Did Wall Street Learn Anything From Public Outcries Over Bonuses?
The headlines trumpet the increase in Wall Street bonuses in 2009 — they were up 17 percent over 2008, a number that the New York State comptroller, Thomas DiNapoli, calls a “bitter pill” for American taxpayers (if not for New York’s increasingly stretched coffers). Did bankers learn nothing?
Actually, it appears that they’ve learned a little something: Although bonuses are up 17 percent, they’re down one-third from 2007, when Wall Street was last profitable. Financial firms actually had a banner year in 2009, fueled in no small part by bailouts, and firms netted more than $55 billion in profits alone, after losing $43 billion in 2008. So, despite record gains, they didn’t pay out record bonuses — at least, they didn’t in terms of non-deferred compensation. Deferred compensation, such as stock options, aren’t taxed until they are recorded as income. That’s, at least, a start.
Deferred compensation is a bonus method that DiNapoli supports, despite its tax implications for the state.
“„DiNapoli supports reforms that require Wall Street bonuses to be tied to long-term profitability, to force more stability in the volatile markets and “make sure the securities industry thrives without driving the rest of us out on a fragile economic limb.”
But if cash bonuses are still hard to stomach for many Americans who aren’t doing as well as the Wall Streeters, it’s hard to believe that Americans will be less bothered by stock options than cash — especially if massive stock options cause tax revenue shortfalls and cuts in services.
