It would make a splendid holiday movie: Miracle on Wall Street.
A plucky band of bankers, traders and brokers is sweating out the end of the year, one eye on their company's compensation pool, the other on a computer screen. They're all looking forward to January, when they'll get seven-figure bonuses for 2010. But what if Congress lets the Bush tax cuts for wealthy Americans expire?
For a guy getting a $1 million bonus — and in 2009, there were 4,700 who got at least that much — the difference between the current 36 percent tax rate and the old Clinton-era 39.6 percent tax rate is something like $46,000.
But then comes Santa. Just as the banks are considering moving the bonus payments forward to December and enduring even more wrath from a public that doesn't understand that banks are doing God's work, the White House and congressional Republicans cut their tax-and-spending deal. Tax cuts for the rich are saved!
January is bonus season on Wall Street. The five biggest banks — Goldman Sachs, Morgan Stanley, Citigroup, Bank of America and JPMorgan Chase — have set aside at least $89.5 billion in their compensation pools for 2010. That's for everybody who works at the banks, from the CEO to the guy who drives the CEO's car.
Because you eat what you kill, the biggest share of the compensation is paid to executives and traders in the most profitable sectors. Because 31,000 lower-level employees have been laid off, the people at the top will get a larger share of a slightly smaller pool.
And, because the big banks have paid back all the Troubled Asset Relief Program money the government loaned them, some senior executives expect to make up for their taking smaller bonuses during the TARP years.
Are they worth it? Some banking and securities regulators have doubts.
In an important article called "What Good is Wall Street?" in the New Yorker, financial journalist John Cassidy noted that Lord Adair Turner, head of Britain's Financial Services Authority, has said that much of what Wall Street and other financial centers do is "socially useless activity."
Banks have their uses, he said, but much of their profit comes from simply shifting money around, often by making exotic trades that produce nothing for society.
Gerald Epstein, an economist at the University of Massachusetts, told Cassidy, "These types of things don't add to the pie. They redistribute it — often from taxpayers to banks and other financial institutions."
By some estimates, the financial sector could be half or even a third of its size without much loss in economic activity. The people who profit by churning money without creating jobs already are amply rewarded. Now the tax code rewards them even more.
Many of these people helped to wreck the economy. Now, as America struggles to recover, they're expecting seven- or eight-figure bonuses for doing, in many cases, essentially nothing. You'd think they'd have the grace not to whine about taxes.
© 2010 McClatchy-Tribune News Service