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The Fed may crack down further on big Wall Street bonuses - Nov. 5, 2009
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Is the Fed about to hit the brakes on the Wall Street gravy train?
A year after they survived the financial meltdown with considerable taxpayer help, Goldman Sachs (GS, Fortune 500) and Morgan Stanley (MS, Fortune 500) stand to spend $35 billion combined this year on employee compensation.
The average Goldman worker is on track to take down more than $600,000 in pay and perks -- in line with levels from 2007, before the economy cracked. Former Federal Reserve chief Paul Volcker said last month that Wall Street pay has gotten "grotesquely large."
But the bonus bubble could be peaking. After years of lassitude, the Federal Reserve is preparing to force big banks to abide by longstanding rules banning excessive or inappropriate banker pay.
What's more, regulators appear to be paying special attention to the risks posed by the lucrative trading that has sent profits at firms like Goldman and JPMorgan Chase soaring just months after last fall's brush with disaster.
Given the bruising the Fed has taken for its failure to act during the credit bubble, some commentators believe officials will flex their muscles.
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Mauro Magnani's FINANCIAL TWINE, Financial and Economic Global Crisis, President Barack Obama, Money and Investing, *Changing America?, law & politics, *Hope, Politics, Banks, Law, Public Policy, Accountability, Finance & Economics, President Barack Obama