Wall Street Pay Could Fall By 30 Percent

The average Wall Street bonus will decline by 20 percent to 30 percent this year, according to a closely watched compensation report, as banks cut costs and lay off workers in a weak environment for trading and deal-making.

Employees in the bond-trading business will face the sharpest pay cuts, with bonuses down 35 percent to 45 percent from a year earlier, according to a projection by New York compensation consulting firm Johnson Associates.

Equity traders and senior executives will also have their bonuses cut by up to 30 percent, the firm said. Investment banker bonuses will decline up to 20 percent.

"The lack of economic recovery, combined with ongoing uncertainty in the world markets, and global and regional regulation are driving most financial services firms to significantly reduce the size of their bonus pools," said Alan Johnson, managing director of Johnson Associates. "As a result, most, but not all, professionals will receive smaller payouts this year."

Traders, bankers and top executives typically receive base salaries of $100,000 to $1 million, but most of their compensation comes as bonuses after year-end, based on the performance of the individual and the broader company.

The expected decline for 2011 comes after two years of record payouts for Wall Street workers, as markets staged a rebound from the depths of the financial crisis. This year, though, big trading and investment banking houses have been reporting increasingly bleak earnings and have begun laying off thousands of employees.

Last month, Goldman Sachs Group Inc reported the second quarterly loss in its history as a public company, while Morgan Stanley and the investment bank of JPMorgan Chase & Co posted sharp declines in third-quarter operating earnings before an unusual accounting gain.

In the first nine months of this year, Goldman, Morgan Stanley and JPMorgan's investment bank set aside $30.4 billion for compensation and benefits, down 7.8 percent from a year earlier.

The Johnson Associates report suggests that pay will come down by a much greater percentage. The only two business lines in the financial industry that may see slightly higher pay are retail banking and divisions that deal with high net worth customers, the analysis said.

(Reporting by Lauren Tara LaCapra in New York; Editing by Lisa Von Ahn)

Copyright 2011 Thomson Reuters. Click for Restrictions.

Comments

[jefe]

05:32 AM on 11/30/2011

Whatever......IF, I get the job I just interviewed for, I would be making 1995 wages. Right now it's been a year and half of looking for work, my chances of hitting the lottery are about the same as me finding a job. Sorry but I just can't find sympathy for wall street.

[Laura Kabel]

12:46 AM on 11/30/2011

My heart absolutely bleeds for them.

[TheCycad]

12:28 AM on 11/30/2011

Oh, It'll get much worse than that.

[Canuckview]

10:10 PM on 11/29/2011

when you eat the golden goose you have to plan for the future diet.

[M4dwoman]

05:28 PM on 11/29/2011

Too much verbiage.
They get bonuses.
That's all we need to know.

[photobug90802]

03:02 PM on 11/29/2011

I'm supposed to feel bad for these Crooks? They speculate with our money, privatize the profits and socialize the losses and left the rest of us holding the bag and wondering where we're supposed to go now. Home values in the tank, 401K's if they recovered are at levels prior to 2008, wages flat for a decade. There isn't any upside to bank losses, the damage is done and low level bank employees are being added to the unemployed. The people who brought us here and still wheeling and dealing with our money and none of them have seen the inside of a prison. The GOP hacks are calling for less regulation of financial institutions, didn’t they do enough damage or they just didn’t get it all.

[torgans]

01:49 PM on 11/29/2011

no ferraris in the driveway, have to settle for those audis again...damn.

[trobts]

12:54 PM on 11/29/2011

Aw, so sorry ...NOT. Even at that rate, these crooks will NOT know how bad their greed has effected their fellow man and the world.

[cassie reinara]

12:23 PM on 11/29/2011

You reap what you sow! Unfortunately, for the rest of us, our economic fate is somewhat tied to these gangsters. Economic activity has been to tied into this sector's growth and when this final bubble really implodes, a lot of collateral damage will happen to a lot of innocent bystanders. The ongoing crisis in Europe and the previous financial collapse of 2009 and everyone before that has its origins from the closed boardrooms of these elite Wall Street firms. Our government being hijacked and no longer serving the public interest is a result of the money corrupting our government and political system coming from these same banksters we bailed out. For this country to resume a healthy economic system, the cancer that is Wall Street must be purged from our economic system. The sociopathic greed must end.

[muck-raker]

05:29 PM on 11/29/2011

excellent post cassie: NOW everyone should see the GORILLA on the floor
JPMorgan Chase & Co. (JPM) and Goldman Sachs Group Inc. (GS), among the world’s biggest traders of credit derivatives, disclosed to shareholders that they have sold protection on more than $5 trillion of debt globally.

Just don’t ask them how much of that was issued by Greece, Italy, Ireland, Portugal and Spain, known as the GIIPS.

As concerns mount that those countries may not be creditworthy, investors are being kept in the dark about how much risk U.S. banks face from a default. Firms including Goldman Sachs and JPMorgan don’t provide a full picture of potential losses and gains in such a scenario, giving only net numbers or excluding some derivatives altogether.
“On the other hand, if there were a run on Goldman Sachs tomorrow because the rumor was that they had exposure to Greece, you’d see them produce those numbers.”

A case in point: Jefferies Group Inc. (JEF), the New York-based securities firm, disclosed every long and short position it held on European debt earlier this month after its shares plunged more than 20 percent. Jefferies also said it wasn’t relying on credit-default swaps, contracts that promise to pay the buyer if the underlying debt defaults, as a hedge on European holdings.

http://mobile.bloomberg.com/news/2011-11-16/jpmorgan-joins-goldman-keeping-investors-in-dark-on-italy-derivatives-risk

[cassie reinara]

12:10 PM on 11/30/2011

I agree and on giving numbers regarding exposure to these exotic financial instruments, whether it be Credit Default Swaps or derivatives, they can't give exact numbers, but can only speculate on what their true exposure is because they don't have a clue themselves. A lot of the CEOs of these firms shoot first and ask questions never when it comes to risk taking. After all, since we now established that they are too big to fail, what risk is there when they know they are ultimately going to be bailed out and have nothing to lose, but everything to gain! This is the moral hazard they have created and this is what happens when corrupt politicians come up with solutions based on dictation from corrupt business people. The patients are running the asylum! This is both a morally and ethically bankrupt financial and political system we have. How we even begin to fix this boggles the mind! But I do have two places where we start: Break up the banks (investment banks and commercial banks should be separate at the very least.) Take the private money completely out of our political system.

[Lex Anton]

09:26 AM on 11/29/2011

Oh how sad so sad. Try having income be stagnant for 40 years wall st. Thats what Americans have to live with.

[georgii1]

08:11 AM on 11/29/2011

I must be missing something, because by 2008 the earnings for these folks were outta sight and it got that way due to the financial games of the last decade. So, if the pay has fallen to the 2008 level sounds to me as if the pay hasn't changed much. Now, if they were to say the pay had fallen to the 1998 levels I might actually believe wall street were starting to face up to what they did to this economy and they were returning to earth.

[builderman55]

01:46 AM on 11/29/2011

Poor guys...mine plunged to 1990 levels...

[Angie Daniels]

12:18 AM on 11/29/2011

playing the littlest violin here.

[kamact]

11:13 PM on 11/28/2011

The TBTF banksters should throw out their executive teams and steal their bonuses,... Then they can have enriched merry holidays,....as usual,...

[rtx47]

11:02 PM on 11/28/2011

This is the soft landing we all need; starting with the fat cats whose contribution to the economy is just one big drag.

Of the money (savings and retirement) invested in Wall Street, 47% goes for compensation for those who work on Wall Street.

No wonder most investors have / see a decline in their porfolios.