How to Cover Wall Street

So, Lloyd Blankfein has decided that Goldman Sachs’ top management will forgo their yearly bonuses this year, bringing the “will they or won’t they” argument to a close. Now the others are expected to follow suit.

Smooth move, Lloyd: Please Washington by taking a hit at the top; let the “little people” take home their bonuses; and Wall Street and Main Street are finally reconciled.

Goldman’s “goodwill” move has prompted executives at UK-based, Barclays, PLC, Germany’s Deutschbank AG and Switzerland’s UBS AG to abandon bonuses for senior managers. But executives at Morgan Stanley, Citigroup and AIG aren’t lining up to fall on their swords. In fact, John Mack and Brady Dougan are conspicuously silent on the matter while Vikram Pandit has decided to eliminate the bonus question altogether by slashing jobs.

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This subject is quite personal for me, since my wife, Stacey, has worked at Morgan Stanley since 2000. She is not an investment banker, nor an executive, so I’m not sure how these plans to cut bonus pay would affect her. She works as a researcher/analyst on asset managers, e.g. mutual funds. Morgan uses her work and that of her colleagues to recommend asset managers to Morgan clients.

Her research division had nothing to do with the high leverage that Morgan took on or its investments in mortgage-backed securities. Her division has continued to make solid, consistent profits for Morgan Stanley.

So if Rep. Barney Frank and Sen. Bernie Sanders are talking about cutting the bonuses of EVERY employee at every financial institution that has received part of the the bailout money I couldn’t be more opposed to the idea. Is it fair to penalize thousands of people for actions they had nothing to do with? And it is more than likely that these employees will be penalized in some way (either by losing their job or receiving less compensation) by their employer without the hand of government getting involved (I get into this later).

Check out this interview Bernie Sanders (I-VT) recently did with CNBC. At the 1:56 mark a host chimes in:

“Senator your proposal looks rather punitive and mean spirited…It’s one thing to say to take bonuses away, when you’re getting federal money, from the big brass, that got us into this mess, but you want bonuses deprived of every Wall Street employee…You want the secretary at Goldman Sachs not to get a $30,000 bonus that she could put back into the economy. And she did nothing wrong.” (more…)

If it were my decision, I wouldn’t give a dime to Wall Street to pay for CEO bonuses. But, as we all know, it’s not up to me.

I saw a segment on “The Early Show” this morning that posed this very controversial question to the experts, which made me decide that I really don’t care if these CEOs get their bonuses or how much the bonuses are–the thing I mostly care about is: Where is the money coming from?

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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…)