How to Cover Wall Street

Greg, Steve and Damian all make good points. I’ll use my own experience to illustrate my take. When I was a waitress at a diner near the U.N., we had a steady trickle of international customers, most of whom were bad tippers (please excuse the broad national stereotypes for the purposes of instructional parable). The most extreme in their penuriousness, it must be said, were Brits, who would often nurse a $2.99 bowl of soup or $1 cup of tea for ages, and then leave a five or 10 percent gratuity.

The Comfort Diner

The reason wasn’t some unresolved resentment toward the colonies, nor do I think it can be attributed entirely to a lack of familiarity with local custom (Yes, tips are much more modest in your country, I wanted to scream, but you’ve got a guidebook – read it!). (more…)

Good bye for now.

Wall Street makes more than almost any other industry as a whole, and the average salary doesn’t do enough to reflect the extremes.

I agree that $360,000 isn’t an exorbitant amount. But what’s the median and mode? I definitely know what the highs are: $1 million, $2 million, $3 million…

And a name like Felix Rohatyn shouldn’t be placed together with Richard Fuld’s, even if they both worked for Lehman Brothers.

Those who can serve our economy beyond serving themselves should be rewarded for their efforts, especially when they take immense pay cuts to do so — Henry Paulson excluded.

But CEOs like Fuld, who made $750,000 with a cash bonus of $4.2 million in 2007, have long been overpaid. So have most of the other top-tier executives and financial officers at banks and brokerage firms.

I’m not implying America should go Socialist. But part of deleveraging is getting used to less money.

Considering the past year’s events, giving Wall Street any bonus at all is a slap in the face to those who have worked just as hard and can barely afford to send their kids to college.

When I think about the journalists and teachers who need to find other jobs to live within their means, and the doctors who make less to work outside private insurance — people who are just as fundamental to preserving our country’s health and integrity — I am forever reminded that Wall Street makes enough off salary.

But as a believer in free market economies, I also believe that salaries, stock options and other rewards should be determined by the markets. Unfortunately, ours is tied down for the moment.

The American flag in the above picture means a lot to me. It’s painted on the building of my former place of employment: A sports bar named Tully’s in Amherst, NY. It was at Tully’s where I met a friend named Eddie…who now works at Goldman Sachs in New York City. Eddie is really my only tangible link to Wall Street, and I’m grateful for that.

So, every time I hear about Wall Street cutting jobs or cutting salaries, all I think of is Eddie. A 25-year-old guy who works his tail off about 50 hours a week–and even more since the financial crisis made its landfall.

Eddie and I never really talk about how much money he makes. And yes, maybe he got into the business to make money. But, who can blame him? (more…)

Here is my view of the great bonus controversy. Continue the conversation….

The line “Wall Street versus Main Street” has become a mantra this fall. They shouldn’t be enemies, especially in New York.
                        It is understandable that politicians from California and Massachusetts want to prevent securities firms from paying out bonuses this year. Liberal Democrats like Henry Waxman and Barney Frank have never liked

the titans of Wall Street. No such pass for New York Attorney General

Andrew Cuomo, who has joined the no-bonus camp, apparently clueless on what is at stake for the city’s economy and the state budget.

True, Wall Streeters make more than just about anyone else—an average of $360,000 in recent years. But there are some economic facts of life that need to be recognized.

People in the securities industry don’t get almost equal installments each month with a small added dollop of cash at the end of the year. Their monthly checks are small, with their bonuses, usually paid out early in the year, accounting for half and sometimes two-thirds of their compensation. Eliminating their bonuses is not like skipping other people’s.

Even at $360,000, most people on the Street aren’t able to afford Porsches, ultra-expensive condos at the Plaza or vacation homes in the Hamptons. Young Wall Streeters often use their windfalls to pay for their weddings or down payments on their homes in the city. A good number stash them away because they expect sooner or later to lose their jobs.

The impact of Wall Street’s pay ripples throughout the economy. Real estate expert Jonathan Miller says apartment purchases by those in the securities industry are the single most important factor in the strength of the city’s housing market. The mayor gets 9% of his revenue from Wall Street, and the governor relies on it for 20%. Bonuses are key to spending on education, health care and police.

Some people do make obscene amounts of money on Wall Street, but many of them do more than spend it for their own pleasure. Last week, the New York Public Library raised more than $2.5 million at its annual Lions dinner. Six wealthy New Yorkers—four of whom made their money on the Street—essentially paid the cost of the event so that everyone else’s money went entirely to the library. The names Pincus, Fuld, Rohatyn and Schwarzman are familiar to everyone. The billions Stephen Schwarzman has made at Blackstone are financing a major, vitally needed expansion of the famed Fifth Avenue landmark. No bonanza, no new library.

Even in New York, tension has always existed between Wall Street and Main Street. A longtime editor of Crain’s always complained about how she was barely middle class, when in fact her family income put her in the top 10% of New Yorkers. Writer and entrepreneur Penelope Trunk made her name in the city and moved to Madison, Wis., because even with a salary of $200,000 “nobody feels rich in New York.’’

This year, bonuses will be less than half of the $33 billion handed out in 2006 and 2007. If Messrs. Waxman, Frank and Cuomo have their way, the figure will be even smaller. Then we’ll all find out that it is better not to feel rich than not to be rich.

COMMENTS? GDavid@crainsnewyork.com

Treasury Secretary, Henry Paulson, is trying to save the financial system. But the Treasury’s Troubled Asset Relief Program or TARP cannot fund all of the financial institutions that have applied for it.

Regulators for the Treasury have announced that the agency expects at least 1,800 publicly-held financial institutions to line up for their piece of the $700 billion bailout designed to rid banks of toxic assets.

Paulson moved quickly to shore up the financial services sector in the midst of a meltdown. And, to date, Treasury plans to divide $33 billion  among the nine largest US banks and 16 regional banks. But the Treasury Secretary may have opened up a Pandora’s box since, now, almost any financial institution can apply for a piece of the pie.

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Mundane trading days like Monday are now exotic and rare

Today was an incredible day for the markets. At the closing bell, the Dow had fallen a remarkable…five points. That’s about one-sixteenth of a percentage point, in case you were counting. The negligible stock movement may seem yawn-worthy at first blush, but in the new upside-down world, where markets soar and plunge in the thousand-point range, and swings of three, four and five hundred have become the norm, a mildly-swaying, low-volume trading day like today is way out of the ordinary.

In the halcyon days of two months ago (when we were just in a recession, not an apocalypse), a financial reporter would have cursed a day like today, because it would mean they’d have to really scrape and claw to find something to write about. Manufacturing is at its lowest level in a quarter-century, but the market hasn’t reacted. And traders don’t expect to be surprised by the country’s choice for leader of the free world. But parsing the minuscule stock movements of individual companies and industries and trying to extrapolate a unifying economic theory would, in the summer, have been tedious and unmemorable.

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