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Wall Street Whine: We Can't Live On $500,000!

Business  (tags: Investment Banking, Obama, President Obama, Salary, Salary Cap, Wall Street, John Thain, Ken Lewis, Merrill Lynch, AIG, Goldman Sachs, CitiGroup, Citibank, Sandy Weil, Business News )

- 3386 days ago -
Bankers expect autoworkers to live on $25,000/YR ($12/HR.). So, this amount is still 20 times what they think is adequate for the working man/woman. And remember, this is ONLY for the ones who accept tax money.

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Blue Bunting (855)
Monday February 9, 2009, 11:55 pm
You Try to Live on 500K in This Town
PRIVATE school: $32,000 a year per student.

Mortgage: $96,000 a year.

Co-op maintenance fee: $96,000 a year.

Nanny: $45,000 a year.

We are already at $269,000, and we haven’t even gotten to taxes yet.

Five hundred thousand dollars — the amount President Obama wants to set as the top pay for banking executives whose firms accept government bailout money — seems like a lot, and it is a lot. To many people in many places, it is a princely sum to live on. But in the neighborhoods of New York City and its suburban enclaves where successful bankers live, half a million a year can go very fast.

“As hard as it is to believe, bankers who are living on the Upper East Side making $2 or $3 million a year have set up a life for themselves in which they are also at zero at the end of the year with credit cards and mortgage bills that are inescapable,” said Holly Peterson, the author of an Upper East Side novel of manners, “The Manny,” and the daughter of Peter G. Peterson, a founder of the equity firm the Blackstone Group. “Five hundred thousand dollars means taking their kids out of private school and selling their home in a fire sale.”

Sure, the solution may seem simple: move to Brooklyn or Hoboken, put the children in public schools and buy a MetroCard. But more than a few of the New York-based financial executives who would have their pay limited are men (and they are almost invariably men) whose identities are entwined with living a certain way in a certain neighborhood west of Third Avenue: a life of private schools, summer houses and charity galas that only a seven-figure income can stretch to cover.

Few are playing sad cellos over the fate of such folk, especially since the collapse of the institutions they run has yielded untold financial pain. But in New York, where a new study from the Center for an Urban Future, a nonprofit research group in Manhattan, estimates it takes $123,322 to enjoy the same middle-class life as someone earning $50,000 in Houston, extricating oneself from steep bills can be difficult.

Therefore, even if it is not for sympathy but for sport, consider the numbers.

The cold hard math can be cruel.

Like those taxes. If a person is married with two children, the weekly deductions on a $500,000 salary are: federal taxes, $2,645; Social Security, $596; Medicare, $139; state taxes, $682; and city, $372, bringing the weekly take-home to $5,180, or about $269,000 a year, said Martin Cohen, a Manhattan accountant.

Now move to living expenses.

Barbara Corcoran, a real estate executive, said that most well-to-do families take at least two vacations a year, a winter trip to the sun and a spring trip to the ski slopes.

Total minimum cost: $16,000.

A modest three-bedroom apartment, she said, which was purchased for $1.5 million, not the top of the market at all, carries a monthly mortgage of about $8,000 and a co-op maintenance fee of $8,000 a month. Total cost: $192,000. A summer house in Southampton that cost $4 million, again not the top of the market, carries annual mortgage payments of $240,000.

Many top executives have cars and drivers. A chauffeur’s pay is between $75,000 and $125,000 a year, the higher end for former police officers who can double as bodyguards, said a limousine driver who spoke anonymously because he does not want to alienate his society customers.

“Some of them want their drivers to have guns,” the driver said. “You get a cop and you have a driver.” To garage that car is about $700 a month.

A personal trainer at $80 an hour three times a week comes to about $12,000 a year.

The work in the gym pays off when one must don a formal gown for a charity gala. “Going to those parties,” said David Patrick Columbia, who is the editor of the New York Social Diary (, “a woman can spend $10,000 or $15,000 on a dress. If she goes to three or four of those a year, she’s not going to wear the same dress.”

Total cost for three gowns: about $35,000.

