Have Wall Street Bonuses Become Too Big To Fall?

Tyler Durden's picture

For all the drama surrounding Wall Street bonuses in a year in which Wall Street profitability was cut in half to just $13.5 billion, the worst since the collapse and bailout of 2008 and 2009 (and compared to $27.6 billion in 2010 and $61.4 billion in 2009), one would think that the average banker would see zero bonus in 2011, or in some cases, especially if they worked at a Greek bank, be told to pay for the privilege of working. The truth is that according to official data from the NY City Comptroller, the average bonus dipped by just 13% in 2011, declining modestly from $138,940 to $121.150. In fact, while a number of large firms announced reductions in cash bonuses for 2011 (with several firms reporting reductions in the range of 20 to 30 percent), personal income tax collections indicate a smaller decline in the overall cash bonus pool. A big reason for this is deferred bonuses from prior years hitting this year's payroll and thus smoothing the impact. Still, bankers being forward looking people, are looking forward and probably not liking what they see. Yet while 2011 data for comprehensive pay is still not available, in 2010 the average salary rose by 16% to $361,180 as more firms shifted to a base-heavy comp structure. Indicatively, the average Wall Street salary is 5.5 times higher than the rest of the private sector at $66,100. And no matter how one feels about them, one thing is true: the New York economy would founder without taxes paid by bankers: "the securities industry in New York City accounted for 23.5 percent of all wages paid in the private sector despite accounting for only 5.3 percent of all private sector jobs" and more importantly, "each job created (or lost) in the securities industry leads to the creation (or loss) of almost two additional jobs in other industries in the City. OSC also estimates that each new Wall Street job creates one additional job elsewhere in New York State, mostly in the City’s suburbs." Hence - Wall Street's bonuses have become "Too Big Too Fall", as the entire economy of NY City and the state is now held captive by Wall Street's exorbitant bonuses.

Below is a chart of the average Wall Street salary since 1985:


That said, all of the above is mostly noise: the only thing driving banker pay is the amount of leverage in the system. As it surges, banker compensation is merely an "externality" of all the newly oozing cash as shown here.

Here is comptroller DiNapoli's remarks on the matter:

And some more observations:

“Cash bonuses were down in 2011, reflecting a difficult year on Wall Street,” DiNapoli said. “Profits were down sharply and securities firms in New York City resumed downsizing in the second half of the year. The securities industry, which is a critical component of the economies of New York City and New York State, faces continued challenges as it works through the fallout from the financial crisis and adjusts to regulatory reforms.”

The Comptroller also estimates that profits for the broker/dealer operations of New York Stock Exchange member firms, the traditional measure of profitability for the securities industry, did not exceed $13.5 billion in 2011, which would be less than half of the $27.6 billion earned in 2010.  This would be the second year in a row that profits dropped by more than half.

While the industry had a strong first half with profits of $12.6 billion, it lost $3 billion during the third quarter. Underlying profitability at the large firms was even weaker than reported because profits were boosted by accounting adjustments. The industry earned a record $61.4 billion in 2009 with the benefit of federal assistance after losing a record total of $53.9 billion over the course of 2007 and 2008. While a number of large firms announced reductions in cash bonuses for 2011 (with several firms reporting reductions in the range of 20 to 30 percent), personal income tax collections indicate a smaller decline in the overall cash bonus pool. This is likely due to the payment of bonuses that had been deferred from earlier years. The increased use of deferred compensation should create a pipeline of bonuses that will be paid in future years, which will reduce volatility in industry tax payments.

DiNapoli also reported that:

  • The securities industry in New York City has resumed downsizing. Between April 2011 and December 2011, the industry shed 4,300 jobs. During the financial crisis, the industry had lost 28,000 jobs, of which only 9,600 jobs had been recovered before losses resumed in April 2011.
  • The average cash bonus declined by 13 percent to $121,150 in 2011. The average bonus declined slightly less than the total cash bonus pool because the pool was shared among fewer workers than in 2010.
  • The average salary (including cash bonuses) in the securities industry in New York City grew by 16 percent to $361,180 in 2010, which was 5.5 times higher than the average salary in the rest of the private sector ($66,110).  Data is not yet available for 2011.
  • Compensation consumed a greater share of net revenue in 2011.  The member firms of the New York Stock Exchange devoted nearly 52 percent of their net revenue to compensation (e.g., salary and bonuses for their broker/dealer operations) during the first three quarters of 2011, compared with 47 percent in all of 2010 and 36 percent in 2009.
  • Before the start of the financial crisis, business and personal income tax collections from Wall Street related activities accounted for up to 20 percent of New York State tax revenues, but that contribution declined to 14 percent last year. Wall Street’s contribution to the City’s tax collections has declined from 13 percent of City tax revenues to less than 7 percent.
  • In 2010, the securities industry in New York City accounted for 23.5 percent of all wages paid in the private sector despite accounting for only 5.3 percent of all private sector jobs.
  • The decline in bonuses forecast by the Comptroller is consistent with the expectations in New York City’s budget but is not as great as the decline predicted by New York State for the broader finance industry, meaning revenues may be slightly higher than anticipated in the last quarter of the current state fiscal year.

