A year has past since the credit crisis wreaked havoc on the world’s financial system. During that year of reckoning, firms on Wall Street that were lucky enough to survive (or should I say get bailed out) reduced annual bonuses by nearly 45% from the prior year.
Fast forward one year and my have things changed. Now, a mere 13 months since facing death, these same firms are set to payout a near record $26 billion in year end bonuses. Many feel this is outrageous…some argue it’s not. I however am going to defer to my man Warren Buffett who says: Wall Street Pay Must Have “Downside”
“You have to put in something where there is downside to people who really mess up large institutions.”
“Too many people have walked away from the troubles they have created for society, not just for their own institution, and they have walked away rich.”
“What you have to change in Wall Street, is you have to make sure that in addition to carrots, there are sticks.”
“And it can’t be a one-way street where they are making ungodly amounts of money when things are good and then they move on to someplace else for a while when things are bad.”
I believe that Buffett has a reasonable take on Wall Street pay. As a capitalist, I have no problems with large salaries and multi-million dollar bonuses. However, I do have a problem when such pay packages are doled out by companies who took a taxpayer funded bailout. There has to be a better way of insuring that failure goes unrewarded and that those who act unethically get punished.
Jack, I can certainly understand your opinion. But if a person brings in $50 million in profit for a firm shouldn’t they deserve a large bonus?
I wish I was a multibillionaire so I could tell people what to do and how much to make and pay!
That would certainly be nice FS! I think people look to Warren Buffett for advice even though he’s a billionaire b/c he’s so humble and down to earth. The guy takes a salary of only $100K a year and lives in the same modest house for decades. He’s pretty much the exact opposite of the typical Wall St figure most people envision.