Tuesday, October 12, 2010

Wall Street is Recession-Proof

The trillion-dollar taxpayer bail-out of Wall Street has worked a treat.

For Wall Street.

For deals like this, Guambat is prepared to dine on moral hazard morning, noon and night.

Wall Street Pay: A Record $144 Billion
Pay on Wall Street is on pace to break a record high for a second consecutive year, according to a study conducted by The Wall Street Journal.

About three dozen of the top publicly held securities and investment-services firms, a 4% increase. Wall Street revenue is expected to rise 3%.

"Until focus of these institutions changes from revenue generation to long-term shareholder value, we will see these outrageous pay packages and compensation levels," said Charles Elson, director of the Weinberg Center for Corporate Governance. Since Wall Street firms pay out up to half of their revenue in compensation, cutting back on that large cost can meaningfully increase profits left for shareholders.

Where revenue falls short, analysts and experts expect that Wall Street will lay off employees in order to keep bonus pools high.

Such nonbank firms like Blackstone Group LP, Och-Ziff Management Group LLC and Fortress Investment Group LLC aren't as scrutinized in Washington. All three firms' revenue and compensation are projected to increase.

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