Wall Streeters used to the unfathomably generous bonuses of years past will likely be facing lighter stockings (OK, direct deposits) this year. Goldman Sachs and Morgan Stanley employees are now employed by bank holding companies with payment structures closer to traditional commercial banks rather than investment banks, meaning Goldman's 2007 $12.1 billion bonus pool will be shallower in 2008.
The bonuses may be scaled down from past years, but employees will still receive bonuses bigger than what most of us outside the financial world will ever see. Goldman's bonus payouts last year averaged about $400,000 per person, while Citigroup paid its investment banking employees bonuses of about $100,000 per person. If Goldman employees are rewarded with a fraction of what they were accustomed to, it's not a bad chunk of change. Still, there's concern that New York's economy will suffer because of reduced spending on everything from housing to entertainment.