Banks Chastened?
The Economist Intelligence Unit, via Free Exchange, on whether the rest of American mondobanks will report lower compensation-to-revenue ratios this week, as JPMorgan did the last:
[. . .] a lower share of pay in relation to revenues may not tell the whole story. Compensation at banks has risen moderately as a share of revenue in recent decades. But when loan-loss provisions are taken into account, recent pay packages appear a lot more generous. According to FDIC data, compensation as a share of revenue at commercial banks is the highest it’s been in nearly 60 years, after accounting for provisions.
Also: the analysis and adjoining graph apparently consider only the cash portion of compensation. Which leaves another part out of the story. Take this, from the JPMorgan story linked above:
A J.P. Morgan official later clarified that “increasing the amount of stock in our cash stock tables across-the-board, but especially for higher paid people, drove [the compensation] ratio down by a point or two more than it other wise would have been.”
Add a point or two more to the shame index, then.
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