Wall Street Bonuses Cause a Stir
Figures released Wednesday by New York State Comptroller, Thomas DiNapoli, revealed that bankers on Wall Street enjoyed an average increase of 15 percent on their annual bonuses for 2013. While this works out to an average bonus of $164,530 it should be noted that the bonus pool of $26.7 billion in 2013 includes all staff members, from the most junior to the most senior, and was reportedly padded out by compensation that had been deferred from previous years. Nonetheless, news of Wall Street banker bonuses climbing 15 percent while, for example, profits from NYSE broker-dealer operations fell 30 percent in 2013, lends credence to the call for regulators to tighten up on banks.
Since the economic turmoil of 2008, when the US government made the choice to bail out sinking banks, numerous unethical and borderline unethical practices by Wall Street bankers have come to light, with many analysts and observers being of the opinion that accountability for the crisis has been lacking – some (such as the 99 percent movement) being more vocal about their concerns than others.
In recent days, however, it has been reported that some government authorities are questioning whether the market rigging, sale of faulty financial products, money laundering, risk-taking and other unethical practices that brought the too-big-to-fail banks to the brink of failure, are attributable to intrinsic flaws in the operations and culture of the banking industry. While the government went out of its way to assist banks in recovering, no visible efforts were made to rectify unethical practices that caused the problems in the first place.
In a speech last year, president of the Federal Reserve Bank of New York William C. Dudley noted that “There is evidence of deep-seated cultural and ethical failures at many large financial institutions.” Similar sentiments have been expressed by the head of the Office of the Comptroller of the Currency Thomas J. Curry, who also called for cleaning up the business practices of US banks.
Skeptics are doubtful that regulators will follow through with toughening up on banks in any meaningful way, particularly as banks have large resources for legal fees and the payment of penalties. But, as unprecedented situations in the financial crisis have arisen, new rules have been formulated and put into practice, hopefully putting regulators in a better position to deal with unethical practices in the future.