BAC Bonuses: wouldn't cover Ken Lewis's Friday afternoon tabs. From the front lines:
In fixed income, the most anyone (not-contract, non-Merrill) got was an MD who did 60+ million in risk-free revenue who was paid 100k. The guy obviously had a lights out year, possibly doubling whoever came in second - staggering. Most everyone got zero but I do know one or two traders who were very good and were paid approx. 8k for their efforts.
Earlier: Bonus Watch '09: BAC
Posted by guest , Feb 02, 2009 12:54PM
how do you do risk free revenue in Fixed Income? I'm not talking about the hedges, etc, but really risk free?
Posted by guest , Feb 02, 2009 12:55PM
MER people see this? You work for Ken now. Why bother working at all?
Posted by guest , Feb 02, 2009 12:56PM
Those guys should stay home and trade for themselves.Why give away their talents for that pittance??
Posted by guest , Feb 02, 2009 12:57PM
@ 1 research, you bonehead
Posted by guest , Feb 02, 2009 12:59PM
@1 by selling something for more than you purchased it for.
@4, because they are reliant on customer flow.
Posted by Debter , Feb 02, 2009 12:59PM
@ 1, it's called crossing.
@4, there's a lot of infrastructure you don't have access to at home. Namely lots of customers who don't know any better.
Posted by guest , Feb 02, 2009 1:00PM
Good. without the government they get ZERO because they are out of business.
Posted by guest , Feb 02, 2009 1:01PM
the more the readers of this site have become unemployed, the stupider much of the commentary on this site has become. i'm talking about @1 AND @4-6. next up, another mother joke...
Posted by mktmkr , Feb 02, 2009 1:03PM
100K for 60mil in revenue? That is a beatdown of epic proportions.
Posted by guest , Feb 02, 2009 1:06PM
@7 - please focus your anger on Ken Lewis, not the typical footsoldier. To be clear, BAC took the government shekel to fuel KL's ego. Both the taxypayer and the hapless BofA employees have been screwed here.
Posted by guest , Feb 02, 2009 1:08PM
@3 LMAO, What kind of credit line do you think an individual would get at a broker right now?
Posted by guest , Feb 02, 2009 1:08PM
How does a sales person make any revenue at all? There sole job is to distribute the risk, but it is the trader who sets the price. $60MM is nothing more than sales credit paid for distributing the risk, but has no reflection on the amount of money made (or lost) for the bank. In fact, a trader may be willing to sell something for a loss (and still pay sales credits) because his view is that the price will fall thereby creating an even greater loss. All the sales person did in this scenario is distribute risk and help mitigate a loss...but it was still a loss. Given that most fixed income traders were significantly down this year, I have a VERY hard time believing that any sales person who supports such traders actually "made" money for the bank. Sounds like the email was from an analyst on the desk that doesn't understand how this really works.
Posted by guest , Feb 02, 2009 1:12PM
in response to #12, aka an idiot. it's called crossing bonds. lets say johnny salesman calls up his friend and says hey pal want to buy a bond? tell me what kind. he says gee i want green bonds today. i'll pay 75 bucks for one. then johnny salesman calls up another friend and says hey pal want to sell me a green bond, i'll pay you 70 bucks right now. all of a sudden johnny salesman just made 5 bucks didnt he. thats how anyone who's making money these days is doing it
Posted by Investorcluzo , Feb 02, 2009 1:17PM
I'm hearing that folks are doing just enough to not get fired (which isn't more than just showing up) hoping to find a new job at a boutique (read: lehman). at least if you got fired, your severance was paid in cash. if you got a bonus, it was 100% deferred, so you're nothing more than a senior creditor...
way to go kenny, you've just bought an investment bank who paid its people enough to tell you to go fk off while they look for happier surroundings! had enough fun yet?
Posted by guest , Feb 02, 2009 1:24PM
@8 bitter, sad, little person
Posted by guest , Feb 02, 2009 1:25PM
@14: Of course he's having fun. Didn't he say he's ahd about as much fun in investment banking as he can stand, not too long ago?
Posted by guest , Feb 02, 2009 1:28PM
@ 1 : How?
You screw your clients and/or front run them.
