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Banker Bonuses Fall Thanks to Government Regulation

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  • November 11, 2011
  • 11:00 am
Banker Bonuses Fall Thanks to Government Regulation

Great news from Wall Street: banker bonuses are expected to fall between 20-30% this year. Though there’s still 70% to go, this is a huge victory for the Occupy Wall Street movement. The driver of these drops was last year’s financial reform act, Dodd-Frank, which made it harder to raise banker bonuses. This report confirms previous stories that Wall Street traders were getting less generous packages than they had been expecting.

This is just another example of how smart government regulation can improve the way that banks function. Despite fairly consistent derision from Republicans, it looks like the much-debated financial reform act is doing exactly what it should — stopping Wall Street bankers from amassing even more wealth and influence. It also levels the playing field for small banks in a lot of ways.

That said, a mere quarter drop in Wall Street bonuses is not enough. Nassim Taleb, a former Wall Street trader and current risk specialist, recently wrote in the New York Times that the best way to safeguard the economy is to make sure “Any person who works for a company that, regardless of its current financial health, would require a taxpayer-financed bailout if it failed should not get a bonus, ever. In fact, all pay at systemically important financial institutions… should be strictly regulated.”

That’s a great idea for a lot of reasons — most importantly that it stops rewarding traders from making risky and short-sighted trades. Indeed, there’s no way for the economy to grow in the long-term without addressing the inherent conflicts of interest that are in the banking sector.

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Photo credit: epicharmus's Flickr stream.

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6:10PM PST on Nov 17, 2011

100 years from now they will be saying, they were laughing at global warming 100 years ago and now nobody is laughing now that the USA is a desert wasteland.

1:41PM PST on Nov 14, 2011

Boo Hoo....the folks that "these" people employee, housekeepers, gardeners, drivers etc. will be the ones that end up suffering. I believe that this whole thing is so far gone that it isn't fixable unless those that got it all have a revelation that it takes more than just themselves to get where they got to today. I don't see that happening. Greed is an ugly monster.

4:09PM PST on Nov 13, 2011

Ahhhh! So the corporations have bought the scientists who disagree with Al Gore!
Thanks.for cleaning that up!

3:09PM PST on Nov 13, 2011

Kelly W. Get your head out of the sand! All of the corporations making billions from dirty fuel have subsidized these "counter-indicative reports" (some of which, at your suggestion, I checked). How can you or they argue with the fact that nine out of the ten years in this century are in the "top ten" for the last 100 years??

11:02AM PST on Nov 13, 2011

Virginia- thanks sweetie, I am typing all of this on my phone. You know you are ahead of the game when the opposing party starts playing grammar police. You don't give the nobel peace prize because their vision and promises make you all sweet and tingly. Al Gore?

10:25AM PST on Nov 13, 2011


6:46AM PST on Nov 13, 2011

Bonuses for anyone should be tied to performance. You should get a salary for the job you do and if you do something extraordinary that is quantifiable and leads directly to a major increase in profit/value/revenue, then and only then should you get a bonus, calculated as a percentage.

And move your money and banking business to a member owned credit union. They're insured and safe, just like a bank. I've been with one for over 30 years and love their services.

12:31AM PST on Nov 13, 2011

Kelly W:
Perhaps if you knew the difference between it's and its, I might take your comments more seriously. And since when does calling Harvard Law School graduates "jackasses" or those who understand the gravity and seriousness of scientific reports (Gore) "comical" have a logical basis?

10:15PM PST on Nov 12, 2011

I am proud to be called a bleeding heart Liberal! At least I have a heart! I care about my fellow human beings I beleive everyone has the right to live with dignity free from abuse and with a decent standard of living decent health care education and shelter.
The trolls here only care about themselves they have no heart! They all stick together and sprout the same scripted propaganda.

9:57PM PST on Nov 12, 2011

Gary A. Thanks! Very intelligent comments!

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