Not every bank executive has school-age children, but for those who do, offspring can be expensive. In addition to paying tuition, “You’re not going to get through private school without tutoring a kid,” said Sandy Bass, the editor of Private School Insider, a newsletter that covers private schools in the New York City area. One hour of tutoring once a week is $125. “That’s the low end,” she said. “The higher end is 150, 175.” SAT tutors are about $250 an hour. Total cost for 30 weeks of regular tutoring: $3,750.

Two children in private school: $64,000.

Nanny: $45,000.

Ms. Bass, whose husband is an accountant with many high-end clients, said she spends about $425 every 10 days on groceries for her family. Annual cost: about $15,000.

More? Restaurants. Dry cleaning. Each Brooks Brothers suit costs about $1,000. If you run a bank, you can’t look like a slob.

The total costs here, which do not include a lot of things, like kennels for the dog when the family is away, summer camp, spas and other grooming for the human members of the family, donations to charity, and frozen hot chocolates at Serendipity, are $790,750, which would require about a $1.6-million salary to compensate for taxes. Give or take a few score thousand of dollars.

Does this money buy a chief executive stockholders might prize, a well-to-do man with a certain sureness of stride, something that might be lost if the executive were crowding onto the PATH train every morning at Journal Square, his newspaper splayed against the back of a stranger’s head?

The man would certainly not feel like himself on that train, said Candace Bushnell, the author of “Sex and the City” and other books chronicling New York social mores.

“People inherently understand that if they are going to get ahead in whatever corporate culture they are involved in, they need to take on the appurtenances of what defines that culture,” she said. “So if you are in a culture where spending a lot of money is a sign of success, it’s like the same thing that goes back to high school peer pressure. It’s about fitting in.”

By the way, the frozen hot chocolate costs $8.50.

Blue Bunting (855)
Tuesday February 10, 2009, 12:03 am
Here a quote by a commentor at the New York Post website. I just had to repeat it here. It is hilarious!

From the article at the New York Post: "ON WALL STREET: WHO COULD LIVE ON $500K?, By KAVITA MOKHA and LEONARD GREENE"

"If Obama's going to cap their salary at $500,000, he shouldn't be asking them for help solving the economic crisis," said Ray Shalma, 37, who works in local real estate.
"These guys have been making a certain amount of money for years and years. . . All of a sudden when you slash it down to half a million dollars what are they going to do?"

New York Post Commenter: joebuck15 wrote:

"Is this joke. He's lucky that the American people aren't chasing after these a$$holes with pitchforks and torches.
When you dig yourselves out of this mess you can go back to paying yourselves what you want. But as long as you're taking OUR money, you play by OUR rules. Crybabies."

Carol L (190)
Tuesday February 10, 2009, 12:32 am
Will this salary cap put a stop to the multi-million dollar bonuses and retirement packages.

Blue Bunting (855)
Tuesday February 10, 2009, 12:54 am
President Obama's executive-salary cap order got a mixed reaction yesterday on Wall Street, where company employees raised concerns about recruiting and retaining top talent.

Stocks fell on the news, with the Dow Jones industrial average off 121.70 to 7,956.66, and the S&P 500 and Nasdaq marginally lower.




The financial sector was buzzing over Obama's decision to impose a $500,000 ceiling on salaries for executives of companies receiving federal rescue money. The president said Americans are through with "executives being rewarded for failure."

Not so fast, say some observers.

"If Obama's going to cap their salary at $500,000, he shouldn't be asking them for help solving the economic crisis," said Ray Shalma, 37, who works in local real estate.

"These guys have been making a certain amount of money for years and years. . . All of a sudden when you slash it down to half a million dollars what are they going to do?"

Mark Rosen, of Pearl Meyer & Partners, a compensation-consulting firm, said the move has pros and cons.

"I personally think it's reasonable to put some sort of restraint on executive compensation when you use government money," Rosen said.

Executives at five of the biggest companies getting government Troubled Asset Relief Program help - Citigroup, Bank of America, American International Group, General Motors and Chrysler - made far more than $500,000 in recent years.

Indeed, BofA CEO Ken Lewis made more than $20 million in 2007.

And those high-priced honchos aren't getting a lot of sympathy.

"They've been getting so much money all these years for work that they're obviously not doing well." said Bill Djurovic, 65, a vice president at a Wall Street architectural and design company.