Posted by guest , Feb 02, 2009 1:31PM
@ 3:
If they could, they would. But they make their money of the franchise not their own intelligence. Every followed what happened to some GS guys who went out into hedgefund-land? Now flow - no dough. Poof!
Posted by guest , Feb 02, 2009 1:32PM
@1 You collateralize some debt, purchase it using leverage and keep on your BS.
Posted by guest , Feb 02, 2009 1:35PM
@ 9: Get a life! How many million dollars worth of cars does a GM worker produce a year? Does he get a cut of that?
Posted by guest , Feb 02, 2009 1:35PM
@13 I can assure you that there wasn't a lot of crossing going on over the past 365-days. Not $60MM worth and definetly not at BofA. Gets your facts straight.
Posted by guest , Feb 02, 2009 1:36PM
@20 Lunch is over. Back to the assembly line.
Posted by guest , Feb 02, 2009 1:37PM
@5 - how does that make it risk-free?
Posted by guest , Feb 02, 2009 1:38PM
@ 11: With 5% margin that gets you a long way, particularly if one didn't blow the bonus in a Hamptons homestead or other excesses.
Posted by guest , Feb 02, 2009 1:44PM
@24, true, true. But you know they blew all that cash on a gold plated helicopter
Posted by Investorcluzo , Feb 02, 2009 1:47PM
by way, have we heard from the bofa insiders - did they make good on their promise of blocking db (and other "blogs")? I know you have iphones, report back...
Posted by Investorcluzo , Feb 02, 2009 1:47PM
by "the" way...
Posted by guest , Feb 02, 2009 1:50PM
@1: it's called selling treasury strips forward and realizing the profits today, especially when the accounting system doesn't FV the booked sale until the coupon comes due. Ask anybody at Kidder-Peabody. They'll back me up on this.
Posted by guest , Feb 02, 2009 1:54PM
@18 -- got any specifics in mind?
Posted by american bandersnatch , Feb 02, 2009 1:58PM
Wow, 100k. Makes me glad my firm isn't sucking on the government teat.
Posted by guest , Feb 02, 2009 1:59PM
@29 Cody Willard
Posted by guest , Feb 02, 2009 2:14PM
@15
you're right. baiting you was funny after all.
Posted by guest , Feb 02, 2009 2:14PM
M&A, IPOs fees are risk free largely
Posted by guest , Feb 02, 2009 2:25PM
13 Sounds good in theory, but no one gets on the phone any more like you're suggesting. Information is readily available, trading is lightening speed, electronic, so spreads are really thin. Dealer does in fact take on little risk, but the profits are not there either.
Posted by guest , Feb 02, 2009 2:25PM
What will happen in banking will roughly approximate what happened in medicine 20 years ago.
A new generation of talent will replace the old and accept lower pay. The older establishment will bitch and moan yet they were the ones responsible because of their greed.
They've killed the goose.
Posted by guest , Feb 02, 2009 2:34PM
The good old "risk free" strategy. Wasn't that what everyone at Lehman and Bear used to say?
If anyone at BAC really generated $60MM in risk free revenue they would have been long gone long ago.
Posted by guest , Feb 02, 2009 2:40PM
i heard somewhere on dealbreaker that first yr associates got 20k. how is that possible now?!
Posted by guest , Feb 02, 2009 2:42PM
Life sure is funny. I remember about six years ago being on the receiving end of a pitch from Bank of America. They made a big point of saying that they were at B of A because they believed in "the universal bank model." Say what you will about B of A, it is, for the moment, still in existence. However, now that Merrill has been acquired, those guys have probably been laid off. The universal bank model worked all right, just not for them.
Posted by guest , Feb 02, 2009 2:43PM
I'd like to think you're right 35, but third party payers killed the $1million/yr cardiologist gig.
A few years from now, those bond traders will be right back where the were three years ago.
Wash, rinse, repeat.
Posted by guest , Feb 02, 2009 2:45PM
I think the goose has been dying a slow death. The prosperity of the last 20 years was based first on a tech boom and then a housing boom. The former had a few promising underlying fundamentals which resulted in significant and sustainable productivity gains, the later not many at all. Just a bubble. The basic problem is that the US economy has turned away from goods and towards services and at the same time the US has been running triple defecits of huge proportions: trade, balance of payments, budget. The middle class has been sucking wind for a long time now. There are just too few good jobs out there. Demand was created with easy credit and therefore couldnt last. I'm not at all optimisitic.
