Recession Ends, Wall Street Declares
Wall Street was late telling us that we had entered a recession, but it’s ahead of the curve in announcing that it’s over. If you haven’t heard about this breathtaking turnaround, read the latest from the New York Times.
The biggest Wall Street banks have set aside $36 billion in the first quarter for compensation, particularly bonuses, because of the strong start in 2009 for bank profits. The start isn’t strong enough to overcome 2008 losses, but apparently, 2008 is old news, and you don’t even have to turn a profit yet to know happy days are here again. Morgan Stanley lost $578 million in the first quarter of 2009 but still set aside $2.08 billion for comp.
The banks’ argument is the same as it’s always been. Big pay recruits and retains the best employees, who help earn more money for shareholders. Hmmmmm. In 2008, bank shareholders lost a ton of money, so why wouldn’t extra money earned in 2009 be set aside to compensate shareholders with greater dividends for their ’08 losses? Or why wouldn’t it be used by the bailed-out banks to pay back taxpayers the obscene amount of money given to them (the banks) by the federal government? Or why wouldn’t it be used to break the continuing credit freeze by loaning the money to businesses wanting to expand or individuals wanting to start new businesses?
So much for all the talk about it being a new day in the financial world. As a financial recruiter (whose business surely took a hit last year) said, “Wall Street is being realistic. You have to retain your human capital.” Would that we were all human capital instead of human borrowers, human defaulters, human debtors, human unemployment recipients, human riffraff. Wall Street hubris is back with a vengeance.
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About Chris Parker
Chris Parker's practice focuses on the representation and counseling of companies in matters pertaining to the workplace and the protection of their intellectual property and trade secrets. In addition to serving as an advocate for clients, Mr. Parker is also trained as a mediator and frequently serves as a third-party neutral.
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About Jimmy Daniel
Jimmy Daniel provides counseling to businesses of all sizes related to the employment relationship. He assists in the drafting of employment agreements, policies, and handbooks, as well as provides guidance related to compliance with federal, state, and local legislation such as the Fair Labor Standards Act and the Family and Medical Leave Act.
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About Larry Bridgesmith
While serving in an Of Counsel relationship with the firm, Mr. Bridgesmith also serves as the Executive Director at the Institute for Conflict Resolution at Lipscomb University and as an officer and principal in Strategic Resolutions Group, LLC. In these roles, Mr. Bridgesmith brings over 30 years of legal experience in dispute resolution and innovative workplace strategies to clients, students and business entities alike.
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One of my duties here is tracking our loans on non-accrual and our foreclosures. Unfortunately there are still quite a few loans on our books which we haven’t foreclosed upon, yet. Also, the expenses tied to these properties is high. Taxes, upkeep, rent collection, etc. I just don’t understand how these large banks have suddenly started running at such huge profits.
As much as I would love for it to be true, it is a bit premature to say the recession is over.