Bonus Coverage « Main Street

Bonus Coverage

From the front page of Sunday’s New York Times:

Everyone on Wall Street is fixated on The Number.

The bank bonus season, that annual rite of big money and bigger egos, begins in earnest this week, and it looks as if it will be one of the largest and most controversial blowouts the industry has ever seen.

Bank executives are grappling with a question that exasperates, even infuriates, many recession-weary Americans: Just how big should their paydays be? Despite calls for restraint from Washington and a chafed public, resurgent banks are preparing to pay out bonuses that rival those of the boom years. The haul, in cash and stock, will run into many billions of dollars.

Industry executives acknowledge that the numbers being tossed around — six-, seven- and even eight-figure sums for some chief executives and top producers — will probably stun the many Americans still hurting from the financial collapse and ensuing Great Recession.

Goldman Sachs is expected to pay its employees an average of about $595,000 apiece for 2009, one of the most profitable years in its 141-year history.

Is that what Goldman’s Chairman and CEO Lloyd Blankfein calls “doing God’s work”?

The Sunday Times piece continues:

Workers in the investment bank of JPMorgan Chase stand to collect about $463,000 on average.

“Workers”? Is that what they’re called?

DealBook reports:

Some Wall Street executives may be envious of the compensation being handed out at one of the banks on Main Street: Wells Fargo. Its chief executive, John G. Stumpf, is set to make as much as $18.4 million for his service in 2009, even though his bank took $25 billion in government aid (which was repaid at the end of the year) and it had to write down billions of dollars in bad loans made during the boom years.

“Main Street”? Must be no recession there.

From AFP:

Major US banks are gearing up to announce annual bonuses for top executives while bracing for a political firestorm over compensation practices that critics say fueled the global financial crisis.

John Coffee, a Columbia University law professor and corporate governance specialist who has testified before Congress on executive pay issues, said many banks scrambled to repay government bailout funds before the end of 2009 to be free from limits on bonus payments.

“There are some (executives) who did not receive bonuses they thought they were entitled to last year, and now want to be compensated” with larger bonuses, Coffee said. “The culture has not changed.”

Perhaps we could learn a thing or two from Europe, where some countries, including the UK and France, are imposing one-time taxes on financial industry bonuses.

Today’s Financial Times reports:

Paris to raise more in bonus tax than expected

The French government intends to raise €360m from its proposed windfall levy on bonuses paid out by banks based in France, according to Christine Lagarde, finance minister.

The figure is slightly higher than expected and reflects the predictions of French banks that they are likely to pay out bonuses in full – and absorb the cost of the tax – if that is what banks in London do.

But, according to reporting this morning from UPI, the U.S. isn’t likely to follow Europe’s lead by taxing bonuses:

Administration officials said President Barack Obama is considering a fee for large U.S. banks to make up for losses in the $700 billion bank bailout program.