IN A holiday season when most folks have to adjust to giving and receiving less expensive gifts, it is hard to work up much sympathy for Wall Street traders unhappy about not getting the year-end bonuses to which they have become accustomed.
Back in the boom years, a trader or manager might receive a bonus three times his annual salary; now, spurred by pressure from regulators, some financial houses have shifted to a more conventional form of compensation: Traders get a set salary, and bonuses are just that — a little extra if the company performs well. But traders reportedly aren’t happy.
Some say they miss the score-keeping thrill of a hefty bonus. But too often those bonuses acted as incentives to take excessive risks, usually with other people’s money, in pursuit of the short-term gains that helped justify huge bonuses. That nearly capsized the American economy.
The new order on Wall Street hardly imposes material hardship. In fact, in seeking to change the old bonus habits, some banks have raised salaries considerably. They can do so because, overall, this year has been very, very good to Wall Street. So even some employees who receive little or no bonus this year will be earning as much, or more, take-home pay as when bonuses were in fashion.
Two years ago, Wall Street barely avoided teetering into the abyss. Thanks to political pull and government bailouts, the major firms have survived swimmingly. If executives can get over their hang-up on a yearly bonus figure, the taxpayers who prop up the financial-services industry will be far safer.