As someone who’s personally invested in this year’s Wall Street bonus pool
– I have a
bottle of Scotch on the line – I was quite happy to turn to page B5A
of this morning’s WSJ. (Please, Mr Murdoch, can you do away with the WSJ’s completely
insane page-numbering system?) There, I found a story by Josée Rose which
starts like this:
Compensation experts say financial-services employees have a lot to be thankful
for this holiday season.
She goes on to quote Russ Gerson predicting that compensation this year will
be "flat to up 10% on average from where it was a year ago."
But that story isn’t online. (Please, Mr Murdoch, can you make sure that all
stories in the newspaper also appear on the website?) Instead, one can only
find this
story, by the same journalist, which starts off much more ominously:
Wall Street’s 2007 bonus pool will be smaller than the 2006 record due to
turmoil in the housing and credit markets after three-and-half years of gains,
even though the strong first half to the year will insulate the drop, according
to a report Tuesday from the New York State Comptroller’s office.
But the crunch in credit markets and the mortgage business is still being
felt. Profits for broker-dealer operations of New York Stock Exchange member
firms are expected to fall to $14.8 billion this year from more than $20 billion
last year, worse than the office had expected.
The compensation-to-revenue ratio at investment banks is very closely watched
by Wall Street, and it would be very hard indeed to raise bonuses, or even keep
them at their 2006 levels, if profits fell by more 25%. I’m thinking that it
might end up being Jesse Eisinger who has a lot to be thankful for this holiday
season, but I do remain hopeful: I’m an optimist at heart.