The Big Five Wall Street securities firms will pay $38 billion in bonuses this year—up from $36 billion last year—while shareholders tote up $74 billion in losses, their worst year since 2002, Bloomberg reports. All but Goldman Sachs lost more than 20% of their market value, says an analyst, but "they're all going to have to fall into line. If Bear and Merrill plead poverty, they're going to lose all of their good people.''
The bigger bonus pool stems from record earnings in acquisitions, IPOs, and sales of junk bonds, according to an analysis of bonuses at Goldman Sachs, Lehman Bros., Merrill Lynch, Morgan Stanley, and Bear Stearns. Record earnings at Goldman are setting the pace: "They're playing a good hand as aggressively as you can play it,'' said John Gutfreund, former Salomon Brothers CEO, putting competitors in "an awkward position.''