Far more interesting than the faux-economic populism of the gazillionaire-owned New York tabloids to Wall Street bonuses, is the reaction from the financial community itself. There is, at least at the top level (you won’t hear any complaining about bonuses being too big from analysts or junior vice presidents), a bit of a sense that things are getting out of hand. Of course, this is usually heard from executives at other investment banks complaining about Goldman Sachs, or Goldman Sachs executives complaining about hedge funds. Blackstone’s Steve Schwarzman has a refreshingly unenvious take on this year’s bonus awards, as evidenced by this interview with the Financial Times.
FT: There’ve been some big pay days on Wall Street recently. Are you seeing that have an impact on your ability to have people come work here?
MR SCHWARZMAN: It hasn’t affected the private equity business because apparently pay is pretty good here. After this interview, actually, we have a meeting that’s going to be finalising compensation for the people at the firm, so I have some idea of where we are, and nobody’s crying for private equity people or other people on Wall Street. I think it brings up a larger issue, you know, of inequality of pay for work in this society, because people in the financial business have been on an incredible run. It’s been one of the few industries in the States that is ideally adapted for globalisation. And think that, looking forward, this publicity around Goldman Sachs’s earnings, and publicity of what individuals are making - you know, America’s a place where people like to have the American dream, everybody’s successful - you know, Wall Street’s doing so well now, it’s certainly not an object of any sympathy for anyone.
FT: Do you see this as becoming a political or social problem going forward?
MR SCHWARZMAN: It’s hard to know, but it’s got more of a potential to be a problem than less. You know, going forward, the middle class in the United States hasn’t done as well over the last twenty years as people in the high end. Part of the compact in America is that everybody’s got to do better. Part of that is caused by globalisation, which really can’t be stopped. You can’t run from that.
FT: Does there have to be some sort of political action?
MR SCHWARZMAN: There doesn’t have to be. Better to deal with this by having the middle class do better rather than just sort of whacking somebody on either side of that. There are a lot of different ways addressing a problem.
Also, DealBook today points toward Schwarzman’s explanation for why there is so little competitive bidding between private equity firms. Hint: he doesn't think its collusion.
View from the Top: Stephen Schwarzman, CEO of The Blackstone Group [Financial Times]