All those Ivy League graduates working on trading formulas that yes, will yield some short-term profits, but in the end merely rachet up volatility and risk in the market – that will no doubt find Wall Streeters back in the halls of Congress looking for a handout.
Just when we thought maybe, just maybe, greed would take a back seat to long term value and prudent compensation that incentivizes sound risk taking, the WSJ reports that pay at public companies on Wall Street will reach a new record: $135 billion. Wow.
What’s up with that? The same Wall Street that brought us to the brink of a worldwide catastrophic depression; just ask Federal Reserve Board Chairman Ben Bernanke and Former Treasury Secretary Hank “I’m vomiting in public from all the stress” Paulson how close we were. The same Wall Street that came hat in hand to Uncle Sam and the American Public, seeking oh, “about a trillion dollars” should do it.
Ok. So some of that money was paid back. But from my vantage point, the driver there was Wall Street’s singular desire to be out from under additional regulation imposed on them by the TARP and other federal bailout programs.
I would not be so outraged if the American public were getting something for these record-breaking salaries. Hey how ’bout the creation of some jobs fellas? Last time I checked unemployment remained dangerously close to 10%. What about some innovative financial product to reduce the deficit or some effort to stem the tide of home foreclosures? Nope. Instead it’s the same story. Trading on exotic financial instruments, arbitrage, shorting markets, stocks and commodities. That’s where the money is and that’s what we’ll get. All those Ivy League graduates working on trading formulas that yes, will yield some short-term profits, but in the end merely rachet up volatility and risk in the market – that will no doubt find Wall Streeters back in the halls of Congress looking for a handout.
I hope when that happens – and it will – policy makers have the guts to stand up to the Street and impose limitations and sanity to future compensation.