Brokerage stocks have failed to keep pace with the broader market, but pay is up.
“Trust us,” Wall Street said.
And what has it brought? A new study of 2010 compensation by The Wall Street Journal found that the industry will pay out a record $144 billion this year. The compensation represents a 4% increase from 2009. It also slightly outpaces a 3% revenue increase at the big brokerages — most earned in the early part of the year. See WSJ report on Wall Street pay.
The numbers starkly contrast the reality for most Americans. Those lucky enough to have work are seeing little, if any, rise in wages. The pay figures also sharply underscore how reform, bailouts and aftermath of the financial crisis failed to influence pay.
In the most heated days of the financial crisis, some banks moved forward. Morgan Stanley (MS 25.34, +0.19, +0.74%) adopted reforms that put more emphasis on deferred pay. Some banks in Europe adopted clawback provisions or built bonus pools invested in toxic securities.
But most Wall Street banks only accepted pay rules forced upon them through the Troubled Asset Relief Program, and even those rules were only targeted toward those which received exceptional aid: American International Group Inc. (AIG 41.43, +0.39, +0.95%) , Bank of America Corp. (BAC 13.25, +0.10, +0.77%) , Citigroup Inc. (C 4.18, -.00, -0.02%) , General Motors and Chrysler.
How onerous was pay czar Kenneth Feinberg? Well, no one’s missed a meal.
That said, pay does seem to be changing in the financial world. Up until the crisis, those who took inordinate risks resulting in short-term profits took heaps of money home despite the long-term consequences of their bets.
Today, it appears pay goes up whether or not those bets create any value at all.
.– David Weidner