Wall Street banks are on pace to pay out some $143 billion in compensation for 2010, just shy of their record year of 2007. But given the widespread layoffs of mid-level employees as a result of the financial crisis, average compensation set a record. At the top six banks, compensation rose 10 percent over 2007.
By spending just half of that money elsewhere, the banks could modify the loans of every homeowner with an underwater mortgage, cutting principal and interest rates down to the current market value, according to a new report by critics of excessive compensation.
The $143-billion figure represents total compensation, including salaries for secretaries and entry-level employees as well as mammoth senior-level bonuses. But salaries for lower-level financial employees have largely flatlined in recent years as executive compensation has soared. Compensation for bank tellers, for example, has risen a meager 5 percent in real terms since 1999, according to the Bureau of Labor Statistics.
The report, compiled by a coalition of groups that includes the Service Employees International Union, notes that the compensation could buy health insurance plans for two-thirds of the uninsured.
The figure represents total compensation, not simply year-end bonuses, but even half of the compensation could cover a third of the uninsured.
Bonus season comes as Congress is pushing through a tax-cut deal that will allow the wealthy to inherit up to $5 million tax-free, while lowering taxes on additional inheritance. It also extends the Bush-era tax cuts for the wealthy for two years.
A small tax on financial transactions would effectively reduce compensation and bonuses, while cutting the federal deficit and reducing financial speculation, but the fee -- known as a "Tobin tax" -- is barely under consideration in Washington.