And concluding the discussion is this rather curious piece appearing in Bloomberg of all places, which asks why anyone with a sense of personal morality go into finance? We have some ideas and they revolve around $320,00 bottle of champagne, and the externalities associated with that particular feature.

Many people assume there is something sleazy about the business of finance, or the people who practice it. This impression is probably behind the commonly voiced opinion that it is a shame so many young people today are going into finance-related occupations, when they could be doing something more high- minded in other fields.


It’s true that many people in business do seem to feel rewarded, for the short run at least, in putting salesmanship ahead of purpose and in cutting legal corners. They seem too focused on money to have moral purpose in their business affairs.


Yet if one lives in the real world, one has to work with, or even for, such people. They are a reality, and it makes sense to try to understand them -- to see if they are as simply sleazy as people think.


Positions in certain finance-related fields often offer more than the usual temptation to be less than honest -- because finance is a profession that offers, at least to the lucky few, astronomically high incomes. On occasion, we may even ask: Why would anyone with a sense of personal morality go into finance?

Read on here.

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Arius's picture

you have to pay for talent ... just bend over and take it ... easier ..

Biatches!  BooYYAA!

JPM Hater001's picture


Just posted my new update...Please help bump my count and get me on the radar so people find it.

US and World Economic conditions:http://www.youtube.com/watch?v=0njE_zvMvSU&feature=colike

TruthInSunshine's picture

New York City with its fine, value-additive finance and equity market gambling machinery, is a special thing. Anyone not living on the east coast won't understand how talented, driven and valuable an asset this general economic sector with its upstanding employers and employees are, and just how instrumental they've been in the growth of the middle class over the last 30 years, and the incredible prosperity in nominal and real terms the meaty center of the working class/middle class that is due to their efforts.

This is why Charles Schumer will always and everytime go to the mat for anything that threatens the upstanding, talented and industrious citizens of his incredible district; they are the few, the proud, the engineers of ingenious ways to shuffle money from one hand to the other (even if an incredible amount of it gets vaporized in that process).

This is why Americans in flyover country (and now, even those on the west coast), need to just suck it up, and continue to allow the executive and legislative branches of our government, with the aiding and abetting of Treasury & the Non-Federal Reserve-less Non-Bank, along with the non-regulatory actions of the SEC, CFTC & other regulatory but non-regulating bodies, complete with the non-prosecutorial DOJ, to pamper, extol, laud and lavishly subsidize New York City and its shining beacon on a hill that is the Wall Street Ponzi with taxpayer dollars, whether currently funded or borrowed from future generations.

Likewise, the government worker/contractor corridor running from D.C through Virginia and Maryland (aka Pork Belly Row) is an essential element in the growing prosperity, massive budget surpluses, and building national wealth of these United States.

If you want to know what the U.S. will look like in 10 or 15 years, look at the U.K. now.

That spread used to be 40 years, and then 20, but we're closing the gap.

The privileged and highly wealth-destructive minions of finance, commodity and equity gambling (who can't lose no matter what 'markets' do - markets that are fixed to be in a looping up-flat-down cycle, by the way, to sheer as many sheeple as possible, continuously) in London are praised and pampered and subsidized by the rest of England's taxpayers. You can have the best of everything and anything in London, for the right price, which necessarily means you're part of the noveau royalty.


What would this country be without these two, bloated, corrupt sectors of the economy, that oversee the shifting of wealth from one party to another (and that do not create wealth), often through devious and criminal schemes?

AldousHuxley's picture

bonuses for selling your soul


only psychopaths stick around and for the "big" bonuses.


wall st. is full of sad souls who have nothing to show for in life except money.


Thomas's picture

JPM Hater: I posted it in several places. Nice effort.

TruthInSunshine's picture

JPMH - Nice job summarizing the Fellini-esque shit show we're living through.

I am a Man I am Forty's picture

JPM Hater, awesome, very nice work, there were a few very small stumbles in there that could be corrected with another read through or two, i would not even bother pointing it out but it was such GREAT work, could be perfect and could go viral, might as well monetize on youtube while you are at it

Shizzmoney's picture

Awesome video. 

TPTB: Pshaw! Facts! 

WestVillageIdiot's picture

Plus you have a sawed off little dictator that has made himself "Mayor for Life" that has scumbag financier blood pulsing through every cell in his body.  He will lick the balls of the big financial companies and do anything to keep their easy money flowing. 

