Attention Wall Street: Kindly report to the Charlotte, NC-based CEO of your choosing.

Wachovia? Seriously? JPM and B of A were one thing, but... WACHOVIA???

The I-Banks merging is not necesarrily a bad thing. It gives them more stability and they shouldn't have too much overlap on employees. Of course it matters how they do it, but that could certainly help to minimize and contain the damage. That would help move us to the recovery stage that much quicker. All business in NYC would likely stay business as usual for the most part.

Guess what happens to investment banker bonuses when their banks are run by commercial bankers?

investment banker bonuses now = lollipops at the drive thru

NYC - their bonuses will be based on the same performance metrics as before. If they generate revenue they will have just as lavish bonuses as before. The I-Banks merging with commercial banks is nothing new. They simply pay them out differently. They don't give them a commercail bank bonus. That is ridiculous.

You must be joking to think that or you really don't understand the industry at all. Seriously.

> If they generate revenue they will have just as lavish bonuses as before.

Now that might be the most important "if" I've ever heard....

And if you think bonuses won't be affected, wow, you're telling me I don't understand Wall Street? BTW, *nobody* said they're getting commercial bank bonuses... except you.

Waverly,: You might be right, but the virtual disappearance of independent I-banks (not to mention likely hedge fund contraction) could change the game. Previously, the universals had to pay I-bank money to compete for talent. The supply-demand dynamic could be shifting to more of a buyer's market. Also, a lot of lucrative business lines have dried up - maybe for a year, maybe for ten. So even if the performance metrics stay the same, the bottom line could be a lot leaner.

I totally agree W81st that bonuses and business will be lean for some time. I have never said there won't be pain. I was just trying to poitn out that the banks merging really won't change anything from a bonus potential. If they make money they will get big bonuses. I also agree that the business will likely change. It has to, but it has changed before. These frims are good at making money and they will make money again. Next time, hopefully it won't be as risky or stupid, but they will survive.

NYC - you actually implied their bonuses would be crushed and Juiceman equated their bonuses to lollipops at the drive thru. If they don't make money they won't get bonuses. If they are profitable they will make big bonuses. It doesn't matter if they are merged with a commercial bank or are a stand-alone I-bank.

Hedge Funds will likely have much more regulation and oversight coming down the pike in 2009 as well. I also agree that the market for their talent will be different for a time as well. But, as history shows us, all it takes is for a couple of firms to do well and then take a couple of people form another firm and then it goes round and round again.

I am not trying to make light of this at all. I just want to try to give some grounding to the extreme positions and predictions that are posted here every day. Just becasue someone has an idea and a computer doesn't mean they know what the heck they are talking about. Things are very rarely black and white. They are usually something more in the middle. And people who say outlandish predictions and always profess to others that they know everything about everything usually end up knowing very little. Absolutes are incredibly rare. Thsi is going to be a difficult time, but everything will get better.

JM,I thought your lollipop joke was very clever. Who gets the red one?

Thanks Newbie.

waverly, relax. I had this picture in my mind of a type A I-bank asshole working as a teller at a suburban retail bank handing out lollipops to little kids at the drive thru. It gave me a laugh. No need to jump up my ass about it.

JuiceMan - solid point.....and humor is always appreciated!

"If they generate revenue they will have just as lavish bonuses as before."

Absolutely, positively not, waverly. Commercial banks are regulated, they get their money from government-guaranteed deposits. The regulators will not allow them to take on the risk that investment banks took on - the government is on the hook. They must lend money to their investment banks at market rates, and have counterparty and risk and capital and leverage limits. The investment banks were essentially unregulated - they made their money by taking on excessive risk, lending out loans (not deposits) at higher rates: they NEEDED subprime and Alt-A loans to make money; they needed the spread. They thought there was no risk because of securitization, but they were wrong.

This is an entirely different scenario. Bonuses will be paid, but if there is no leverage used, then the revenue will not be as high. Capital ratios must be met. Bonuses will be decided by the commercial bankers who provide the cash, not by the Dick Fulds of the world who think they're worth their weight in gold, so that's what they paid themselves.

Morgan Stanley will not be independent for long. Goldman won't be able to raise cheap funds to compete and will be forced to merge or form a joint venture or something. Never again will we see these excesses on Wall Street.

BTW Wall Street excesses - excess leverage - along with slower economic growth (thanks, Smoot-Hawley!) is what caused the stock market crash of 1929. Guess what we're facing now?