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Should Bankers Get Bonuses This Year?

By JLP | November 12, 2008

Reading assignment: Hard Times, But Big Wall Street Bonuses

Apparently the big banks and brokerage houses are worried that if they don’t pay bonuses this year, their talent will go elsewhere.

Question: Where are they going to go?

I seriously doubt that that’s the real reason banks don’t want to forego bonuses. My guess is that the very people in charge of paying out the bonuses are themselves on the receiving end of a bonus. We’re not talking small potatoes either:

According to a report from financial news agency Bloomberg, Goldman Sachs, for example, has set aside $6.8 billion for bonuses, and Morgan Stanley, $6.4 billion.

Of course neither Goldman nor Morgan Stanley are in as bad a shape as some of the other banks and brokerages. Still, they haven’t had good years. When the results aren’t there, the bonuses shouldn’t be either.

Topics: Business News | 15 Comments »


15 Responses to “Should Bankers Get Bonuses This Year?”

  1. JimmyDaGeek Says:
    November 12th, 2008 at 3:10 pm

    I misread your opening sentence as “pig banks” so you can see where my sentiments lie. Financial institutions are lying, just like they lied about everything else. Their loose underwriting and laissez faire operations help put this country where it is today. The execs deserve nothing if their institutions see fit to borrow from the taxpayer.

    PS. The first word is “Apparently”

  2. BD Says:
    November 12th, 2008 at 3:47 pm

    Total bonuses are probably too high. But the banks are right – completely eliminating bonuses will lead the workers they need the most to start looking for other jobs.

    This is a legitimate concern. Bonuses have become absolutely standard in the banking industry that your boss can actually hint that you ought to resign merely by giving you a small(er) one, and tell you you’re about to be fired by skipping one entirely. Plus, in any industry, if there are employees you want to keep, skipping bonuses is not the way to do it. This is especially true in banking now since they are working hard in an industry that has become a lot less fun to work in this year.

  3. Preston Says:
    November 12th, 2008 at 3:48 pm

    IMO, if they received even $0.01 in ‘bailout’ money – no bonuses.

    If they are still SHAREHOLDER OWNED, then that is up to the shareholders. IMO they can do wtf they want. But as soon as the Gov’t became a shareholder, no bonuses, period.

    I work for Gov’t, and I can’t count the number of times I’ve been told “If it was legal to give you a bonus for {x}, I would”

  4. Sean Says:
    November 12th, 2008 at 4:04 pm

    they do not deserve a bonus, they did not perform their job.

    what talent they made horrible financial decisions they should be sacking the major players who made bad decisions.

  5. Andy Says:
    November 12th, 2008 at 5:08 pm

    I say no bonuses, and it was their “talent” that got them into this mess in the first place, so it’s no big loss.

  6. Christopher Says:
    November 12th, 2008 at 5:34 pm

    Normally a bonus is paid due to performance…not just because you came to work. That is your salary. Maybe I miss read but I didn’t see where anyone stated they were worried their ‘Talent’ would go elsewhere if they didn’t pay. They don’t seem to be too talented to me. Give me Billons of dollars and I guarantee you I can lose it all just like they did. That doesn’t take any talent. I could do it while drinking heavley and sitting at home buying crap online. Let them leave, it doesn’t seem like it would be a big loss to me.

    They could hire JLP. He could get it all turned around by the middle of next year!!!

  7. Christopher Says:
    November 12th, 2008 at 5:49 pm

    Alright I re-read it and I see where it states they are worried they will lose their top talent. Wow maybe I should go into finance. It doesn’t really seem that hard to be considered a ‘Top Talent’.

    Interviewer: Yes we wanted to know what your experience was?

    Top Talent: Um, well I’ve lost billons of dollars over the last few months and years. I have also run my previous company into the ground and created a crappy econonmy in the US that is spreading to the global market for all to enjoy.

    Interview: Great that sounds like what we are looking for. I’m glad so and so didn’t pay you your bonus so that you became available. When can you start.

  8. Sam Says:
    November 12th, 2008 at 6:13 pm

    I would like to add my voice to the chorus of commenters saying H*ll No!

  9. Gerard Says:
    November 12th, 2008 at 6:43 pm

    Hmmm…
    I agree with BD’s sentiments. As long as the company is still in shareholder control, it is up to the Board of Directors and shareholders to make a decision. On the other hand, it the bank is indeed receiving a ‘bail-out’ then using those monies to pay employee bonuses is unethical, to say the least.