The corruption of NYC is beyond anything I could have imagined.  It is truly appalling, at every level.  I will say "good riddance" and never look back to this cesspool with anything but scorn.  And fuck the Yankees while we are at it.  They are to baseball what Wall Street is to business. 

philipat's picture

1. Why is it ONLY in the Financial industry that Employees expect a larger share of profits than the owners (Aka Shareholders)?

2. Why do the owners let them get away with it?

Widowmaker's picture

Let them eat hot dogs.

Zola's picture

bankers are the ultimate hypocrit capitalists... Their stocks crash and yet there still are bonuses being paid. I am most outraged at the SHAREHOLDERS for their total incompetence on that matter. But then again, only an idiot would be holding a bank share.

Village Smithy's picture

That's part of the problem, there are no more "shareholders" in the traditional sense. That is to say anyone who actually cares about what goes on at the company.

Hugo Chavez's picture

Yeah that is what pisses me off. Dont blame managers and employees for ripping off the shareholders. Emoloyees will steal and rob you blind if you dont watch them carefully. It is their nature. The owners are ultimately respinsible for allowing management and emoloyees to take advantage of the situation and only have themselves to blame

Rainman's picture

yippppee ! ....soon it will be time to BTFD in the Hamptons

WestVillageIdiot's picture

Property prices in the Jersey burbs have finally gotten hammered.  I would imagine the same is going on in the boroughs.  I don't know about The Hamptons.  Manhattan has held up reasonably well but only because it is the center of thievery since 2008. 

When will the country realize how badly it is being robbed blind by this rockpile? 

nmewn's picture

Bloomie, the rents too damned high ;-)

WestVillageIdiot's picture

That guy's biggest fans were the subsidized crowd.  What a bunch of bullshit.  Rent control and rent stabilization are massive scams.  The corruption here creeps into every corner. 

nmewn's picture

"That guy's biggest fans were the subsidized crowd."


He & Bloomie have a lot in common...both believe in subsidation...Bloomie, of course, from Fed printing operations in the market...generating tax revenue for rent subsidy.

t_kAyk's picture

no no no, let's not give them any ideas... 

tickhound's picture

My buddy who has been a decade long financial planner for MS, just went from office back to cubicle... and new phone chick was canned.

I told him he should go indy, but he said it sends the wrong mssg to the client. 

He ain't seen nuthin' yet.

AbruptlyKawaii's picture

it aint the wrong message, he's too fuking lazy and loves sucking FIRE cock to go solo.....and you can tell him i said so

WestVillageIdiot's picture

The financial guys I have seen in this shithole are a lot of things, but talented is not one of the words I would use.  They are disgusting to view in their natural habitat.  They are sheep.  These morons couldn't even see the housing bubble, let alone anything else related to it.  In any other business they would all go bankrupt. 

BORT's picture

Have Alex Hope transfer to New York.  Problem solved.  He gets his bonus here and creates tens of hooker jobs in the process.

By the way:

Pussy is raunchy by name and raunchy by nature. This all natural energy drink has already landed in the London nightclub scene and is the premium energy drink that everyone is asking for. Pussy is everything a good night should be; spontaneous, sophisticated, optimistic and fun. It's about bringing people together, having a good time and giving you natural energy.

Pussy has been branded as the first truly premium energy drink, it's sourced from the best ingredients to create a great taste and a natural lift. The unique taste is created from a blend of fresh white grape juice from Southern Italy, pressed Mexican limes and lightly carbonated water. These are then mixed with Grenadilla and Lychee flavours, and infused with six selected botanical herbs; Milk Thistle, Guarana, Siberian Ginseng, Sarsaparilla, Schizandra and Ginkgo Biloba.

Reese Bobby's picture

Wow.  You made pussy gay.

BORT's picture

In Britain it is actually called "Fanny".  Quite a gaff when you say you smacked someone on their fanny

Arius's picture

"Have Alex Hope transfer to New York.  Problem solved.  He gets his bonus here and creates tens of hooker jobs in the process."

Jobs, jobs, jobs ... its all about the jobs ...

and Hope knows better where to spend the money to create real jobs instead of leaving it up to the gov bureacrats meddling with statistics ...

Booyyaa!!! Viva Cramerica!

Hugo Chavez's picture

Alex is my fooking hero.
If he would give me a job in the low six figures I would gladly take a pay cut for a chance to see what i could do. He is a fair salesman but he needs polish. He and I would make a great team and would comolement each other.

Hope and Chavez. Move over Goldman.

Reese Bobby's picture

Banks are people too.

-Mitt Romney

Irwin Fletcher's picture

They're not bad people. Don't hate them. They're scared to death. They're just like you.

