Former Wall Street CEO: Banker Pay is ‘Unbelievably Generous’ and Needs to be Cut
During an interview on Bloomberg TV yesterday, former Morgan Stanley CEO John Mack — who led the bank through the 2008 financial crisis, when it was bailed out by the federal government — said that Wall Street pay has been too high and needs to come down
Let’s be totally honest. A lot of people who have done really well have not handled that wealth very well. That gets to part of the issue with Wall Street. I think it’s really changing. I think the kind of money that’s made and the way it was flaunted — look it’s wrong. [...] The money was really unbelievably generous, to say the right word…At the end of the day the one area that has to be squeezed [to give a return to shareholders] is the compensation number.
Estimates show that Wall Street pay is going to be near record highs for 2012, and the biggest banks are back to making pre-recession profits, while most of the rest of the country is still struggling with the effects of the Great Recession. Over the last three decades, increasing pay on Wall Street has contributed to America’s skyrocketing income inequality.
Earlier this month, Morgan Stanley’s current CEO agreed that banker pay is “way too high.” Another former trader said, “There’s no other industry where you could get paid so much for doing so little.” (HT: Mark Gongloff)