Trading Places

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Do the right thing

November 17, 2008

Goldman Sachs sent the business media abuzz this weekend with news that its top executives were voluntarily giving up their annual bonus in a gesture they hope will spread to the rest of the Street. The decision immediately won the praise of New York Attorney General Andrew Cuomo, who hailed the move as a “step in the right direction”, while the firm’s spokesperson said, “They believe it’s the right thing to do.”

But don’t expect any applause just yet, at least not from Main Street. Taxpayers around the globe are still fuming about their respective government’s multibillion dollar bank rescue schemes, prompting no shortage of snarky editorials pointing to bloated paycheques and bankers’ cavalier actions for the financial meltdown.

At a time when most bankers are holding on to their jobs by a string — just ask any Citigroup employee how they’re feeling these days — editorialists are quick to point out that bonuses are just that: a bonus.

“The truth is, most of them are lucky to have a job at all and they know it,” writes the Wall Street Journal’s William Cohan.

Perhaps UBS is taking note. The Swiss bank recently axed bonuses for top executives and said it would introduce a more transparent pay system, in a sign that banks are finally acting to quell the public’s mistrust of the bonus culture.

Are the recent moves to cut bankers’ pay an encouraging sign, or is the damage already done? Share your thoughts below

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