How Wall Street Got Too Far Ahead of the Recovery

Anticipating a swift recovery and bull market, Wall Street had been on a hiring spree that began in 2009. This included fat signing bonuses. It turns out, however, that the recovery financial firms anticipated hasn't panned out. As a result, they are trying to wiggle out of paying some of those lofty bonuses promised. Aaron Lucchetti of the Wall Street Journal reports:

"The economics of the business are going to have to change," says one executive at a firm that paid bonuses to incoming brokers. Many deals that look bad in hindsight were struck because asset-hungry brokerages were willing to pay "extremely uneconomic" sums, this person says.

Some frustrated firms have decided they want their money back. Financial Industry Regulatory Authority arbitration panels have issued about 165 awards related to "promissory notes," a term for payments to brokers, this year. Those cases amount to 17% of all Finra arbitration awards in 2010, the highest percentage in a decade.

Read the full story at the Wall Street Journal.

Presented by

Daniel Indiviglio was an associate editor at The Atlantic from 2009 through 2011. He is now the Washington, D.C.-based columnist for Reuters Breakingviews. He is also a 2011 Robert Novak Journalism Fellow through the Phillips Foundation. More

Indiviglio has also written for Forbes. Prior to becoming a journalist, he spent several years working as an investment banker and a consultant.

How to Cook Spaghetti Squash (and Why)

Cooking for yourself is one of the surest ways to eat well. Bestselling author Mark Bittman teaches James Hamblin the recipe that everyone is Googling.

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register.

blog comments powered by Disqus

Video

How to Cook Spaghetti Squash (and Why)

Cooking for yourself is one of the surest ways to eat well.

Video

Before Tinder, a Tree

Looking for your soulmate? Write a letter to the "Bridegroom's Oak" in Germany.

Video

The Health Benefits of Going Outside

People spend too much time indoors. One solution: ecotherapy.

Video

Where High Tech Meets the 1950s

Why did Green Bank, West Virginia, ban wireless signals? For science.

Video

Yes, Quidditch Is Real

How J.K. Rowling's magical sport spread from Hogwarts to college campuses

Video

Would You Live in a Treehouse?

A treehouse can be an ideal office space, vacation rental, and way of reconnecting with your youth.

More in Business

Just In