    With regards to where the talent will go, I think you’ll find a lot of smaller, boutique-style investment banks opening up over the next few years.

    Finally, being an investment banker myself, a small point of clarification. The term investment banker seems to be used in a very general sense these days. Unfortunately, with generalisations you tend to find that some of us get grouped with the ‘talent’ that created this mess. While I don’t blame people for being angry at the banks, try and remember that most of the banking community had nothing to do with this and the ‘bankers’ and traders who dealt with mortgage backed securities comprise of a sub-section of the people working at investment banks

  10. Ankit Says:
    November 13th, 2008 at 7:39 am

    Humourous.Instead of asking should the bankers get bonuses,we should be asking where will the bonuses come from.The statements made my these banks cannot be considered creditable anymore after the fiascos which have been brought to light.
    We never know when morgan Stanley or for that matter even Goldman Sachs will bite the Dust.

    When lehman brothers which survived the world war collapsed like a pack of cards,god only knows what’s in store

  11. harm Says:
    November 13th, 2008 at 7:43 pm

    No way. Not if they are getting bailout
    money. If you want to see what is going to
    happen to wildly overpaid execs, there are a
    few good scenes in “A Tale of Two Cities” or
    “The Scarlet Pimpernel”. Chop chop.

  12. V Says:
    December 25th, 2008 at 10:19 am

    Most of you seem to think all investment bankers make 7 figure bonuses. That is complete nonsense. Only top traders and high up bankers bring in that kind of money on a yearly basis. The rest of us, analysts and associates, bring in large amounts, but not nearly 7 figures. We work an average of 70 hours a week at a regional investment bank (like one headquartered in a smaller city) or sometimes upwards of 90 to 100 hours a week in big bank in NYC. Analysts can expect somewhere from 30-120K in bonus based on performance of their group with a base of 60-70 but the bonus money comes as one large check in january. This means the taxes are huge. That bonus money get’s taxed at the highest bracket shrinking it substantially. Tack on New York state tax, cost of living expenses in NYC, sales tax in NYC, and everything inbetween and your left with a very moderate sum of money for the amount of hours and stress put into your job. Why do you think the stereotypical banker has no hair by 35, because of the amount of stress in the job, and the amount of egos that need to be stroked. If you think high finance is an easy job your out of your mind. The global financial markets are some of the most complex things in the world. Why do you think most traders have Phd’s in physics from top institutions. It’s not all buying and selling stocks on scottrade. It takes the strongest quantitative skills to be a trader or banker which is why most bankers come from ivy league schools.

    All markets have their cycles. High risk trading for increased profits started this mess in the CDO sector of trading. However, the government magnified this problem by bailing out bear stearns and trying to correct market failures that would’ve smoothed out themselves given time.

    Some of you think all bankers should be punished and thrown in a hole. What about those of us that had nothing to do with this. We were doing our jobs and had no idea any of this would happen. Were on the bottom or middle line, the bonus is what bankers live for. Who else would do a high stress, long hour job for average pay unless you had the possibility of hitting a large bonus at the end of the year? What about the people who bought homes they couldn’t afford because they didn’t have personal responsibility? I have friends that have lost their jobs when they weren’t even apart of the group that caused the subprime mess. They can’t find jobs because there are none out there. Isn’t that punishment enough?

  13. Dan Says:
    December 26th, 2008 at 1:13 pm

    Boo-Hoo, the big banker wet his pants and Uncle Sam changed him. Now he wants to be fed and burped. These guys do not have a corner on 70-80 hour work weeks. Try any guy on the street with two jobs. Try any health care worker with one job and just as much education as the Banker with the Boo-Boo. No performance – no bonus. No performance – no job. No excuses no crybaby. Your are the enemies of this country.

  14. justice Says:
    January 6th, 2009 at 6:14 pm

    If none of them give bonuses then where would they go?? Poor buggers in their expensive homes and cars when so many are loosing their homes jobs due to their mistakes great stuff!! Why don’t the ordinary workers who put in a hard days graft get the bonuses.

  15. Albert Goss Says:
    February 11th, 2009 at 1:29 pm

    There should be no bailout for any of the corporate hogs, particularly the bankers and Wall; Street crooks. Those bastards got us into the present mess. Confiscate their wealth and give it to the rest of us. Put the lying, hypocritical, greedy copracephalites in prison where they belong.

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