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Wall Street bonus outrage spurs reforms

Posted on: Saturday, 24 January 2009, 09:05 CST

U.S. taxpayer outrage over bonuses paid to workers at Wall Street firms that accepted federal bailout funds will force industry-wide pay reforms, analysts say.

Although most people outside Wall Street don't realize that bonuses aren't tips -- but rather the main form of compensation to many financial firm executives -- revelations of continued bonuses handed out by companies such as Merrill Lynch that accepted bailouts are creating pressure to reform compensation systems, The Washington Post reported Saturday.

The economics are going to be different, and once the dust settles and we can take the emotions out of it, we could be entering a new paradigm as to how all of this gets done, Steven Hall, managing director of pay consultancy Steven Hall & Partners, told the Post.

Critics aren't satisfied with the government's so-far limited attempts to diminish executive bonuses by the bailout beneficiaries, with some saying the shame factor isn't working and calling for forced reforms.

An auto worker making $60,000 a year is not going to drive people crazy, but some snot-nosed 32-year-old making three-quarters of a million dollars and whining about it, that's going to make people crazy, said Alan Johnson, managing director of Johnson Associates.

Source: United Press International

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