goldman Sachs cut its employees' pay this year to the lowest level in more than a decade, reports the Financial Times.
The pay cuts, which came in the third quarter, threaten to create "unrest" among the Goldman employees, the FT notes. During the first nine months of this year, Goldman paid an average (which misrepresents the actual pay scale) of $370,000 per employee, compared to $527,000 last year. According to the FT, Goldman CFO David Viniar said it's the lowest ratio of compensation to revenue since 1999, when Goldman went public.
The bank's third-quarter profit was down 40 percent from a year earlier, the Wall Street Journal reported Thursday, noting that the bank has suffered as it tries to re-focus on its traditional business practices.
Indeed, the "hot" trend, as the WSJ noted earlier this month, is for banks to do business for clients, rather than for themselves. Trading with the bank's own account can be enormously profitable, but it also creates the kinds of risks that contributed to the financial crisis.
Analyst Meredith Whitney predicted last month that banks would be forced to fire employees and cut pay. "I think that the bonuses are going to be really, really bad at  year end," she said on CNBC.
The profit slump comes, in part, from a decline in trading volume and also, banks say, from the financial reform laws. Many of the new rules have yet to be written, much less implemented, and some regulations are less severe than they could have been, but firms claim to be adjusting anyway. Big banks, including Goldman, JPMorgan and Bank of America, have trimmed or eliminated their propriety trading units, which make trades on the bank's own behalf.