Underneath the surface of smaller sized Wall Street bonuses

Wall Street bonuses shrank an average of 8 % year-over-year in 2010. Even though Wall Street profits soared, bonuses were deliberately held down. Increasing earnings offset decreasing bonuses to account for an overall increase in payment on Wall Street. Resource for this article – Wall Street bonuses fall as executive salaries rise by MoneyBlogNewz.

Wouldn't it be nice to get a Wall Street bonus?

NY State Comptroller Thomas DiNapoli explained that an average of $128,530 was paid in 2010 for Wall Street bonuses in the financial services industry. That figure represents an 8 percent drop from the $140,730 average for Wall Street bonuses the year before. There was a 33 percent drop in the total Wall Street bonuses from 2006, before the financial meltdown, to 2010. They went from $34.3 billion in 2006 to $20.8 billion last year. In 2010, Wall Street profits were at $27.6 billion which is second to 2009 only when profits were at $55 billion due to government bailouts and record low rates of interest.

Wall Street bonus deception

The decrease in Wall Street bonuses for 2010 isn’t a signal of executive compensation in decrease. Handing out scaled-down bonuses was because of what the public wants. The public was angry that there were huge bonuses passed out during the financial crisis to executives. DiNapoli explained that Wall Street financial service compensation went up last year. It went up by 6 % total. Financial reform regulation, along with the controversial nature of obscene bonuses, has motivated big banks to change the way they pay employees. Base earnings are larger than bonuses now.

A new way taxes are prevented

Some of the compensation is being deferred by Wall Street firms. This will make financial regulators think that short-term gain is exchanged for long-term profitability. By doling out scaled-down bonuses, Wall Street firms have also discovered a new and effective tax avoidance tactic. About 20 percent of the tax revenue in New York before the financial crisis came from tax revenue from the financial sector, DiNapoli reports. Now it’s only 13 %. NY City’s tax revenue from Wall Street dropped from 13 % before the crisis to 7 percent in 2010.

Information from

CNN Money

money.cnn.com/2011/02/24/news/economy/wall_street_bonus/index.htm

Wall Street Journal

blogs.wsj.com/metropolis/2011/02/24/wall-street-bonuses-dropped-in-2010/?mod=google_news_blog

NPR

npr.org/2011/02/24/134017725/wall-street-bonuses-fell-from-2009-level