Bank of America Corp. (NYSE:BAC) was one the largest U.S. lender by assets. Then, it was eviscerated by the financial crisis and continued to showcase its arrogance and stupidity with proposals like a $5 debit card fee. JP Morgan Chase (NYSE:JPM)became #1, and moved BAC into second place in the asset race.
That’s kind of the story for everything at Bank of America, as the company has now become maligned by investors and consumers alike. But now there’s a new group of people who will be frustrated with BAC leadership: It’s investment bankers.
According to Bloomberg, Bof A has told its investment bankers to expect compensation packages that average 25% less than last year. Formal 2011 pay discussions are scheduled for this week, so that’s just rumor, but you can understand the motivation for such a move. Many Wall Street firms are curbing pay for investment bankers and traders as regulatory pressures increase and profits dwindle. JP Morgan earnings recently reflected trouble in investment banking, and the other bank stocks followed suit soon after.
Unfortunately, the reality of the investment banker business is that these people frequently go where the best compensation is for their talents. By their nature, these folks are driven by money.
“Greedy” is a blunt way to put it.
Bloomberg says investment bankers with several years of experience may earn from about $500,000 into the millions. So a 25% cut may be painful, but these people aren’t going to starve.
Still, it’s a sign of how far the banking industry in general has fallen — and how troubles still lie ahead for Bank of America, Citigroup (NYSE:C), Goldman Sachs (NYSE:GS) and other top investment firms that have fallen on hard times.