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February 29, 2012

Morning Money Wisdom on Why America Hates Wall Street

Ben White, who writes Politico’s Morning Money, reports on two stories this morning.  One is Blackstone co-founder Steve Schwarzman’s 2011 paycheck of $213.5 million and the other is about bankers struggling to survive on only $350,000 a year, which is referred to by the banker as not “having money.”

Ben’s summaries are below with the links, but first his pithy take down:

“M.M. NOTE – Families ‘who don’t have money’ know a lot more serious stress than how many private school tuitions they can afford. If you want to know why America hates Wall Street, the [below] stories go a long way to explaining it.”

Now for the struggling bankers:

“SCHWARZMAN TAKE: $213.5 MILLION – From the ‘it must be nice file’, Reuters reports: ‘Blackstone Group co-founder Stephen Schwarzman got about $213.5 million in salary, share of profits and cash distributions from his holdings in the world’s largest private equity firm in 2011, up 33 percent from the previous year. Schwarzman, 65, who co-founded Blackstone in 1985, got most of his payout from dividends on his 21 percent ownership of the private equity firm and realized investments from funds predating the company’s IPO in 2007. Schwarzman’s salary was only $350,000, unchanged from last year, and he has not taken any bonuses since the company went public, according to a regulatory filing on Tuesday.’

“MM NOTE – Interesting use of the word ‘only’ in relation to the salary portion.

“PITY THE POOR BANKERS – Bloomberg’s Max Abelson has a must on how much suffering is going on in the wake of smaller Wall Street bonuses: ‘Andrew Schiff … director of marketing for broker-dealer Euro Pacific Capital Inc. … is facing another kind of jam this year: Paid a lower bonus, he said the $350,000 he earns, enough to put him in the country’s top 1 percent by income, doesn’t cover his family’s private-school tuition, a … Connecticut, summer rental and the upgrade they would like from their 1,200-square- foot Brooklyn duplex. ‘I feel stuck,’ Schiff said. ‘The New York that I wanted to have is still just beyond my reach.’ The smaller bonus checks that hit accounts across the financial-services industry this month are making it difficult to maintain the lifestyles that Wall Street workers expect, according to interviews with bankers and their accountants, therapists, advisers and headhunters …

“‘People who don’t have money don’t understand the stress,’ said Alan Dlugash, a partner at accounting firm Marks Paneth & Shron LLP in New York who specializes in financial planning for the wealthy. ‘Could you imagine what it’s like to say I got three kids in private school, I have to think about pulling them out? How do you do that?'”

Or, slightly rephrasing Ben, the 10 plus million Americans still unemployed and the 15 plus million Americans still underemployed, not to mention the millions who have lost their homes to foreclosure and have lost their health care, savings, retirement and college savings, would be more than happy to struggle to make ends meet on a paltry $350,000 a year. 

The pathetic part is that this isn’t the whining of an isolated banker or two.  No.  It’s in the DNA and culture of Wall Street, which seems to think the rest of the world has it easy and only they are suffering.  As you can read here, reality simply does not seem to penetrate the rarified air of Wall Street.



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