Pain?

“All told, [Wall Street] bonuses fell 44 percent last year, from $32.9 billion in 2007, the largest decline in dollar terms on record…” to a paltry $18.4 billion! (January 29^th New York Times). Boy do I feel sorry for those poor folks! These bonuses are for just participating in “deal flow,” regardless of overall profitability, that’s how Wall Street traders, investment bankers, and the like get paid. Yup, the same financial institutions that are hoarding taxpayer bailout cash and, for the banks, cheap Federal Reserve loans… these same funds and banks that have stopped investing and lending, yet have supported and participated in some of the biggest layoffs in American history.

Oh, they made sure the Federal funds were not used in the bonus pool (the Feds are checking to be sure), and a few CEOs and other top managers have waived their bonuses (or were required to do so as a condition of accepting Federal money), but Wall Street has always been about rewarding your “managing directors” – often in the hundreds or even thousands of senior financial managers in the larger financial institutions – even if the top echelon corporate management don’t get to participate (because the Feds won’t let them) and even as many of these financial institutions themselves had wildly unprofitable years. The Times: “[The 2008 bonus pool] was the sixth-largest haul on record, according to a report released [January 28^th] by the New York State comptroller…”

“Lucian A. Bebchuk, a professor at Harvard Law School and expert on executive compensation, called the 2008 bonus figure ‘disconcerting.’ Bonuses, he said, are meant to reward good performance and retain employees. But Wall Street disbursed billions despite staggering losses and a shrinking job market… ‘This was neither the sixth-best year in terms of aggregate profits, nor was it the sixth-most-difficult year in terms of retaining employees,’ Professor Bebchuk said.”

They argue that this is the only way they can keep the “best and the brightest.” I guess that would be the same “best and the brightest” that got us into this mess, created toxic derivatives, supported a credit rating system that simply overlooked obvious flaws in favor of fat fees for issuing favorable opinions and generally created an environment of overpaid and underperforming executives using outmoded pay systems that were developed in an era where up was the only direction for markets and home prices to go. They say that Wall Street salaries are modest and that the pay is really measured in the bonus pool… Did anybody ask if perhaps those “modest” six or seven figure salaries were more than enough for a horrific performance in a horrific year?

In a world where the new theme is accountability, it might be nice to see those in the private sector most responsible for this “managed depression” being held to a new standard that is in fact linked to success and profitability, not tradition. For those who cry against government regulation, for free market forces to correct obvious imbalances, please explain to me how a down market with a losing corporation can permit such an anomaly?!

I’m Peter Dekom, and I am indeed outraged.