Wall Street Bonus Update

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.

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