Looks like the recession is over at Wall Street as the money comes pouring in. Many blame the current recession on Wall Street and it’s over leveraging ways, so it is not surprising that those of us on “Main Street” and government officials in Washington are outraged that after seemingly such a short time and the billions in taxpayer bailouts that the Wall Street firms are paying such large salaries and bonuses.
Workers at 23 top investment banks, hedge funds, asset managers and stock and commodities exchanges can expect to earn even more than they did the peak year of 2007, according to an analysis of securities filings for the first half of 2009 and revenue estimates through year-end by the Wall Street Journal.Total compensation and benefits at the publicly traded firms analyzed by the Journal are on track to increase 20% from last year’s $117 billion – and to top 2007’s $130 billion payout. This year, employees at the companies will earn an estimated $143,400 on average, up almost $2,000 from the 2007 pre-recession and bailout levels.
The growth in compensation reflects Wall Street firms’ rapid return to pre-crisis revenue levels. Even as the economy is sluggish and unemploymentt approaches 10%, these firms have been boosted by a stronger stock market, thawing credit market, a resurgence in deal making and the continuing effects of various government aid programs. The rebound also reflects growing confidence by some Wall Street firms that they can again pay top dollar for top talent, especially once they have repaid the taxpayer-funded capital infusions they received at the height of the crisis. So far, regulators and lawmakers have focused on making sure pay practices discourage excessive risk-taking, leaving to companies the question of how much is too much.
Many financial firms, however, say they need competitive pay packages, pointing to threats from non-U.S. companies, private-equity firms and hedge funds. Mr. van Praag, a Goldman spokesman, said the firm understands public sentiment over bankers’ pay, but added: “The easiest way to destroy the firm would be if we didn’t pay our people….Destroying a profitable enterprise would not be in anybody’s interest.” Goldman Sachs, one of the highest paying firms, also says employees have long had a stake in its long-term results because many are compensated in part with shares they can’t touch for several years. Average compensation per employee at the firm is on pace to reach about $743,000 this year, double last year’s $364,000 and up 12% from about $622,000 in 2007, according to the Journal analysis. The average American earns less than $50,000, so talk about the growing level of income and wealth inequality!
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