Sequitur's picture

Falling Wall Street bonuses = good for the markets, good for America. Time to shackle these crack-addled bankers and their bullshit FAS 125/FAS 140, repo, CDS, and other off-balance sheet 40x leverage transactions. Oh, democrats and republicans criticizing Dodd-Frank because banks can no longer prop trade, resulting in lower bonuses? Fuck you. Go play casino on someone else's dime. If you're a bank, you should be regulated like a goddamn utility, with compensation to match. If you want to roll the Greek CDS dice a la Corzine, get off the Fed's teat, dissolve as a bank holding company, and hedge it up.

Lower banker salaries = enormous victory for America.

rosiescenario's picture

...."“We have had at least one eyewitness account of someone that has been obviously present for a sexual encounter arranged by (Gristina) for one of her clients in which minors were involved in the encounter,” Assistant District Attorney Charles Linehan said at her Feb. 23 arraignment.

Prosecutors said they caught Gristina, a suburban mom with four children, boasting that she had collaborators in law enforcement who were willing to tip her off if investigators were closing in on her.

She was recorded bragging that contacts were “poised to help her out, to let her know if there is trouble on the front that she needs to be concerned about, particularly back during the Eliot Spitzer investigation,” Linehan said.

The DA’s unit on official corruption, which usually investigates crooked cops and dirty public officials, brought the potentially explosive investigation to an end while Gristina was meeting with a partner — who worked at investment banking firm Morgan Stanley — and discussing expanding her business.

Read more: http://www.nydailynews.com/new-york/manhattan-madam-busted-running-upper-east-side-brothel-catering-wealthy-clients-court-records-article-1.1033622#ixzz1oNsFFia0" ....so Morgan Stanley was considering doing an IPO for her to expand her business....the stock symbol to be MOAN....YELP having already been taken.
Pancho Villa's picture

Not to worry! Notice that the bonus chart repeatedly peaks, then drops for a year or two, and then goes on to an even higher high. And we have had two years of declines already. So it should be time for the next upswing to start any time now.

Actually, come to think of it, this IS cause for worry. The upswings seem to correspond to financial bubbles.

Offtheradar's picture

Bankers are being replaced by computers.  Better personalities.

Renfield's picture

So let me get this straight. A significant percentage of our productive economy is dependent on giving a bunch of parasites enormous amounts of money so they can continue to destroy the larger economy. Because giving parasites overblown amounts of money then 'trickles down' to the productive sectors, who need to be kept alive and motivated by survival, but who aren't paid well enough to consume enough of their own production to make our economy run. Is that about how it works?

Or am I misunderstanding something? It's a serious questions since that's honestly all I'm getting as the takeaway from this so article so far.

ETA: Isn't this comparable (in a simplistic view) to how China works?

Dr. Engali's picture

The chart looks like a head and shoulders top.

Hugo Chavez's picture

I could see myself enjoying wall street. Everyone knows its dog eat dog and caveat emptor. If I ruined somebody or snookered a country into hiding its debt for usirious terms well fook them. Everyone knows the game aint fair. Get the fook out if you cant handle it.

In healthcare I have to play nice and not take advantage of naive innocent people so I play fair, but I have always wondered how I would do. I think I have what it takes, but I will never know.

sgt_doom's picture

Here's the answer:


Guns and Butter

"The Greatest Bank Robbery Ever" with William K. Black.


realtick's picture

Great chart - topping like everything else:



holdbuysell's picture

Sorry, Bloomberg. That read more like an apology/excuse for the atrocious behavior by the whole rather than the commendation of the good behavior by the few.


Downtoolong's picture

Considering the level of government subsidy via QEn, guarantees, and other bailouts and backstops these TBTF financials now receive, I think they shoud all be paid on the GS salary scale.


sasebo's picture

Now TD wouldn't try to bullshit us would he? Like to see Lew Rockwell get his hands on this article  ---  that's only because Mises is dead.

What a big joke. Sounds just like "we can't make it without the guvmunt". The only jobs we can't do without are those that produce our food, clothing, shelter, transportation, energy & health care. Bankers are useless assholes. Pardon my french.

vh070's picture

So… after the massive fraud and dysfunctional financial transactions tolerated by incompetent regulators, just who is getting some jail time?  Has it been even acknowledged that there has been a failure in the whole system that has bankrupted a significant portion of the population?

q99x2's picture

Wall Street's bonuses have become "Too Big Too Fall", as the entire economy of NY City and the state is now held captive by Wall Street's exorbitant bonuses.

Not only that they've stunk up the whole place over there. You can smell when passengers from NYC come into a terminal at LAX. They should close NYC down and let it air out for a while.

Sandmann's picture

You would find it hard to obtain similar data for London as it has NO City Income Tax but I bet London would die without the backwash of money laundering by the anonymous rich through London funding PR firms, Lawyers, Accountants, Hotels, Brothels, Politicians etc. Without the favourable Non-Domicile Rule and Offshore House Purchases to avoid registration and Stamp Duty, London would be the boring and decrepit Third World dump it is without the glitz and coke-laden covering of sleazy lucre