Levine on Wall Street: More Money, Less Work
Compensation consultant Johnson Associates thinks that Wall Street bonuses will be up 5 to 10 percent, but people with low-risk client-servicey jobs such as asset management and retail brokerage will get bigger bumps while people who commit capital in fixed-income trading will see lower bonuses than last year. You get what you pay for, so I that seems like a positive sign for those who want banks to be lower-risk and more client-servicey. Though I suppose as long as you're keeping around risky capital-committing businesses like bond trading you want the people in those seats to be good at their jobs. There's only so much damage a bad retail broker can do; bad bond traders have more scope to cause trouble.
Banking six days a week
It's easy to make fun of Goldman Sachs's new plan to make junior bankers work less, and I have, repeatedly, but here is the memo about it and it seems like a legit, well-intentioned and thoughtful effort. The plan is that "All analysts and associates are required to be out of the office from 9PM on Friday until 9AM on Sunday" -- associates too! -- and that if a senior banker wants an exception he needs to e-mail his business unit leader for approval and "cc the team and state the business critical reason for the junior banker needing to work Saturday." Presumably "indoctrinating Junior into the fraternity of banking and creating cultural cohesiveness through shared misery" is not a business-critical reason though, maybe, I would like to see someone try that.
You also need business-unit-leader permission "if a junior banker needs a cultural, personal or religious exception to the Saturday rule (i.e. would like Sunday off instead)." Which, one, I think that Goldman's default day of rest being Saturday says something interesting about Wall Street religiosity or lack thereof, and, two, I am certain someone will try "my cultural and personal beliefs revolve around NFL football so can I work on Saturday?"
Steve Cohen is confused by insider trading
In 2011, SAC Capital boss Steven A. Cohen did a video deposition in which he was quizzed about insider trading rules; the video has been legendary in certain dorky circles but now has apparently surfaced and you can watch bits of it if that's your thing. Cohen is asked questions like "if a reporter tells you that he's about to publish a negative report about a company, can you short shares of its stock?", and I guess he's supposed to look shocked and say "oh no I would never do that that would be wrong," but what he actually says is that the rules are murky and maybe he would. And that's right! I mean, his analysis isn't perfect, but he has lawyers to make the analysis more perfect, though they seem to have been on vacation from like 2007 to 2010. But insider trading law really is more complicated than "never trade if you have nonpublic information," and as a guy in charge of running a giant hedge fund whose business was finding out information and trading on it, of course Cohen understood that. Though SAC's recent guilty plea suggests they made it more complicated than it needed to be.
Soon you'll be able to get your aluminum faster
One of the most baffling financial scandals of our time is aluminum warehousing, in which metals-trading firms put aluminum in a warehouse and don't let it out for months even as beer-can makers are clamoring for it. I have never stored aluminum as a business but my understanding is that it is a metal, nonperishable, not especially fragile and unlikely to run away. You could store it in your garage. Why store it at a black-hole trader warehouse? Many of the warehouses are in Detroit, too, which probably has a lot of empty garages. Anyway, new London Metal Exchange rules will require that "LME-registered warehouses experiencing outgoing delivery delays of 50 days or more will have to ship out more metal than they take in," which still seems like a pretty low bar but I guess it's better than nothing, though worse than almost anything else.
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Matthew S Levine at firstname.lastname@example.org