NEW YORK (TheStreet) -- Everywhere I look this morning there is bad news for banks -- in particular for banking bonuses.
Bonuses in the financial world are so culturally entrenched and so irresistible that financial institutions continue to award lavish payouts despite public outcries, Congressional scrutiny and in many cases such poor corporate performances that no one could reasonably expect to be rewarded. Yet they are.
But maybe not for long. A study of proposed global regulatory reforms suggests that long-term profitability of U.S. and European banks would be reduced by about a third and could cause staff cuts and -- heaven forbid -- a reduction in bonuses. The study by JPMorgan Chase (JPM) -- which of course has no particular bias when it comes to bonuses -- was conveniently leaked to the Financial Times.
Elsewhere in the news, New York Attorney General Andrew Cuomo is preparing securities fraud charges against Bank of America (BAC) executives related to bonuses paid to Merrill Lynch staff as the investment bank was in the process of being taken over by BofA.Unlike the toothless SEC settlement with BofA over the bonuses -- which is being challenged by an enlightened judge -- Cuomo is going directly after the executives involved, according to The Wall Street Journal. That makes more sense than a general fine that would come out of shareholders pockets, which is ironically the approach taken by the SEC, whose job it is to protect investors. It's easy to get outraged over banking bonuses and many readers will no doubt argue that they are necessary to reward talent and remain competitive in the financial world.
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