Here’s a crazy fact, one that likely won’t sit well with Elizabeth Warren and other Wall Street detractors. The average bonus for employees in New York City’s securities industry actually increased in 2014 despite the fact that profit was down 4.5% from a year earlier, mostly due to embarrassing litigation costs. Though the narrative is a bit more complicated than what appears on the surface.
The average Wall Street bonus increased by 2% to $172,860, the high-water mark since the economic collapse, according to a new report from New York State Comptroller’s Office. The industry also added 2,300 jobs in New York City, ending a three-year run of headcount reductions.
While that’s all good news, the report includes a few dark clouds. One, you can make the argument that bonuses didn’t increase as much as they flat-lined. The average bonus increased 19% in 2013 as the industry pulled itself off the mat. Bonuses increased 52% over the two previous years.
New York State Comptroller Thomas DiNapoli was cautious with his words on Wednesday, noting that while job growth is certainly a good thing, “it remains to be seen whether this trend will be sustained.”
Another key to the report is that the numbers are based solely on personal income tax, meaning they don’t include bonuses that were deferred this year. However, the totals do include previously deferred bonuses and options that have vested for which taxes have been withheld. Considering share prices of bank stocks have doubled at some firms, last year’s bonus numbers may be artificially inflated a bit. Plus, banks like Morgan Stanley paid out more in cash in 2014, so there’s that.
Finally, DiNapoli includes one sobering statistic that suggests banks will never again regain their stature. During the two recoveries previous to 2009, the securities accounted for 10% of job creation in New York City’s private sector. This time around Wall Street has accounted for just 2% of job growth.
Maggie Thatcher got four a night. Napoleon only two. Obama gets a whopping six hours of sleep. The average junior investment banker ranks somewhere between the Corsican Emperor and the Iron Lady. And many are proud of it.
J.P. Morgan appears rather serious in its efforts to limit LinkedIn activity among its technologists. Mark Ashton-Rigby, co-CIO at the bank, is now reportedly on the case.
Credit Suisse’s incoming CEO could cut 15% of investment banking staff, or nearly 3,000 people, according to one analyst. Investors are onboard. Credit Suisse stock was up another 8% early Wednesday morning.
Tidjane Thiam has a fascinating history. The new Credit Suisse CEO was born in the Ivory Coast, raised in Morocco, educated in France, speaks three languages and began his career at one of the world’s most prestigious consulting firms, McKinsey & Co. He spent part of his 30s under house arrest following a military coup in the Ivory Coast yet worked his way into becoming the first black executive of an FTSE-100 company in Britain.
J.P. Morgan Chief Executive Jamie Dimon defended TARP and all the moves made by the Fed in the aftermath of the crisis but lamented the fact that all banks and bankers were painted with the same scarlet letter. And he would have never rescued Bear Stearns if he had to do it all over again. Dimon also reiterated that he’d like to keep his job for another five years or so.
Nomura has suspended securitized-debt trader Matt Katke, who is expected to plead guilty to charges in Connecticut this week. Authorities in the U.S. have been cracking down on securities fraud in the debt market, though no clear details related to the Katke case have come out.
Buzz Around the Office
If you are a hedge fund employee who happens to live in a town known for housing many hedge fund employees, you may want to stay inside on Saturday. A group of at least 30 “hedge clippers” are planning to march in Greenwich, Connecticut on Saturday to expose the practices of hedge funds, including “avoiding taxes, depleting our schools, destroying jobs and buying our politicians, among other things,” according to the group’s Facebook page.
Quote of the Day: “If you said to me, how do I feel about some of these C.E.O.’s who walked away with $50, $100, $150 million and their company blew up? Terrible. It's outrageous. I agree with them. Everyone says that's bad. If this company went bankrupt, we should all give back the money we earned in the last five years or more. You wouldn't have to ask me.” – J.P. Morgan CEO Jamie Dimon