Just think about it. Stocks with multi-billion market caps down 40% this year. Merrill (MER) and Bear Stearns (BSC) are down about that much. Lehman (LEH) is down 20% and Morgan Stanley (MS) is down 25%. Investors in the shares have been crushed.

But, according to figures from Bloomberg, bonus money paid by the top five investment banks will be over $38 billion this year. The news service writes "that money, split among about 186,000 workers at Goldman Sachs Group Inc., Morgan Stanley, Merrill Lynch & Co., Lehman Brothers Holdings Inc. and Bear Stearns Cos., equates to an average of $201,500 per person."

Nice work if you can find it.

But, the investment banks would say they are in a tough bind, The people in their M&A departments and IPO divisions had good years. That talent needs to get big cake or it will flee to other companies. Maybe. It does depend on how many other firms are willing to take on thousands of people who expect millions of dollars in comp per year.

And, even large-brained mammals will have trouble finding a solution to a problem where large financial firms are broken into autonomous units, each with its own goals and comp systems.

It will take a recession across every segment of the investment banking business to bring pay into line with public company investor returns.

And, that could happen, too. In the meantime, the stockholders get to carry the load. Nothing new there.

Douglas A. McIntyre

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