Goldman bonuses raise Wall Street bar
Wall Street's "Charging Bull" statue
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Kai Ryssdal: It's a soggy day in early fall here in Boston. Down on Wall Street, corporate America is smack in the middle of earnings season. Tomorrow we'll start our quarterly tour through the books of the big Wall Street banks. And for the most part, bigger will be better. Profits are expected to be pretty good, overall. And with those profit reports, we'll also get an idea of how much those banks plan to hand out in bonuses. The headline number floating around today is $23 billion. That's said to be the bonus pool at Goldman Sachs. Goldman says somebody made it up out of thin air. Whatever the number does turn out to be when Goldman reports profits on Thursday, it won't do much to convince anybody that Wall Street has changed its ways. Marketplace's Jeremy Hobson reports from New York.
JEREMY HOBSON: The main argument for bonuses or incentives, as they're sometimes called, is that without them, top talent will pack their bags and go work for someone who appreciates them.
Goldman Sachs CEO Lloyd Blankfein said as much in a speech in Washington earlier this year.
LLOYD BLANKFEIN: We believe attracting and retaining the best people is vital to our effectiveness and that incentives are an important element in that process.
PETER COHAN: I don't really think that there's enough other firms making the kind of money that Goldman is making to cause a massive talent exodus.
That's Peter Cohan, president of a Massachusetts management consulting firm. He says if Goldman's bonus pool really is $23 billion, it'll be far more than what's needed.
COHAN: There are probably 20 or 30 people that would be dying to take any Goldman job that would be vacated by maybe the one or two people who would leave for a higher offer somewhere else.
Nevertheless, all the other big banks will have to keep up with Goldman to compete for talent. And that's a big reason why Wall Street bonuses keep getting bigger and bigger.
Not that there's anything wrong with that, according to Danny Sarch of the headhunting firm Leitner Sarch Consultants:
DANNY SARCH: I think it's wrong to just make a blanket statement that Wall Street is bad and should not make this much money, without an appreciation of how much money that they're making for their shareholders and the other people which Wall Street is supposed to make money for.
But wouldn't shareholders rather just take the money themselves, instead of letting the company hand it out in the form of bonuses to employees?
SARCH: As long as shareholders feel that the best people are there, and they're getting quote-unquote their fair share, which is reflected in the share price, I don't think it's gonna be an issue.
And on that score, Goldman Sachs share price has more than tripled, since bottoming out last November.
In New York, I'm Jeremy Hobson for Marketplace.