>Financial firms risking more than reputation by continuing lavish spending and bonuses
Wall Street bonuses have always drawn the attention of journalists. In the best of times, the topic of bonues at investment banks has been covered much like auctions at Christie’s — phenomena to behold, but not quite believe. These are not those times and the issue of bonuses at Merrill Lynch was toxic enough to send John Thain into retirement. How can Citigroup buy a new corporate jet on the heels of more financial support from the government? How can AIG pay $450 million to workers at the unit that brought down the firm? It is hard to fathom that the culture of compensation and the perception that it requires bags and bags of money to retain talent in the financial sector is so pervasive that the same hand that is begging for taxpayer-funded relief is signing whopping bonus checks.
Bankers need to look at the case of Detroit for a reality check. Automakers were denied a government bailout partly because public sentiment was against them. Financial firms will lose political support in hurry if they continue to enrich their own at public expense.
By comparison, the 2/20 compensation system for hedge fund managers, long criticized by media, seems aligned with the interests of investors. Not that you are going to read that anywhere soon!
Maureen Dowd turns her wit on John Thain and Wall Street bonuses in today’s New York Times.
A former Merrill banker writes about the bonus culture on Wall Street in an op-ed in the New York Times.