Bad Day for Bank Bonuses: Today's Outrage
NEW YORK (
) -- 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) - Get Report
-- 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) - Get Report
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.
I don't disagree entirely. But someone out there will have to explain the $100 million payout being sought by a
Citigroup
(C) - Get Report
trader for his work in 2008. That seems pretty much outsized to me.
Agree? Disagree? Either way, I invite you to share your outrage by
posting a comment.
--Written by Glenn Hall in New York.
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Glenn Hall is the New York-based Editor in Chief of
TheStreet.com
. Previously, he served as deputy editor and chief innovation officer at
The Orange County Register
and as a news manager at
Bloomberg News
in Frankfurt, Amsterdam and Washington, D.C. As a reporter, he covered business and financial markets, worked in both print and television in the U.S. and Europe, and conducted in-depth investigative coverage at
The Journal-Gazette
in Fort Wayne, Ind. His work also has been published in a variety of newspapers including
The Wall Street Journal
,
The New York Times
and
International Herald Tribune
. Hall received a bachelor's degree in journalism and political science from The Ohio State University and a certificate in project and program management from Boston University.