Posted by guest , Feb 02, 2009 2:54PM
Cluzo,
BAS employees can still view DB, but no more Gawker media. Also noticed that EP's old blog was blocked (assuming all typepad and blogspot type URLs are now verboten). Sadly, ClusterStock has not been blocked.
Posted by guest , Feb 02, 2009 3:02PM
@33 - IPO are underwritten you idiot.
Posted by Goldman Sachs Neophyte , Feb 02, 2009 3:05PM
@41, BAS? You do mean BAC right? Yeah, I called you out on something as small as a typo. Why did I do this? Because I work at Goldman and this is what we do.
- that guy from Goldman Sachs (aka.: TGFGS)
Posted by guest , Feb 02, 2009 3:17PM
@43...BAS is Banc of America Securities, the broker dealer. BAC is the corporate parent company. If you work in the investment bank, you are emploed by BAS.
Try not to call someone an idiot...when you are in fact wrong.
Posted by guest , Feb 02, 2009 3:22PM
@43...ever heard of a bank holding Co? BAC is the holding Co for, among other things, BAS. Why did you this? Because you work at Goldman and you are a douche bag.
Posted by guest , Feb 02, 2009 3:29PM
@ 34 "Why did you this?" Huh?
Posted by guest , Feb 02, 2009 3:35PM
this post is just false, not to say they weren't people who didn't get this paltry sum, but there were others who got more for sure.
Posted by guest , Feb 02, 2009 3:37PM
@47- "Most everyone" would mean not everyone. learn to read before commenting.
Posted by guest , Feb 02, 2009 4:18PM
@1: you buy a bond and you hedge by selling (short) the treasury with the same term structure. then let's say the corp-UST (default risk) yield spread goes down. you buy the treasury you are short to cover and you sell the bond you had purchased. you take the cash-in-hand profit you made and you buy a treasury with it. you now have traded your way to a risk-free stream of income.
Posted by guest , Feb 02, 2009 4:22PM
@49
now you have basis risk. but don't worry, treasuries don't move much...
Posted by guest , Feb 02, 2009 4:26PM
@26 dealbreaker still works. No facebook, espn blogs, dealbook, any blog on the weblogs network.
Pretty shitty given there's lack of work to be done and most websites don't work.
Posted by guest , Feb 02, 2009 4:36PM
@1. Cocaine.
Posted by TheBlackstoneGroupie , Feb 02, 2009 5:08PM
Not to sound rude, but for a bunch of financial types, you all complain too much. You act like UAW workers at the Big Three plants; when times are great, you live off your overtime, overextending yourselves. Then when the downturn occurs, I would say nearly half of you have no "rainy day" fund and you don't not how to cut your personal costs. But what the PHUCK do I know, I am just a silly unitholder of BX and a Phish phan as well, didn't even get tickets this weekend to any shows :/ ~!
And to those in the financial industry who earn all this big $$$, if you all are getting laid off or hate your jobs, why not pool your capital together and start a boutique firm???? Stephen Schwarzman and Peter Peterson started with a $400,000 portfolio and a shared secretary. I would rather invest capital with others and start my own firm than spend millions on a mortgage for an overpriced condo on the Upper East Side for bragging rights.
So go ahead, flame away...and to those who work at GS, Ruth Simmons is the biggest WASTE of an Ivy League President, and should not even be on the board of directors; I plan to vote NO when it comes to her re-election. She and her ilk destroyed $800M of Brown's endowment; now the students can't even have their own swimming pool!
Posted by guest , Feb 02, 2009 5:22PM
53 I would say Simmons landed on the GS Board in order to achieve diversity. And in that sense she's a good candidate. Remember, Board members individually aren't all that powerful. I also wouldn't blame her too much for the value destruction within the Brown endowment. Others have done just as bad this year.
