Thursday, January 22, 2009

Wall Street Puts Another One Over On You

A reader of Josh Marshall's reports that Merrill Lynch paid $3-4 billion in early bonuses, just days before it was acquired by Bank of America, backstopped by $128 billion in taxpayer TARP funds.
John Thain, former head of Merrill and now formerly with BofA (fired today), paid the bonuses earlier than they are normally paid (late January, February) because he knew that once the BofA deal closed, he would be unable to "reward" all those hardworking Merrill bankers and traders who lost a mere $27 billion in 2008
The reader makes a larger point that Congress (and those of us who vote for congress persons) should keep in mind:
I worked on Wall Street for 15 years, and was laid off late last year. I can tell you this for sure: you don't need to pay a dime in bonus to anyone on Wall Street these days. I know this firsthand: there's nowhere to go!

Where would a Merrill banker unhappy with a donut for a bonus go? Lehman? Bear? Bank of America? There are no jobs on Wall Street, there are no jobs on Main Street (and certainly none that will even pay close to what these guys earn just in salary; my salary alone put me in the 99+ percentile in income).

These guys aren't going to leave Merrill because of no bonus to become CEOs, law firm partners, or MLB shortstops. They'll do what every single person I know on Wall Street that still has a job: they'll keep their heads down and hope the next round of layoffs doesn't include them.

Want to see some limits on executive compensation for federally-funded banks and brokerage houses, anyone?

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