Yawning at Wall Street's Record Payday
What does the lack of outrage at bankers' best year ever--$140 billion in compensation--mean?
There are a couple of stories that really could have gotten people's dander up. First, Goldman Sachs--the predictable stirrer of public outrage--is handing out $23 billion in bonuses. Second, the government is struggling to persuade perennial ne'er-do-well AIG not to shower its employees with retention packages. Third, compensation at top Wall Street investment houses is the best it's ever been--a $140 billion dollar payday in 2009. To top things off? More regular workers are being forced to take a wage cut.
What sounds like a recipe for populist ire has, in fact, fizzled. Despite signs that some bankers are resigned to lower pay, and that "pay czar" Kenneth Feinberg's compensation limits have become more palatable, pundits are having a hard time summoning anger over the latest round of news. While they are predicting a backlash, they aren't participating in one. Here's a sampling of the more even-keeled reaction:
- Not Indifferent, Just Waiting for the Inevitable, suggests Douglas A. McIntyre at Daily Finance. "The hearings over Wall Street salaries will almost certainly start in Congress by the end of the year. Compensation is the perfect target for lawmakers to attack as a sign to voters that they are prepared to rip down the old system where the rich get richer."
- There Are Worse Financial Sins to Condemn, says Barry Ritholtz at the Big Picture. "The focus on the bonuses of top performing traders and investment bankers is misplaced. There are many, many things to be upset about regarding the financial sector -- but bonuses are not one of them. We live in a capitalist system, where there are going to be winners and losers. Its not fair, but it is how it is. You can complain about it, but it is all but pointless. Feel free to pursue a millionaire's tax of 1% on every who earns more than $1m -- a super top tier -- to pay for health care reform or whatever you want. (Best of luck with that!)"
- Smart Guys, Not Paychecks, Ruined Wall Street, says Calvin Trilling in the New York Times. Trilling recounts an interaction with an elder giant of Wall Street, who says that the problem was not high paychecks, but simple incompetence at the top ranks. "When the smart guys started this business of securitizing things that didn't even exist in the first place, who was running the firms they worked for?" Trillings answer: executives who didn't understand what was going on: "Guys who didn't have the foggiest notion of what a credit default swap was." Felix Salmon at Reuters agrees.
- People Read Too Much Into Salary Size, suggests Yves Smith at Naked Capitalism. "What is striking" she writes "is how deeply ingrained the 'my paycheck is my worth as a man' ethic is ingrained....In other words, the US has unwittingly done a great job of conditioning many of its citizens to be even more dependent on their standing at work than they otherwise would be."