Issue of the week: Those big bonuses are back

In all, more than 5,000 bankers received bonuses of $1 million or more—1,444 at JPMorgan alone.

Don’t look now, but “bankers are starting to make mega-bucks again,” said Matthew Lynn in Bloomberg.com. New York Attorney General Andrew Cuomo revealed last week that Citigroup, Merrill Lynch, and seven other big U.S. banks, which have collected $175 billion in federal bailout funds, paid $32.6 billion in bonuses last year. In all, more than 5,000 bankers received bonuses of $1 million or more—1,444 at JPMorgan alone. This year, with markets and confidence rising, the payouts will be even bigger. Goldman Sachs alone increased its bonus pool by 33 percent in the first six months of 2009, to a record $11.4 billion. The swelling of Wall Street’s bonus hoard has all the earmarks of a bubble: “The price of bankers has become disconnected from real forces of supply and demand.”

That bubble could burst sooner rather than later, if Democrats in Congress have their way, said Anne Flaherty in the Associated Press. “Bowing to populist anger and defying President Obama,” the House voted last week to prohibit pay schemes that encourage employees to take reckless financial risks. The bill’s prospects in the Senate are uncertain; many senators prefer the administration’s proposal to give shareholders a “say on pay”—a nonbinding vote on bonus packages. But no matter what happens to this particular legislation, it’s clear that bonuses are back in policymakers’ sights.

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE
https://cdn.mos.cms.futurecdn.net/flexiimages/jacafc5zvs1692883516.jpg

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up
To continue reading this article...
Continue reading this article and get limited website access each month.
Get unlimited website access, exclusive newsletters plus much more.
Cancel or pause at any time.
Already a subscriber to The Week?
Not sure which email you used for your subscription? Contact us