How Much Will Wall Street Pay Itself Now?

The banker bonus culture encourages CEOs to take big risks
By Kevin Spak,  Newser Staff
Posted Oct 7, 2008 12:07 PM CDT
Mr. Fuld, did you deserve that $480 million you paid yourself?   (AP Photo/Susan Walsh)
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(Newser) – Richard Fuld has made roughly $480 million since 2000 as he piloted Lehman Brothers to total ruin, according to one congressman at his testimony yesterday. “I have a very basic question,” he said. “Is this fair?” Many shareholders are wondering the same thing, writes Andrew Ross Sorkin in the New York Times. The sacred executive bonus is being questioned, not just by the hoi polloi, but by “a more austere Wall Street itself.”

“Wall Street denizens are supposed to be part of a high-risk, pay-for-performance ethos,” writes Sorkin. But, for example, while profits sank 83% at Citigroup last year, bonuses fell only 4.7%. When “huge profits bring huge rewards and huge losses bring, well, smaller rewards,” executives are bound to take big risks. But don’t expect calls for reform to amount to much. “Wall Street’s appetite for big paychecks has endured through fat times and lean.”