As payday nears, Wall Street bonuses shrivel

By Nathaniel Popper

Jan. 10, 2012 12 AM PT

Reporting from New York —

We knew bankers would be unhappy with their bonuses for 2011, but as the end of year payments draw closer, it is now becoming clear just how severe the cuts might be.

While previous estimates have put the pay cuts for all of Wall Street at 15% or more, at the standard bearer for the industry, Goldman Sachs, pay could fall in half for the vaunted partners, with even bigger cuts for bond traders.

In an industry in which year-end bonuses make up most of the pay, there is talk of there being no bonuses at all at some firms, the Wall Street Journal reported.

At the lower ranks, the traditional yearly raises are being phased out, according to Bloomberg.

The big bonuses are often cited as one of the primary reasons it is worth working in finance and pulling 90 hour weeks. If the big checks aren’t coming, is it still worth it?

At some firms, such as Jefferies, the employees appear to be putting up a bit of a fight. But the New York Post reports that management has had the trump card in these fights, which is that bankers who choose to leave a firm will have trouble finding work elsewhere.

It is an interesting moment for Andrew Ross Sorkin to point out that Wall Street firms are still being generous, given the amount that revenues have shrunk on Wall Street. He points out that even with the pay cuts, firms like Goldman are paying out a greater portion of their revenue in compensation. That, it can be argued, comes at the expense of shareholders.

For those who want to get further into the weeds, this all plays into an ongoing debate about the role that banker bonuses played in causing the financial crisis. While a British academic just came out with a paper providing evidence for that thesis, he was quickly attacked by one of the most articulate voices in the finance industry, the blogger The Epicurean Dealmaker, who called for a more nuanced discussion of how bonuses work.

What’s the discussion, though, if they don’t even exist anymore?

Wall Street annual compensation expected to fall 15% to 30%

Banker bonuses falling amid new calls to ban them all together

--Nathaniel Popper