According to the latest Bloomberg poll, a whopping 71% of respondents (many of whom are likely bankers) have said that bonuses at banks receiving bail out funds (that's all of them) should be banned this year, and another 17% believe that a 50% tax should be imposed on all bonuses exceeding $400,000 (which, in another record bonuses year, will likely be most of them). This goes back to our thesis presented over a year ago that since Wall Street is essentially a government utility, it should be treated as one, with set IRR targets and caps, and bonuses for bankers, whose every action results in a government bail out sooner or later, should be closely controlled and scrutinized in concordance with traditional utility metrics. Then again, in keeping with the spirit of the middle-class wealth transfer program so well presented by Ben Bernanke over the past 5 years, this proposal has about a snowball's chance in hell of passing. This is doubly so now with a Republican controlled Congress whose allegiances to the banker class are not exactly top secret.
“The American people bailed them out and immediately they went and paid their employees very large bonuses,” says poll respondent Michael Robertson, 43, of Wayne, Michigan. “I don’t believe they should have a bonus at all for a while.”
Robertson lost his job in retail management in the auto parts industry three years ago when his company cut workers and is now in school studying computer electronics. “Of course I’m bitter about this Wall Street thing,” he says.
Cash bonuses to securities industry employees in New York City grew 17 percent, to $20.3 billion, for work in 2009, according to estimates in a report last month by the New York State Comptroller’s office. While the cash bonus pool for 2010 will probably be smaller, the average bonus may be bigger because after job losses the money will be divided among fewer employees, the report said.
The Bloomberg poll of 1,000 adults 18 and older reflects continuing public animosity toward the bailouts, which became a potent political issue that helped defeat dozens of lawmakers from both parties in congressional elections this year.
Seven of 10 Americans say it’s Wall Street’s turn to help bail out the government Treasury, supporting a tax on Wall Street profits as a way to reduce the $1.3 trillion deficit. By comparison, 43 percent favor a freeze on spending for items like education and medical research, 33 percent would cut farm subsidies, 25 percent back a new tax on gasoline, and 15 percent would reduce benefits in the Medicare health insurance program for the elderly.
“I know that some of the tax I pay when I buy gas for my car, and on my income, was somewhere written into a check to keep these companies from imploding,” says poll respondent Steven Previll, 33, a maintenance worker from Harrisonburg, Virginia. “There’s an amazing amount of money being made on Wall Street. It would be cool if we could take some of that money and reinvest it in the country.”
Bolstered by bailouts, Wall Street earned $61.4 billion in 2009, almost three times more than in 2006, according to the New York State Comptroller’s office report. This year’s profit, projected at $19 billion, still would be the industry’s fourth largest, the report said.
The average securities industry wage in New York City fell more than 20 percent last year, to $311,000. That was still five times the average pay for other private-sector jobs in the largest U.S. city, the comptroller’s office said.
And as we wrote previously, none other than the New York comtroller now expects the average bonus to be larger than 2009, courtesy of headcuts in the industry. Which is why feel free to ignore disinformation campaigns by the likes of Morgan Stanley that they will be actually cutting bonuses: the bank knows all too well that with the rest of the Street hiking its comp for 2010, the last thing the firm can afford, which is now the administration's darling (GM IPO), and the ECB's indirect sovereign bond broker, is an exodus of employees to its key competitors... or whatever is left of them.