In the first three quarters of the year, Goldman Sachs squirreled away $16.7 billion for employee compensation. JPMorgan's investment banking and asset management units have collected a total compensation pool of $11.1 billion.
If bonuses were to be paid out now, three quarters of the way through the year, compensation per Goldman Sachs employee would be $526,813. JPMorgan employees in investment banking and asset management would earn $279,266 each on average. The companies determine compensation at the end of the year.
Citigroup Inc. (C) reported a narrow profit Thursday. While Citigroup, like JPMorgan, is also a commercial bank, it doesn't break out investment banking and asset management compensation, so comparisons aren't accurate. Firm-wide, $18.71 billion has been set aside for bonuses year-to-date.
The rest of Wall Street, including Morgan Stanley (MS) and Bank of America (BAC), are set to report earnings in the coming days and weeks.
Compensation and large bonuses have become hot-button issues on Wall Street, especially after taxpayer money was used to bail out or prop up Wall Street companies at the peak of the financial crisis. Regulatory and political scrutiny have put Wall Street's pay culture in a negative spotlight.
While bonuses were down across the industry last year, this year bonuses are starting to soar, with some companies set for a record compensation year. U.S. banks and securities firms are on track to pay employees roughly $140 billion this year, a record high, according to analysis from The Wall Street Journal.
While Goldman Chief Financial officer David Viniar might be getting tired of fielding bonus questions, when asked Thursday during the earnings conference call about them, Viniar said compensation decisions aren't made until year end, but "we have to be fair to our people who have performed admirably." He added, "performance is quite dramatically better than last year."
JPMorgan's CFO, Michael Cavanagh, talked about bonuses Wednesday during the company's earnings call. The investment bank professionals' bonus pool is $8.78 billion for the three quarters of the year, compared with $6.5 billion last year. Asset management compensation set aside for the three quarters is $2.4 billion.
This year, bankers will certainly be paid better, as JPMorgan generated investment banking income of $10 billion in the first three quarters this year, up from $1.5 billion a year earlier. Cavanagh declined to say how much more the bankers will be paid. "We'll await final guidance from regulators" on compensation, he said, but "ultimately performance will determine compensation" at the end of the year.
Source: Jessica Papini and Joe Bel Bruno, Dow Jones Newswires
Comments by Robert Creamer in Huffington Post:
"Amazingly, giant insurance conglomerate AIG is currently scheduled to pay another $198 million in bonuses next March.
Remember that AIG's sale of unregulated "credit default swaps" helped trigger the financial collapse that led to the recession. "Credit default swaps" were essentially insurance policies that, if the underlying financial instrument fell below a certain price, AIG would insure the loss. Only problem was, that since the "credit default" business was completely unregulated, AIG had no capital requirements to guarantee that they could pay off.
To prevent what they thought might be a world-wide systemic meltdown, the Government was ultimately forced to invest $180 billion of taxpayer money, and now owns 80% of the company.
But earlier this year AIG actually paid $168 million in bonuses to executives and traders in the company's Financial Products Division that had run the "credit default swap" program ...now will give even more financial rewards to the very people who have helped put millions of Americans out of work and caused the worst economic downturn since the Great Depression? "
Remember Jack Welch(GE) saying to Charlie Rose that Wall Street has a culture of money and these people care for nothing else. When GE owned a Wall Street firm he needed to pinch his nose when he handed out bonus cheques.
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