Posted by guest , Feb 02, 2009 5:45PM
I have to agree with 53. He sounds angry, clearly not in the industry, but his point is that its pathetic for people that see themselves as masters of the universe to be whining, just because things are not going their way. Buck up boys.
Posted by guest , Feb 02, 2009 5:46PM
@ TGFGS,
#41 here. Thanks for the troll comment.
While I may not be the biggest GS fan, I know that they do not employ obvious low-end talent such as yourself. Any discernable ATD could have ensured this little snafu of yours never occurred, but no, basic effort coupled with an ounce of intelligent thought is well outside of your abilities.
Good luck with being a no talent assclown that is too quick on the trigger, shoots blanks, and will never so much as mop the GS lobby.
Posted by Anal_yst , Feb 02, 2009 7:55PM
@ Blackstonegroupie
Based of what secret, proprietary data are you making your claims?
Yea, I didn't think so. Back to Yahoo Finance for you.
Posted by guest , Feb 02, 2009 8:11PM
The story is just plain wrong. Plenty of people got more than $100k bonuses. But not many.
And some BAS desks have enough flow to do riskless crossing - matching buyers and sellers and booking the spread. A significant amount of the IG desk's business is riskless crossing.
Posted by TheBlackstoneGroupie , Feb 02, 2009 8:18PM
bwahahahaha This forum ROCKS. No, I don't work in the financial industry. I have nothing against anyone in it at all, as my godfather was a retired broker/operations manager from Merrill Lynch, working there at a time when you didn't need an MBA to get a foot in the door. Actually, I guess I could say that Merrill Lynch was part of my life growing up, before the dark times...before the "bonus culture" and the CDOs. :D
It is common sense...do not overleverage yourself, and don't invest more than 10% in one asset class or stock. And read "The Wall Street Journal." And why do I need a broker, I have Sharebuilder.com. And why in the hell would I give a hedge fund/alternative asset manager $1M to invest when I don't have any equity in it, and they charge me a 2% management fee and 20% performance fee??? Hell, I would rather have $1M in Och-Ziff Capital Management Group stock shares. Not bad, for a hippie, eh???
Anal_yst, when you become like Henry Kravis, George Roberts, Carl Icahn and Stephen Schwarman, then I'll listen to you... :p Go smoke some weed~!
Masters of the Universe...LMFAO
Posted by guest , Feb 02, 2009 8:26PM
@35 agreed. All of this squealing is the economics of supply and demand grinding along and people getting spit out or taking big pay cuts because there is an oversupply of "talent" and very little of value they are now able to create. The days of easy money are just gone, and people will have to go back to getting paid for the value they create (and not just paper value that can evaporate before your eyes).
Posted by guest , Feb 02, 2009 8:53PM
"The story is just plain wrong. Plenty of people got more than $100k bonuses. But not many."
then i guess it's not plain wrong then, now is it?
Posted by guest , Feb 02, 2009 10:20PM
there are admins that got higher bonus numbers than MD's(who got zero)...put that in your pipe and smoke it
Posted by guest , Feb 03, 2009 7:25AM
@62 - As they say in HR, it's the total comp number you need to focus on. Which means that the MDs probably just got paid more than their secretaries for the year.
What a fcking shitshow.
Posted by guest , Feb 03, 2009 7:38AM
@61: Read the original story. "In fixed income, the most anyone got was an MD ... who was paid $100K"
The point of the story is the shock value of $100k being the highest bonus paid.
Lots of people in fixed income were paid more than $100K.
But a lot of people also made 0 or close to it.
Posted by guest , Feb 03, 2009 7:54AM
heh. #44 just made #43 his bitch, right in front of god and everybody.
Posted by guest , Feb 03, 2009 8:58AM
#52....best comment on the whole thread.
Posted by guest , Feb 03, 2009 9:14AM
also, @43 doesn't work at GS, because GS disabled employees' ability to comment on DB like six months ago.
Posted by guest , Feb 03, 2009 12:05PM
Can all the bankers and equity sales guys stop trying to comment about things they simply don't understand.
Client trades with bank as principal on Tradeweb or over the phone on an OTR Tsy. Trader lays it off in BTech or Espeed.
Job done book profit.
If you are uncertain what any of the terms are above F*** off and stop commenting.