WORLD> America
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WORLD> America
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No curbs on Wall Street pay despite meltdown
(Agencies)
Updated: 2008-10-25 15:04 Those taking cash from Uncle Sam must follow guidelines limiting executive pay, including a ban on golden parachutes for departing executives. No restrictions are placed on across-the-board pay.
In total, those nine banks had pay-related costs of $108 billion for the first three quarters of the year. The average increase came to just shy of 3 percent, according to AP figures. Some banks have set aside less. Merrill Lynch's costs for pay were $11.2 billion for the first nine months of the year, 3 percent less than last year. That nearly matches the company's $11.7 billion overall loss so far this year. Merrill spokesman William Halldin said that the company thought a better measure would be to compare the 2008 compensation expense with the first three quarters of 2006. That would reflect an 18 percent decline from Merrill's last profitable year, he said. Bank of New York Mellon sharply curtailed its bonus expenses in the third quarter. That cost was $242 million for the three months, down 30 percent from the second quarter and off 37 percent from last year. Spokesman Ron Gruendl said the decline was "due to operating results and a reaction to the current market environment." But at the same time, the bank's total compensation cost has climbed 44 percent to nearly $4 billion because of higher salaries. If companies decide to reduce bonuses, that could be a boon to the banks' finances because that would help the bottom line, said Jack Ciesielski, who writes the financial newsletter The Analyst's Accounting Observer. Already, lawmakers are doing all they can to shame the banks out of paying anything. House Financial Service Committee Chairman Barney Frank has called for a freeze on all Wall Street bonuses. Sen. Carl Levin wrote this week to US Treasury Secretary Henry Paulson saying it was "unacceptable for financial institutions ... to maintain past levels of compensation." On Wednesday, insurer American International Group agreed to freeze payouts from a $600 million bonus pool and compensation packages for the company's chief executive and chief financial officers, as well as cancel unnecessary corporate trips and junkets. AIG has received government loans topping $120 billion to keep it from collapse. Cuomo calls it a "test case" for stopping unfair pay. Certainly, workers are uneasy about whether the bonus money will really come. Many traders, bankers and financial advisers have received little or no word about how big their bonuses might be, or whether they will come at all. |