"If they're not delivering on profits, why should they be making so much money?" he said.

Owen Ellsworth, 31, who works at a restructuring firm, agrees.

"These guys ran their companies into the ground, and are taking taxpayer money to bring them around," Ellsworth said. "I don't see a problem with it."

Carol L (190)
Tuesday February 10, 2009, 1:18 am
Yes, I read the article. I always read the article before I comment. The article says that there will be a cap on salaries, but there is a difference between salaries and added perks such as bonuses, etc. Bonuses are not part of your regular salary. That is why they are called bonuses. So does this cap include salary, bonuses and retirement packages or will these multi-million dollar golden parachutes be exempt from the cap?

Blue Bunting (855)
Tuesday February 10, 2009, 10:57 am
Carol, some bonuses are negotiated at the time a person is hired so they consider it a part of their salary; some bonuses are calculated as a percentage of the profits that "trader" made for the financial institution, etc.

CEOs' bonuses are almost always decided by the Board of Directors.

Blue Bunting (855)
Tuesday February 10, 2009, 12:00 pm

Protestors Picket Bank CEO's Homes, Offices

A new kind of street warfare is breaking out against Wall Street titans - and it's happening on their lawns and outside their lobbies too. A corps of agitators - financed, ironically, with federal-stimulus millions - is making the rounds of suburban

Past Member (0)
Tuesday February 10, 2009, 4:51 pm
I would cut the basic salaries even lower, and tie bonuses to companies performances. No crisis in keeping the talent, now nobody is hiring and the talent is cheaper than usual.

Blue Bunting (855)
Tuesday February 10, 2009, 5:47 pm
Goldman CEO Blankfein Acknowledges "Broad Public Anger" At Wall Street

"Anger" is putting it mildly. Outrage is more like it. Not only should Washington insist on pay caps for any firm taking taxpayer funds, but most of these crooks should be canned without any serverence. They held themselves out as the titans of finance and they skated along with unchecked greed and complete incompetence that resulted in lives in rubble across the globe.

Wednesday February 11, 2009, 6:39 am
The financial crisis appeared in Wall Street contaminated all the planet. Indeed, as regards the business import export, almost all the countries of the world suffered in their bilateral relations. For example, the textile industry in Morocco was austerely got(touched). Consequence, arbitrary and collective dismissals of the employees which is probably going to be translated in a humanitarian crisis. Nobody can support(bear) the change of way of life bound(connected) to the dismissal and especially when there are children, it is really the humanitarian disaster which ensues from the financial crisis.

Blue Bunting (855)
Wednesday February 11, 2009, 8:35 pm
* U.S. banking leaders told
the House Financial Services Committee that they're not humiliating
failures, guilty of widespread mismanagement. Zachary Roth had some good coverage of the hearings today.

Louise L (48)
Thursday February 12, 2009, 3:33 pm
Oh, boo hoo. Try living on minimum wage and THEN talk to me about making ends meet...thanks, Blue.

Blue Bunting (855)
Thursday February 12, 2009, 3:40 pm
Amen, Louise! These multi-millionaire$ are $o out of touch with how their behavior affects working class people ... they need a wake-up call ... and we won't foot the bill for their mi$take$ any more.

Blue Bunting (855)
Friday February 13, 2009, 8:45 pm
Stimulus Package Contains Strict New Restrictions On Executive Pay
Goes Beyond What Obama Admin Imposed Last Week

Julianny Gomez (0)
Wednesday March 4, 2009, 7:18 am
Blue Bunting, please shut up. Both my parents make less than $50,000 a year and we live in the NY Metropolitan area. My parents are not "successful" bankers or CEO's but work as a truck driver and a custodial worker, and have NEVER missed a payment on their mortgage. Maybe it's time for these so-called CEO's to stop being so high maintenance and start being more frugal with their money. And the only reason a cold hot chocolate is $8.50 is because you're willing to pay the price - I bet if the consumer demanded a lower price it would be given.

Blue Bunting (855)
Wednesday March 4, 2009, 10:31 pm
Poor Julianny G., has 0 friends and doesn't appreciate satire.
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