The Wall Street bonus in retreat

The Wall Street bonus in retreat
As Washington steps up its attacks, bankers are already getting used to a whole new pay scale.

NEW YORK (Fortune) -- While Washington's attacks on Wall Street bonuses have reached a fever pitch - "outrageous," declared President Obama's economic advisor Larry Summers on Sunday about AIG's bonuses - this latest round of firepower is being leveled at forces already in retreat.
In the wake of one of the most heavily scrutinized bonus seasons on what is left of Wall Street, a review of how bankers and traders got paid this year reveals not only a few unexpected surprises but also a sense that market forces - with two notable exceptions - are doing as much to set compensation now as are the lawmakers in Washington.
The outrageous exceptions, of course, occurred at both AIG (AIG, Fortune 500), the large international insurer that is now nearly 80%-owned by U.S. taxpayers, and at Merrill Lynch, where "Let them eat cake"-style massive bonuses were paid last December to a plethora of top traders and bankers before the firm completed its sale to Bank of America, even though Merrill lost $27.6 billion in 2008, took $10 billion in TARP funds and was days away from a likely bankruptcy filing.

AIG's bonus conundrum (Video CNN Money)
Mar 16, 2009 filed under Business News
Fortune's Managing Editor Andy Serwer says the insurance giant needs bonuses to retain top talent.