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Wall Street 2011 Bonuses Fall 30 Percent

Poor market conditions and increased regulatory scrutiny contribute to large drop in 2011 bonuses.

It appears that Wall Street bonuses, on average, will be 30 percent lower this year than in 2010, due to poor market conditions and increased scrutiny on bonus allocations by regulators. And the 30 percent drop is just for the equities crowd. Fixed income professionals will likely see their bonuses fall even farther, according to this feature on American Public Media's Economy 4.0 website.

However, bonuses should still be robust, averaging $100,000.

Meanwhile, regulators and politicians are still trying to figure out a way to solve the bonus controversy. For most of the population, financial services bonuses are extremely unpopular, since the industry financial incentives are viewed as encouraging risk (at the public's expense). In the industry, financial incentives are a way of life.

To solve this problem, financial firms and regulators are still looking at ways to balance the need for financial incentives without encouraging excessive risk. One possible solution is to delay bonuses one or two years, so if a trade or strategy goes bad, the bonuses can be withheld.

Here is the full segment:

Greg MacSweeney is editorial director of InformationWeek Financial Services, whose brands include Wall Street & Technology, Bank Systems & Technology, Advanced Trading, and Insurance & Technology. View Full Bio

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