This post has been read 2822 times!
I was recently explaining to a restaurant manager why his business was spiking, and that it was because of the bonus season on Wall Street. I explained that the vast majority of Wall Street employees live from check to check throughout the year, and go nuts when the bonuses hit. That’s when they buy the hideous Porsche SUV’s (the worst car ever made) and dine out.
However, the bonuses (that were never great to begin with) have shrunk in half, almost, since the 2007 demise of the financial industry. The NYT reports, “Take Goldman Sachs. It recently reported that the size of its balance sheet — all its loans and holdings — shrank 6 percent since 2010 and 24 percent since 2007, while the pay per employee fell 13 percent since 2010 and 43 percent since 2007. “We have significantly adjusted both compensation levels and fixed expenses,” the chief executive of Goldman, Lloyd C. Blankfein, told the industry conference in Florida. “We have transformed the financial profile of the firm.”…But industry executives and regulators alike agree that the broad reshaping of the industry has been driven primarily by the efforts of the Federal Reserve and other regulators to strengthen the amount of capital held by big banks, measures that banks have had less success in lobbying against.””
On a personal note, when I was the global portfolio manager for all-things-healthcare at Merrill Lynch’s $10 Billion-in-assets internal hedge fund, I controlled $250 Million in assets with virtually no oversight of my day-to-day trading. I could do whatever I wanted, and it wasn’t even Merrill Lynch’s money. It was all borrowed, or leveraged. Even then, my base salary was only $130,000 and the bonuses were not as big as you might think. Times are much tougher now.
The only people in Wall Street who used to make big money were the hedge funds, not the banks, and even those people are broke now. Of the many thousands of hedge funds, a small percentage made a profit last year.