Sign me up!
Bonuses. Perks. Offices. Staff. Planes. Cars. Drivers. No need to produce profits. In fact we don’t have to really do anything except come up with deal structures that only we understand, bury the inherent risk pitch it as safety to the client, then flip the whole package to the other guy. Then, do it again.
There is no one left in the free world that has not heard about the obscene bonuses the once tall investment bank Merrill Lynch paid its people minutes before it’s acquisition by Bank of America. It was in the coming months, as B of A stock plummeted, that we would come to learn of bailout bonuses and the possibility that the Fed forced Bank of America to take over the behemoth before it was too late.
Now the former CEO of Merrill, John Thain and Kenneth D. Lewis, Bank of America’s CEO, are under fire for allowing this to happen and for what they knew. The when, the where and then the inevitable, for gods sake how??? Why would several of the parties generally considered responsible for causing the collapse of the credit markets and the stock markets, resulting in the loss of many billions upon billions of dollars possibly receive a bonus? Do you get a bonus if the firm you work at doesn’t do well? I certainly don’t.
This incestuous paradigm that has gripped Wall Street for decades must stop. First compensation packages were large. Then they became larger as salaries became tied to tremendous bonuses and perks. Then they became enormous, including signing bonus, equity in the company, salary and bonus, regardless of performance. This madness needs to come to an end and given today’s political climate, the compensation scam that’s infected Wall Street may be coming to a close sooner than many would prefer.
Now, to be clear, I am all for performance based compensation. If one meets a specific performance goal, then you should certainly be rewarded by a reasonable bonus. However, if the firm has to take money from the government to stay alive, or needs to be acquired to survive, the definition of what is reasonable, very quickly needs to be redefined. We are tremendously confident in the new administrations ability to act swiftly and act fairly.
Article written by: Simon B.