THE BLOG
10/17/2012 04:18 pm ET Updated Dec 17, 2012

Former Morgan Stanley CEO John Mack: Yeah, We Get Paid Too Much

If you're mad about Wall Street pay, take heart: At least one guy on Wall Street seems to get it. No, he's not going to give back any of his own pay or anything like that. That would be crazy. But at least somebody out there feels your pain!

John Mack, former CEO of Morgan Stanley, went on Bloomberg TV today and did the usual banker moaning and groaning about how mean and divisive people are, always blaming banks for blowing up the financial system and what-not.

But he also, strikingly, expressed some sympathy for the pitchfork-wielding rabble, saying he could understand how somebody who's been out of work for a while could get disgusted by the obscene wealth being raked in by Wall Street types for essentially moving numbers and pieces of paper around, social benefit be damned.

"Let's be totally honest: A lot of people who have done really well have not handed that wealth very well," he told Bloomberg. "The kind of money that was made and the way it was flaunted -- look, it's wrong."

Mack, who by my count was paid more than $58 million during his stretch as Morgan Stanley CEO between 2005 and 2009, took a stroll down memory lane, remembering that he got paid just $8,000 per year for his first Wall Street job back in 1968.

"We really didn't make a lot of money" at first, he said. "Over time, markets took off. We took on more risk, we became global, we used technology, and the money was really unbelievably generous."

Now, he says, Wall Street compensation just has to be reined in. For one thing, excessive pay makes the Poors all angry and stabby and wanting to vote for Democrats. He also said it's the easiest cost to cut for an industry that is tightening its belt in the face of lower returns, higher capital requirements and more regulation.

But then Mack has always been one of Wall Street's less-greedy guys, or at least he makes sure it looks that way. He nobly gave up his bonus for three years during the crisis, accepting paltry annual compensation of no more than $1.6 million between 2007-09 (most of his $58 million in pay came in 2006, just as all hell was about to break loose).

Mack was echoing comments earlier this month by the guy who replaced him as CEO at Morgan Stanley, James Gorman, that he was "sort of sympathetic to the shareholder view that the industry is still overpaid."

What Mack did not mention was that obscene Wall Street pay -- including his own, arguably -- helped cause the very financial crisis that put banks in the spot they're in now, as many studies have shown. Maybe if there hadn't been a financial crisis people wouldn't be hating quite so much on Wall Street wealth.

What Mack also did not mention is that Wall Street pay hasn't exactly been collapsing. New York State Comptroller Thomas DiNapoli reported last week that the cash bonus pool for New York City employees of the securities industry will likely shrink this year for the second year in a row. Oh, noes! The total bonus pool will likely be less than $20 billion, to be split between 168,700 people, which works out to less than $120,000 per person, or only twice the nation's median household income.

That is just the bonus pool. Altogether, including salary and bonuses, the average Wall Streeter took home $362,950 last year, according to DiNapoli, five times more than the average private sector salary in New York City. Thirty years ago, in contrast, the average Wall Street pay was about $45,000, a mere two times the average New York City salary, notes The Wall Street Journal's David Weidner.

While most wages in our hobo-chili economy have been relatively stagnant, Wall Street pay has been climbing since the Great Recession ended. Wall Street pay rose in 2010 and 2011 by 16 percent and 0.5 percent, respectively, according to DiNapoli's office.

A key test of the supposed new sobriety in banker pay will be what happens to newly defenestrated Citigroup CEO Vikram Pandit. Bloomberg notes that, by up and quitting, Pandit should be giving up $33 million in pay (on top of the $261 million he has already taken home, for a tenure during which Citi's stock price fell 89 percent).

But Citigroup could still decide to give Pandit a little something for his troubles, Bloomberg notes.