It was only two years ago when Wall Street's top financial firms recorded soaring profits that showered over executives, traders, and bankers via multimillion dollar bonuses. I worked on Water Street during that time, and remember having lunch with friends who worked at Goldman Sachs. It was the holidays, and the then famed investment bank announced it would dish out $16 billion in bonuses—an average of more than $600,000 per employee. I was jealous and appalled and completely in awe. What would you do with a $50 million bonus?
Two years later, the golden age of Wall Street seems like a distant memory. This past December, Goldman reported its first loss since 1999 and put a cap for cash compensation for everyone at the firm, including partners. Bonuses reportedly dropped by as much as 80 percent, and the firm's seven top executives relinquished their bonuses.
In order to ease the pain, Goldman has found another way to allocate cash. According to the Wall Street Journal, "Cash-strapped employees now can use their Goldman stock like an automated teller machine. In response, some rushed to sell, fueling a spike in the trading volume of Goldman shares on Tuesday, when most employees officially got their newly unrestricted stock." The Journal says several employees at Goldman Sachs spent lavishly when times were good and now "are essentially facing margin calls on their lifestyle, unable to keep up with payments on mortgages and other loans."
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karl of VA 3:53PM January 16, 2009
of OH 3:38PM January 15, 2009