Wall Street is set to see its
biggest bonus increases
since basically more than a decade.
So this is data that was released
by Johnson Associates.
They look at the pay scale and
what's expected when it comes
to pay increases among
these Wall Street firms.
And here's what they found.
This year's expected increase are
the largest since 2009 when several
business areas were projected to
receive bonuses that were 30-60%
higher than the previous year,
according to Johnson Associates.
Now, overall bonuses for investment
banking underwriters are forecast
to jump 30-35% from the year prior.
While investment banking
advisers and
equity traders can expect a 20-25%
year over year bonus increase.
So what is the justification for
these pretty significant bonuses?
Well, the argument here is, well,
you know, the Wall Street firms are
also experiencing a labor shortage.
So we need to pay more in the form
of bonuses to retain talent to
ensure that we retain
these wonderful hard workers.
The other argument is booming deal
activity a hot IPO market and
climbing equities mean bankers and
traders are in line for outsized
performance-based compensation.
I want to just show you this chart
that CNBC put together, that gives
you a sense of just how much these
bonuses will be for various people
working in Wall Street.
So, investment banking
underwriting, as I mentioned,
30-35% increases in their bonus.
Sales and trading, you've got
20-25% investment banking.
If you're working in an advisory
role, on average, you're seeing
a 20-25% increase in your bonus.
And private equity is getting
a nice bump as well, with 15-20%.
Now when they talk about increased
business activity, I'm curious if
they're referring to any
substantive business activity or if
they're just talking about wheeling
and dealing in the stock market.
Because one thing that we've also
noticed this year is
that corporate stock buybacks
are at record levels.
And remember a lot of these
Wall Street firms,
a lot of banks are receiving cheap
money from the Federal Reserve
thanks to their monetary policy.
And so what do they do with that
money that they get
from the Federal Reserve?
Are they're investing in
businesses?
Are they doing something
that that's actually beneficial for
American workers or the economy?
Or are they just paying
themselves well?
S&P 500 companies in recent weeks
have disclosed buybacks totaling
$145 billion for the third quarter.
And the total is likely to surpass
$224 billion by the time all
reports are in.
That would be above the $223
billion 2018, which was a record.
So, just because you're seeing
these pay raises or these bonuses
among these Wall Street firms
doesn't mean that they're actually
doing something that's beneficial
to the economy, they're taking
advantage of cheap monetary policy
to the cheap money that they get
their hands on and they're finding
ways to invest it in themselves.
>> Yeah.
So look guys,
I wouldn't mind the bonuses and
I understand why they do it and
they don't have a labor shortage
like Wendy's does but people
are making money hand over fist and
so that does create a hot market
for hot bankers.
God help us.
Right? So I understand all
the economics behind that.
But the part that they never talk
about it in moments like this is,
yes, but what happens when it
crashes?
So if it turns out it was a bubble
and there was no real value there
that they were creating.
And later all those stocks crash
and you lose money from it.
Do those bankers then
give back their bonuses?
No, of course not.
No. They take home all the bonuses
and then they go,
there was nothing we could do.
And then they say, well look,
you've got to retain our top level
talent here to run these banks.
Even if they crash,
why do I say all this?
Because it already happened?
This this is the second largest
increase since 2009.
Why was there such a big
increase in 2009?
Because the crash was in 2008.
And so after the crash they still
got some bonuses.
But in 2009 they went back to big
bonuses.
>> Right. But
what type of policy was implemented
under the Obama administration to
basically recover the economy?
Quantitative easing by
the Federal Reserve.
So the same monetary policy that
the federal reserve is engaging in
right now and that policy creates
this unequal and unjust economic
recovery where those at
the very top in the case of 2008,
those who actually destroyed
the economy get paid handsomely and
everyone else suffers.
>> Now, mind you, one other thing
that's important here, everyone in
cable news is demagoguing about
inflation and they're saying part
of the problem, I did a segment on
this about Stephanie rule, but I've
now seen a number of them do this.
Part of the problem is
higher wages.
They say for the average American
it's leading to inflation.
No one has done a story about too
many Wall Street bonuses leading to
higher wages leading to inflation,
but they get way more money than
you guys do.
I mean that overall their wage
increases is monstrously
higher than yours and they can say,
hey, I deserved it, Blah Blah Blah.
But you can't say the average guy
is making too much money because he
moved up from $7000.25 to $7000.75
an hour.
And we got to make sure his wages
don't go up at all.
And congratulations to the Wall
Street bankers, they get another
couple of million dollars apiece.
Right?
And that doesn't affect inflation.
>> Exactly.
>> So their hypocrisy is hilarious.