WALL STREET paid out $20.3 billion (€15 billion) in bonuses in 2009, up 17 per cent on the previous year, New York’s state comptroller said, as the financial industry recovered fitfully from a near meltdown.
Comptroller Thomas DiNapoli said profit for all of Wall Street could top $55 billion for 2009, nearly triple the previous record year. Last year, the US economy began to stabilise as lenders raced to repay federal bailout money they had come to view as a stigma.
Average taxable bonuses on Wall Street rose to $123,850 in 2009, Mr DiNapoli said in a statement. Compensation at Goldman Sachs, JPMorgan Chase, and Morgan Stanley, three of New York’s biggest banks, rose 31 per cent, he added.
The comptroller’s annual report on Wall Street pay is closely watched not only by Wall Street but also by politicians eager to rein in runaway pay in a still-weakened economy, where unemployment remains high and tax revenue remains depressed. While bonuses are well below the level set in 2007, and are now more closely tied to company performance, Mr DiNapoli acknowledged that many may consider them outsized, given the lingering problems in the economy.
“[For] most Americans, these huge bonuses are a bitter pill and hard to comprehend,” he said.
Taxpayers in 2009 rescued the US banking industry with hundreds of billions of dollars in bailouts, putting into focus pay practices at Wall Street banks. As a result, President Barack Obama appointed a “pay czar”, who had the authority to rein in pay at firms that got extraordinary bailouts.
Public outrage over pay also affected pay practices at some banks, even after they had paid back the taxpayer bailout. The anger stemmed from the quick return to profitability and large bonuses so soon after the bailout.
Wall Street’s dominant bank, Goldman Sachs, for example, did not give out any compensation in the fourth quarter of 2009, and instead made a $500 million charitable contribution. The firm was earlier on course to pay out more than $20 billion in compensation, shattering its record from 2007.
Banks have also changed their compensation structures to pay employees in stock that must be held for multiple years, a move designed to curb risk-taking for short-term gains. Mr DiNapoli said financial firms devoted a much lower share of net revenue to compensation than in past years. – (Reuters)
