Wall Street Bonuses May Go Way of Dodo Amid Bailouts

[Joanne98]

Source: Bloomberg

Jan. 30 (Bloomberg) -- The Wall Street bonus, considered a sacred ritual, may become the industry’s biggest casualty as governments worldwide bail out financial institutions.

UBS AG was told to reduce bonuses after the Swiss government gave the country’s biggest bank a $59.2 billion lifeline. Bank of America Corp. is under pressure to scale back payouts after New York Attorney General Andrew Cuomo subpoenaed executives earlier this week for information on compensation and President Barack Obama said just yesterday that bonuses handed out by banks represent “the height of irresponsibility.”

The current system of “asymmetric compensation,” in which people are rewarded when they do well and aren’t required to return the rewards when they lose money, is detrimental to society and needs to change, said Nassim Taleb, a professor at New York University and author of “The Black Swan: The Impact of the Highly Improbable,” in an interview.

The worst economic crisis since the Great Depression, a $700 billion taxpayer bailout in the U.S. and the demise of three of the biggest securities firms -- Bear Stearns Cos., Lehman Brothers Holdings Inc. and Merrill Lynch & Co. -- didn’t deter investment banks from offering year-end rewards to employees on top of their salaries.

Financial companies in New York City paid cash bonuses of $18.4 billion last year, the sixth-most in history, even as they posted record losses, according to data compiled by the office of state Comptroller Thomas DiNapoli.



Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=aLZhlzIUX8hY&refer=home

[No Elephants]

1. Big Business is going to find ways of giving favored employees an

ample total compensation package, whether or not the word "bonus" is ever used again. At least a "bonus" is theoretically based upon rewarding good performance. Forget word choices. Look at substance.

[onehandle]

2. "May." Won't. nt

[closeupready]

3. And even when they claim they have done so, rest assured that means they found a way around it.

n/t