With unemployment hovering stubbornly at 9%, late mortgage payments rising for the first time since 2009, and the number of Americans living in poverty rising to a record 49.1 million, it seems that Main Street is headed for a hard, cold holiday season. But, somewhat surprisingly, so too are the fat cats of Wall Street -- relatively speaking.
According to a report released by the compensation consulting firm Johnson Associates, corporate bonuses -- which are often the crown jewels of compensation packages, making up the bulk of bankers' pay -- are set to fall an average of 20% to 30% this year.
It attributes the cuts to a "challenging market environment," in particular the "sluggish and uncertain" recovery.
The forecast, if accurate, would make this "the weakest bonus season since the financial crisis," The New York Times observes, "and a reflection of the leaner times confronting the industry."
Alan Johnson, managing director of Johnson Associates, announced the news with sadness: "This year started with great promise for a banner year on Wall Street, but hopes for larger bonuses faded over the summer and continue to dim as we approach year end."
"It is disappointing," Mr. Johnson told The New York Times' Dealbook. "I think we were all hoping we were out of this morass."
Traders, investment bankers and senior management look set to suffer the steepest declines in compensation, but those who manage wealthy clients' money might actually see a small increase in their bonuses.
Although The Washington Post's Zachary Goldfarb recently reported that Wall Street firms made more money in the first two and half year of the Obama administration than they did during the entire presidency of George W. Bush, some banks have shown signs of faltering. Goldman Sachs (GS) reported its second-ever quarterly loss in October, and Bank of America (BAC) has said it will lay off 30,000 workers.
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