Wall Street braces for smaller bonuses
Bankers and traders could receive as much as 30 percent less in year-end bonuses. Some just hope they keep their jobs amid mounting layoffs.
Jeremy Hobson: Well it's the holiday season, which for some Americans means it's bonus time. On Wall Street, bankers and traders are bracing for their bonuses. I say "bracing," because bonuses are likely to be smaller this year.
But as our New York bureau chief Heidi Moore reports, it's all relative.
Heidi Moore: It's bonus season on Wall Street. To anyone who works in finance, this one bonus payment will be a momentous validation -- or dismissal -- of an entire year's work.
Michael Driscoll now teaches at Adelphi University, but used to be a trader at Bear Stearns.
Michael Driscoll: Face it, nobody goes to work on Wall Street because they're trying to cure cancer or work for the greater good of the common man. You go to Wall Street because you want to make a lot of money.
Well, there's less money available this year. Banks have struggled to be profitable.
Alan Johnson heads a firm that advises Wall Street on how to pay its people. He predicts that bonuses will be down by one-third this year. That would still net the average senior investment banker around $900,000. But don't call it a bonus.
Alan Johnson: The average person doesn't realize how much the word "bonus" has caused more pain than just about any word I can think about. We think of "bonus" as being a tip, gratuity, extra. For many people on Wall Street, it's most of their pay.
Richard Lipstein, at Boyden Executive Search, explains.
Richard Lipstein: If someone made $1 million, it's likely that person made $200,000 in a base and $800,000 in a bonus.
And that $800,000 bonus wouldn't come in hard cash. Around 50 percent to 80 percent comes in the form of the bank's stock, and a banker may not be allowed to sell it for three years.
But money with strings attached is better than no money at all. Most banks are laying people off. Morale is low, Driscoll says.
Driscoll: It makes for a pall over the entire Street.
Lipstein says the layoffs are a bigger worry than the size of bonus checks this year.
Lipstein: A good number of the people I talk to are almost happy to have a job.
Which makes Wall Street more like the rest of America for once.
In New York, I'm Heidi Moore for Marketplace.