Posts filed under “Bailouts”
I come not to bury bonuses, but to praise them.
Yesterday the New York State Office of the Comptroller released itsannual report. The report is chock full of great tables and charts (seethis, this, and this). The key takeaways include these data points:
• The bonus pool for securities industry employees who work in New York City grew by 3 percent to $28.5 billion in 2014.
• The average bonus rose by 2 percent to $172,860 in 2014, the highest level since the financial crisis.
• The securities industry added 2,300 jobs in New York City in 2014, after years of downsizing.
• The cost of legal settlements related to the 2008 financial crisis continues to be a drag on Wall Street profits.
Two factors have made Wall Street bonuses a contentious issue: The size of the payouts, and that they were awarded in so many companies that had been bailed out.
I have been highly critical of both Wall Street and the bailout of banks during the crisis. However, it’s important to distinguish how Wall Street’s rank and file employees are compensated from what senior management “got away with.” Most professionals understand this difference intuitively, but much of the public and many elected representatives do not. They view enormous bonuses as a sign of excess or corruption.
As a denizen of the Street for a few decades, I’ve received bonuses big and small. The bonus structure on Wall Street serves three primary purposes: Continues here
One of my favorite thought experiments is the careful-what-you-wish-for scenario. I was reminded of its utility during Federal Reserve chief Janet Yellen’s Congressional testimony the other day. Consider the critique of the Fed by some members of Congress. As the New York Times described it, the three-hour hearing was “testy” as “Republicans on the House Financial…Read More
Morgan Housel makes the delightful if infuriating observation that bank execs take credit — along with fat paychecks and even fatter bonuses — on the way up. On the way down, its always seems to be someone else’s fault: Robert Rubin, a former Treasury Secretary, joined Citigroup in 1999 as chairman of the executive committee. He was…Read More
There has been a great deal written about Greece recently. I therefore, somewhat timidly, add my penny’s worth. The Syriza Party, through their PM and their finance minister, has rejected the idea of cooperating with the Troika, the EU, ECB and the IMF. They are seeking debt forgiveness to meet their election pledges to the Greeks population….Read More
Fascinating flowchart from Deutsche Bank: It is wrong to think that contagion stems only from Grexit. An excessive compromise with Greece could result in moral hazard, particularly in relation to structural reforms. This could undermine the medium-term stability of the euro area. The tail risk is that Greek politicians try to leverage too much the fear…Read More
Mr Draghi (Super Mario) delivered yesterday, despite the leaks which virtually gave away the details of his announcement ahead of the press conference. The EZ Central Banks (coordinated by the ECB), together with the ECB is to buy E60bn of government, ABS’s, covered bonds and agency debt, per month, commencing March 2015 up to at…Read More
The ECB said the combined monthly purchases which includes ABS and covered bonds and now include sovereign and agency bonds will total 60b euros per month and will continue to do so “until we see sustained inflation improvement.” The ratio will be based on the capital key where about half is made up of Germany,…Read More