Wall Street Bankers Make Stunning $145 Billion for 2009!!!

Big banks have decided that big pay trumps good PR. In a move that is sure to irritate an already outraged public, major U.S. banks paid out $145 billion in compensation in 2009, up 18% from 2008 according to a study by The Wall Street Journal. The survey covered 18 financial firms and showed that pay packages were 32% of the revenue of these firms. Some firms quarreled with the paper's methods, but its figures are probably not far off the mark.

It appears that banks have taken a calculated risk; Bad PR is bad PR and nothing more. Angry taxpayers do not set payouts at big banks and Congress may not like the numbers, but politicians know that putting strict regulations on compensation, particularly at financial firms that have paid back TARP obligations, may raise the issue of whether the government should override decisions by public company boards of directors.

Of course the Administration has already figured out a way to claw back money from the largest and most successful banks with a 0.15% tax on liabilities, dubbed the Financial Crisis Responsibility Fee. This levy is expected to bring in $90 billion over the next ten years, which is not very much when spread over the roughly 50 firms that are expected to pay it.

The large pay packages may cause Congress to set high taxes on Wall Street bonuses next year in the way that the U.K. did for 2009 compensation. This would avoid the government stepping into bank board rooms, and would bring a portion of bankers' compensation into the Treasury instead of merely capping it. Congress and the Administration could then secretly hope for big bonuses because a tax on them would help offset the growing deficit.

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