The average Wall Street bonuses amounted to 184,220 USD in 2017, in addition to the otherwise lush annual salary. This amount is more than three times the average household income in the US. The Wall Street bonuses rose by 17%, this was the second consecutive year with a rapid increase. In this way bonuses are approaching the records achieved in 2006, the year before the major financial and economic crisis.
Besides the debate on fairness that can be ruled now arises the question “Why”. The simple answer is that bankers’ bonuses have risen because banks are doing well. When stock prices, currencies and other investment opportunities fluctuate sharply, traders can make higher profits because they can bet not only on rising but also on falling prices.
Wall Street banks also did better with asset management, as well as merger and acquisition fees last year. According to New York’s financial regulator, the financial sector has spent 153 billion USD last year, 4.5% more than the previous year. So, profits are also rising.
The robust growth in profitability over the past two years has shown that industry can also be successful with regulations and consumer protection measures adopted since the financial crisis. But banks will benefit from the fact that US President Donald Trump eliminates some of the stringent requirements introduced by his predecessor to prevent the industry from triggering a similar crisis as in 2007. Only two weeks ago, the US Senate voted in favor of a bill, which provides for a relaxation of regulations for small and medium-sized banks and excludes them from the so-called Dodd–Frank Act. The 2010 reform prohibits banks from trading at risk for their own account.
Moreover, the October appointment of Randal Quarles as the Federal Reserve Deputy Governor in charge of Banking Supervision will also help the sector. Quarles is considered an opponent of strict supervision. Chief of the Consumer Financial Protection Bureau (CFPB) was appointed Mick Mulvaney, one of the institution’s biggest critics.