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Kucinich voted against the $700 billion bailout package, saying that he "had great suspicions" that the money wouldn't help stop the flood of foreclosures. Reining in excessive executive compensation was promised as part of the bailout plan. Now it appears, Kucinich said, that such promises aren't coming true and that some firms might even be using the cash from the federal bailout to reward employees.
"That raises questions about the legitimacy of the bailout and we really need to find out how widespread this is," he told ABC News today.
Uncle Sam has a new name on Wall Street — Sugar Daddy. Bonuses for investment bankers and traders are projected to fall by 40% this year. But analysts, compensation consultants and recruiters say the drop would be much more severe, perhaps as much as 70%, had it not been for the government's efforts to prop up the financial firms. "Year-end pay on Wall Street will be higher than it would have been had it not been for the government and mergers," says Alan Johnson, a leading compensation consultant. "You would expect it to be down much more."
Johnson predicts the average managing director at an investment bank, a title typically earned around eight years on the job, will receive a bonus of $625,000. That's down from nearly $1.1 million last year, but it is still 15 times the income of the average American household. Top bankers could receive as much as $1 million. Even a bond trader just out of business school could see his or her bank account enriched by as much as $170,000 this Christmas.
Five straight quarters of losses and a 70 percent slide in its stock this year haven't stopped Merrill Lynch & Co. from allocating about $6.7 billion to pay bonuses.
Goldman Sachs Group Inc. and Morgan Stanley, both still on track for profitable years, have set aside about $13 billion for bonuses after three quarters, down 28 percent from a year ago. Even some employees at Lehman Brothers Holdings Inc., which declared the biggest bankruptcy in U.S. history last month, will get the same bonus they received a year ago.
public outcry over excessive pay and the demise of three of the biggest securities firms won't deter Wall Street from offering year-end rewards to employees on top of their salaries, compensation experts say.
``Critical producers and critical managers will be retained with the same bonus they had last year,'' said Robert Sloan, head of U.S. financial-services recruiting at Egon Zehnder International, a New York-based executive-search firm
Goldman, the biggest and most profitable Wall Street firm until it opted to become a bank holding company last month, has set aside about $6.85 billion for bonuses, or an average of $210,300 for each employee
Morgan Stanley, the second-biggest securities firm until it also converted to a bank, has $6.44 billion for bonuses, or $138,700 per person,
The money Merrill has set aside for bonuses equates to an average $110,000 for each of its 60,900 people, up from $108,000 a year ago
At Merrill Lynch, CEO John Thain, 53, received a $15 million bonus when he was hired in December. Peter Kraus, 56, who is leaving after joining Merrill last month as strategy head, may be eligible to collect on a pay package originally valued at $95 million
A Morgan Stanley investment banker in Europe, speaking on the condition that he wouldn't be identified, said his bonus last year was five times his salary and that he would quit if he didn't get a bonus this year, unless his salary was doubled.