Hot on Facebook

Man Tries to Order Priciest Starbucks Drink Ever Total cost: $23.60 »

Wall St. Braces for Lower Pay, Less Risk-Taking

Gov't, public pressure forces shift in expectations

By Matt Cantor, Newser Staff

Posted Jan 31, 2009 9:13 AM CST

(Newser) – With the new president joining the chorus of outrage against bonuses for bailed-out Wall Street firms, bankers are grappling with the notion that long-held pay expectations will have to change, the Wall Street Journal reports. Eager to avert government crackdown, firms are expected to shrink and perhaps defer bonuses, to eliminate "big paydays for financial wizards who created bumper profits that blew up later." Salaries may inch upward, as firms switch to lower risk profiles.

“The business model of the investment banks is almost certainly going to change,” writes Joe Nocera in the New York Times. Bankers have long operated in an “eat-what-you-kill” culture, without “a sense of shared enterprise” or any expectation that they should take a hit if the company is under water, he notes. “That culture had a lot to do with creating the financial crisis. If Wall Street can’t bring itself to admit as much,” the new government will “be more than happy to point it out.”

[Images (3)]

[Quotes (1)]

In this Dec. 22, 2008 file photo, people walk to work on Wall Street in New York. (AP Photo/Mark Lennihan, file)

Wall Street is grappling with the idea of a cultural shift. (AP Photo/Richard Drew)

Lloyd Blankfein, right, CEO of Goldman Sachs, leaves the New York Stock Exchange in October. (AP Photo/Mark Lennihan)

« Prev« Prev | Next »Next » Slideshow

Wall Street traders are reluctant to give up the “eat what you kill” mentality. There is no sense of shared enterprise at most firms, and no belief that they should have to pay a price if the firm is drowning in losses.
- Joe Nocera

« Prev« Prev | Next »Next » Slideshow

To report an error on this story, notify our editors.

More Newser Stories

Eastwood: I'm Not Politically Affiliated With Obama

Chrysler ad a political football

(NEWSER) - God bless America ... and the Chrysler bailout ... seemed to be the message that left football fans misty-eyed after Clint Eastwood's Super Bowl Chrysler ad. It's "halftime" in America, and we're all pulling together for a brighter economic future, says the gravelly-voiced star. But Eastwood was opposed to the bailout that made the Chrysler turnaround possible, and now the ad has become a political football as Dems score points with it and the GOP tackles it, notes ABC News . “Saving the American Auto Industry: Something Eminem and Clint Eastwood can agree on," crowed White House spokesman Dan Pfeiffer on Twitter, referring to Eminem’s Chrysler ad during last year's Super Bowl. "Powerful spot," chimed in Obama re-election strategist David Axelrod. But George Bush's political maven Karl Rove snapped that he was "offended" by the ad, which he argued was orchestrated by the administration to paint a rosy future. More»

US Drones Return to Hit Rescuers, Funerals

Strikes occurring every 4 days under Obama: report

(NEWSER) - A few days back, President Obama said that US drone attacks in Pakistan had "not caused a huge number of civilian casualties." But a Bureau of Investigative Journalism report finds that somewhere between 282 and 535 civilians, including 60 children, have been "credibly reported" killed in the campaign. Secondary strikes target groups of rescuers shortly after attacks, while other drones have killed dozens at funerals. Obama has drastically escalated the drone program; some 260 strikes have occurred an average of once every four days under his administration. More»

Geithner: Obama Won't Ask Me to Stay

Treasury secretary says he's done after election

(NEWSER) - Tim Geithner is pretty sure he's going to be joining the ranks of the jobless after the election: The Treasury secretary—the longest serving member of President Obama's economic team—tells Bloomberg that Obama is "not going to ask me to stay on, I’m pretty confident. I’m confident he’ll be president. But I’m also confident he’s going to have the privilege of having another secretary of the Treasury." The White House announced in August that Geithner would stay put through the election, amid Beltway rumblings that he would step down. More»

Obama Losing Super PAC War

...because he's not terribly interested in fighting it

(NEWSER) - Democrats saw the way Mitt Romney's super PAC destroyed Newt Gingrich in Iowa, and it terrified them, because President Obama's super PAC—or as Politico terms it, "not-so-super PAC"—doesn't have the muscle for anything like that. "It's like when China got the bomb," says one Democrat close to the PAC, "We thought we were the ones with cash supremacy. That's clearly not the case." Obama's Priorities USA Action has just $5 million in the bank, less than half Romney's $12 million. More»

Did White House Hide Lavish Costume Bash?

Nope, says spokesman: event reports, pics are online

(NEWSER) - At the nadir of the economic crisis, the Obama White House held a lavish Alice in Wonderland-themed Halloween costume party, organized by Johnny Depp and Tim Burton and full of Star Wars character. But with unemployment at 10%, the Tea Party at its apex, and the economic downturn still rocking the country, officials feared the 2009 party would look terribly decadent, so kept it a secret, reports the New York Post . “White House officials were so nervous about how a splashy, Hollywood-esque party would look to jobless Americans—or their representatives in Congress, who would soon vote on health care—that the event was not discussed publicly, and Burton’s and Depp’s contributions went unacknowledged,” alleges Jodi Kantor in her new book, The Obamas . More»

NEWS FROM OUR PARTNERS

What is Newser?

Face it: there's too much news. At Newser, we choose the most thought-provoking and entertaining stories from hundreds of US and international sources and reduce them to a headline, picture, and two paragraphs. And we do it 24/7—you can come back morning, noon, night (and in between) for something new that matters. Read less, know more.

Learn more »

Partnering with: Slate

View Newser on the mobile website

Wall St. Braces for Lower Pay, Less Risk-Taking