Moody's may downgrade bank credit ratings if bonuses are excessive

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Bank bonuses are not what they used to be, although they could make a comeback once the dust settles from the financial crisis, according to a new report by Moody’s Investors Service.

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“While many banks have made changes in line with new global compensation standards and more are expected, in the long term we expect to see erosion in pay discipline,” Christian Plath, the report’s author, said in a statement. If the industry returns to its freewheeling ways, Moody’s warned that it might consider downgrading bank credit ratings.

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Wall Street doled out an estimated $20.8 billion in cash last year, an 8 percent decline from 2009, according to a recent report by the New York State Comptroller’s office.

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Still, bankers are not exactly strapped for cash. Wall Street’s overall paychecks rose 6 percent in 2010, the comptroller’s report said. At Goldman Sachs last year, the base salary for managing directors rose to $500,000 from $300,000.

And Moody’s expects the pay packages to keep getting bigger as the crisis fades and firms lose talented bankers and traders to less-regulated industries.

The rating agency said it was “less optimistic about lasting change.”

http://dealbook.nytimes.com/2011/03/11/moodys-warns-about-a-return-of-lavish-bank-pay

[Mr. Big Dog 10,747]

It happened all over Wall Street - pay packages were re-designed to push some of the usual bonus compensation into base pay. Same compensation in the end, only now you have more of it guaranteed rather than having it dependent on your performance and the overall performance of the business.

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It happened all over Wall Street - pay packages were re-designed to push some of the usual bonus compensation into base pay. Same compensation in the end, only now you have more of it guaranteed rather than having it dependent on your performance and the overall performance of the business.

The insurance sector is under the public's radar (strange, seeing how AIG was a big beneficiary of the bailouts) so there has been very little change that I can see in our pay/bonus structure. People just like hating the banks.

[Mr. Big Dog 10,747]

People just like hating the banks.

Tell me about it - I work for one.

[Ban Hammer 13,530]

Tell me about it - I work for one.

[Mr. Big Dog 10,747]

[Ban Hammer 13,530]

where's my pellet rifle?