Not to give the impression that this column space will be used to document personal milestones, but I’m happy to report I sold my first story to New York Magazine, and hopefully not my last. It’s a short front-of-book piece in the Intelligencer section about rappers and wine. I had a great time working on it, and the per-word rate isn’t half-bad either.
That is, unless you compare it to the folks in the cover story of that particular issue : The Emasculation of Wall Street. That piece, by Gabriel Sherman, is incredibly thorough and well reported, and should be of great interest to MyBankTracker readers. Accompanied by photos of a well-dressed man clutching his crotch, the feature documents an ego crisis in the post-economic crisis world of finance. And it suggests that the Dodd-Frank Act, and specifically the Volcker Rule, has likely ended the era of obscenely high pay on Wall Street.
No longer can banks crank up leverage and make the risky bets that paid for the bonuses that paid for the penthouse, the mistress (?), the expensive Burgundys and the truffle tasting menus.
While Washington saved Wall Street — most of it, anyway — from collapsing in 2008 with TARP, that came at a cost for the finance industry, explains Sherman. No longer would Washington allow these banks to grow so large and interconnected as they had in the past, and Dodd-Frank, however flawed, has been quite successful in accomplishing this. Likely more than half of the news we report on here at MyBankTracker relates in some way to this one piece of legislation. By design, it’s a major source of pain for the industry.
The news peg that Sherman’s story hangs on is Wall Street’s earnings season, which just came to a close. Morgan Stanley, he reports, capped their cash bonuses at $125,000 this year. Ouch?
Sherman gets a great quote from another investment banker: “After tax, that’s like, what, $75,000?” (If only it were capital gains!)
Can you think of a quote that might better embody the attitude of entitlement that three decades of vastly profitable rent extraction engendered in the industry? A salesman, likely a smart and competitive one, just sneezed at a number that is more than twice the median income of the nation he calls home — a sum earned on top of an already high salary.
It’s stunning to see just how much Wall Street thinks its labor is worth. And perhaps we’ll all be better off if Sherman is right: that bankers’ compensation will now be tied to more sustainable growth in our economy, not rent-seeking and paper profits.
All I know is I am happy that I got paid well for a 500-word story. There’s no question that I add less value to the economy than an investment banker — I know that. But at least I can’t sink the entire global economy. I might have the opportunity to make a stranger think, make them angry, or make them smile, but I will never create a complex secondary market security that will create enough liquidity to allow a stranger to purchase a home well above their means, and then take it away from them in due time.