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.

What Happened to the Milky Way?

Light pollution has taken away our ability to see the stars. Can we still save the night sky?

Join the Discussion

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

Please note that The Atlantic's account system is separate from our commenting system. To log in or register with The Atlantic, use the Sign In button at the top of every page.

blog comments powered by Disqus

Video

What Happened to the Milky Way?

Light pollution has taken away our ability to see the stars. Can we still save the night sky?

Video

The Faces of #BlackLivesMatter

Scenes from a recent protest in New York City

Video

Desegregated, Yet Unequal

A short documentary about the legacy of Boston busing

Video

Ruth Bader Ginsburg on Life

The Supreme Court justice talks gender equality and marriage.

Video

Social Media: The Video Game

What if the validation of your peers could "level up" your life?

Video

The Pentagon's $1.5 Trillion Mistake

The F-35 fighter jet was supposed to do everything. Instead, it can barely do anything.

More in Business

Just In