With the new president joining the chorus of outrage against bonuses for bailed-out Wall Street firms, bankers are grappling with the notion that long-held pay expectations will have to change, the Wall Street Journal reports. Eager to avert government crackdown, firms are expected to shrink and perhaps defer bonuses, to eliminate "big paydays for financial wizards who created bumper profits that blew up later." Salaries may inch upward, as firms switch to lower risk profiles.
“The business model of the investment banks is almost certainly going to change,” writes Joe Nocera in the New York Times. Bankers have long operated in an “eat-what-you-kill” culture, without “a sense of shared enterprise” or any expectation that they should take a hit if the company is under water, he notes. “That culture had a lot to do with creating the financial crisis. If Wall Street can’t bring itself to admit as much,” the new government will “be more than happy to point it out.”
(Read more Wall Street stories.)