NYT: After an Off Year, Wall Street Pay Is Bouncing Back

why so upset? don't you want our city to rebound?

agree with jsmith. we STILL live in a capitalist society, i hope.

class warfare and envy is a terrible thing.

Hi, 1313. Any updates on 905 WEA? Somebody was spreading word here that the sponsor had missed the AG's deadline, but I notice that open houses are ongoing.

and the destruction of anyone below the upper class was so beautiful it moved me to tears.

Accruals are what they are but every single banker I know expects 2009 comp to be down 15-25% over 2008. Except the guys in restructuring. If the NYT understood how revenue accruals work at the banks they'd understand that Q1 was inflated by improvements in credit prices that won't repeat during rest of 2009 so comp accrual will be end up being down 15-25% per head.

I agree with nyc10013 - plus the figures include SEVERANCE.

Yes the article is very misleading. Sensationalist, even. And that's something coming from me.

the conspiracy theorist in me wonders whether cheerleading for wall street comp is the new and improved way for the times to shill for the real estate market/their real estate advertiser clients, now that they've been widely called out for shilling directly in the real estate section and actual market movement has given the lie to the happy talk.

I think it's just crappy journalism. Why publish an article like that if you admittedly (as the author did) said that you don't have the information necessary to draw the conclusions you're drawing?

She could have gotten more information had she waited for the 10Q.

I've already complained to the Times about the crappy reporting by Ross Sorkin. Add one more.

I actually think it's the NYT's way of acting as compensation watchdog and stirring up outrage. I don't think they're rooting for higher comp. Would be very un-NYT-like.

As for what I'm seeing and hearing from other bankers, there is a mix of opinions on next year's anticipated comp. With the demise of BSC, LEH and ML there are only a few publicly-traded full-service non-commercial investment banks (read GS, MS). GS, MS will probably pay at the top. Commercial banks such as BAC, C and UBS will not pay well this year. Other non-TARP banks such as CS, DB and Barclays that have fared okay will pay somewhere in between. Ex-LEH bankers at Barclays and Nomura will be paid based on their contracts. And the boutiques will pay on an eat-what-you-kill basis.

As for hedge funds, given high watermarks and the fact that amount of assets under management has contracted so significantly that I think you're looking at a while before comp levels return to 2007 levels.

thanks faustus. that's actually much more plausible than my conspiracy theory. of course i have some room in my black heart for steve's crappy journalism thesis as well.

faustus, re: 2009 comp mostly agree and would note a couple of other points:

- we're only three months removed from the political firestorm of 2008 bonuses (I think the number that got everyone, including the President, hyperventilating was $18bn). Wall Street's PR flacks will have to do an exceptional job in the next nine months to get the industry to a point where they can pay what they want to and not set off another backlash. Personally, I doubt that it can be done. Maybe GS and JPM repay TARP and escape some scrutiny, but MS is not performing (lousy Q1; stock sitting at 24% of pre-crisis high vs. GS's 48%) and doesn't look as likely to get out from under Treasury just yet. I largely agree with how you categorize the others
- people forget that a huge number of MER and LEH people got paid something like 2007 comp in 2008 because bonus pools were protected in their respective merger agreements. The MER example went over particularly poorly in the press, Washington and Albany. Not to mention that the MER/LEH people's new colleagues at BAC/Barclays got paid pretty poorly and there is a lot of resentment. Between the ongoing difficult market, internal politics (resentment) and external politics (politicians and regulators), there is no protection for these folks in 2009. That's basically two full bulge bracket firms of people who are going to get paid a lot less this year, assuming they even have jobs

- hedge funds - I think that the picture looks something like the following but would welcome a debate:
* the number that I see quoted in the press for peak assets under management industry-wide is $1.9 trillion in mid 2008. At 2% management fee, that was $38 billion of management company revenue
* to make the math simple, I'll assume a 12% return before fees in a decent recent year (someone can no doubt help us out with some actual CS/Tremont index data). That's 10% after management fee, yielding a 2% performance fee assuming a 2 and 20 fee structure. That 2% performance fee is another $38 billion, implying peak industry revenues of $76 billion (in reality more or less depending on performance above or below the 12% assumption).
* I believe I saw a report recently that hedge funds ended Q109 at about $1.3 trillion under management, implying $26 billion of management fee revenue. The reality will be less than that because of funds that have waived management fees to palcate investors and keep them from bolting. With most funds well under their high water marks, industry aggregate performance fees will be small, but some funds are performing, so they will be greater than zero
* $26 billion less waived management fee plus performance fees (for the performers) equals, what, $25-30 billion? Down by two thirds, from peak, give or take
* now consider the cost base of the hedge fund industry - rent, data, IT, admin overhead, etc. adding up to God knows how many billions. This cost base can't fall two thirds in a year or two, so the operating leverage from fixed costs levers the main variable cost item, comp, down even faster. The slow motion train wreck that is the resizing of the hedge fund industry has a long way to go.

"palcate" = "placate"

sidelinesitter, good coverage.

Louise Story is one of the single worst reporters for the times. She's constantly on (bogus) trend-alert, reports numbers without knowing what they mean, and takes anecdotal evidence as proof of real trends.

http://www.nytimes.com/2009/04/26/business/26pay.html?pagewanted=2&em

I'd like to hear Noah's(UD) take on this. Noah, what do you think? Do you agree?

Thx for the link jerkstore...

Noah??