Wall Street Bonuses

Wall Street bonuses are not greed and it reflects Obama's ignorance of
the capitalist system to call them so. It reflects in part a failure of
the advocates of capitalism to reinforce the bedrock concepts of
meritocracy and pay for performance. This is nothing new on Wall
Street.

Money began to be set aside for bonuses paid in December 2008 and
January 2009 starting in December 2007 a full 12 months ago. Money is
being set aside now for bonuses to be paid in 2010.

They reflect the uncertainty of the year to come -- will it be
profitable, unprofitable, or wipe out the firm? Bonuses are paid in any highly
competitive industry. Is the very idea of variable pay being attacked
here as "greed"?

The variability of bonuses reflects three factors: the overall economy
-- the growth/contraction of capital, the profit or loss of the firm,
and finally the individuals contribution to that enterprise. Poorly run
Wall Street firms were shut down or merged in sort a shotgun marriage.
Market forces are at work here.

Bonuses are also a legacy of days 30 and 40 years ago when there was a
mix of partners and non-partner employees, the partners were paid out
their annual profits and since many employees could not be made partners
they were compensated at the same time.

Finally, the taxes paid by these employees are also expected by local
and state governments. Taxes are withheld from them. They are part of
the economic fabric of New York City and State. You have the unusual
situation of the Attorney General of New York State Andrew Cuomo saying
the bonuses should NOT be paid and the New York State Comptroller
begging for the taxes that will be paid on those bonuses.

Bonuses in themselves are not greed but Wall Street's version of
incentive pay. Greed comes into the picture when they are excessive for
the results obtained by that employee at any level.