Trading Places

Do the right thing

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

The tricky business of bonuses

In these dismal economic times, nothing comes in handy quite like a 5-step program to reclaiming your bonus. Of course, delicacy is key.  With job cuts spreading like wild fire and the Treasury’s seemingly never-ending bailout, everyday taxpayers aren’t going to be rooting for you and your six-figure paycheque.

But as Bloomberg‘s Michael Lewis cheekily points out, all is not lost. You just need to rethink your strategy:

“If you are one of those people currently sitting inside a big Wall Street firm praying for some kind of bonus it may already have dawned on you that you need to rethink your approach. It’s no longer any use to hint darkly that they had better fork over serious sticks or you’ll bolt for Morgan Stanley. There’s no point even in thinking up clever ways to make profits for your firm: who cares how much money you bring into Goldman Sachs if the U.S. Congress doesn’t allow Goldman Sachs to pay bonuses? ”

While Lewis pokes fun at the contentious topic, bonuses have sparked some serious debate in recent weeks, even prompting some banks to consider giving their bonus structure an overhaul. But they may want to tread carefully.  Bankers could demand pro rata bonuses from their firms after they’ve been laid off, even forcing the case into litigation (though such cases usually favor the employer, law experts say.)

Granted, not everyone is scrambling to scoop up their slice of the payout pie. UBS chief Peter Wuffli reportedly turned down bonuses worth $10 million in a sign of “solidarity with the leadership” of the crisis-stricken bank.

How will your bonus be affected this year? Share your thoughts below.

Forget your banking career – join the IRS

In yet another sign of tough times on Wall Street, dejected financial professionals were among those lined up yesterday for a shot to work for none other than the IRS, the New York Times reports. It’s a curious career move until you look at the circumstances: the battered banking sector has been cutthroat in its downsizing, leaving virtually no job safe. But can anyone remember the last time the IRS downsized?

“You could get a lucrative job in the financial market right now, but how long can you keep it?” says ex-Lehman Brothers staffer Jean Delice. “Everywhere I look, I see layoffs. If I take a $10,000 or $20,000 pay cut, in the long run, I’m ahead. The government is not in the trading business. It will be around.”

Now may be as good a time as any to cut and run, especially given NY Attorney General Andrew Cuomo’s recent warning that it may be illegal for banks to pay bonuses with government money. In yet another blow to anyone dreaming of a fat bonus, a new study shows that nearly two-thirds of big U.S. companies have banned their chief executives from keeping hefty bonuses when there are questions over executive conduct.

Are you thinking of leaving Wall Street behind? If so, what career suits someone with a financial background? Share your thoughts below.