The Slatest

Good News! Wall Street Bonuses Are Back to the Size They Were Before the Financial Crisis. Which Means … Wait. Uh Oh

Bags of $100 bills.
Carlos Jasso/Reuters

The American economy is thriving! From the Wall Street Journal:

The average banker bonus in New York City was $184,220 last year, the biggest annual haul for Wall Street employees since before the financial crisis. … The jump, the largest in percentage terms since 2013, continues a long rebound for New York City securities-industry bonuses from their postcrisis nadir in 2008, when they averaged just over $100,000, according to the annual report by the Office of the New York State Comptroller. Last year’s average payout was just shy of the high of $191,360 in 2006.

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Hmm—almost as big as they were before the catastrophic economic meltdown? Seems like that could be a bad sign! Still, the relatively symbolic issue of bonus totals aside, there’s no way financial institutions would already be repeating the substantive mistakes they made during that era—i.e. massive institutional overexposure to the risks of complicated, poorly understood financial derivative products. There’s simply no way.

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Right, Wall Street Journal article from last August?

In a Blast From a Financial Crisis Past, Synthetic CDOs Are Back

Market for collateralized debt obligations is on the rise again after years on the decline

The synthetic CDO, a villain of the global financial crisis, is back.

A decade ago, investors’ bad bets on collateralized debt obligations helped fuel the crisis. Billed as safe, they turned out to be anything but. Now, more investors are returning to CDOs—and so are concerns that excess is seeping into the aging bull market.

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Well, gee whiz. And—now that I’m thinking about it—I also seem to recall periods of notorious Wall Street exuberance and profligate compensation preceding giant crashes in the 1980s and 1920s. But surely, with the wisdom afforded by both recent and distant history, our leaders are keeping a close eye on the financial sector via federal regulatory bodies. At the very least, we can expect that the Democratic Party is using the power of the filibuster in the Senate not to roll back the oversight regime put in place by the Obama administration after 2007-2008’s disaster.

What’s that you say, March 14 Politico article?

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Senate passes deregulation bill scaling back Dodd-Frank

The bill, which was years in the making, was a rare bipartisan accomplishment at a time when Congress is gridlocked on almost all major issues.

The Senate on Wednesday passed a milestone bank deregulation bill that would mark the biggest rollback of financial rules since the 2008 market meltdown.

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Ah … gah. [Tugs collar.]

The thing is—here’s a thought—you have to realize that 2008 was a uniquely vulnerable time for the United States. The country was led by a low-functioning, unpopular president who had wasted both literal and political capital—capital that could have been used to strengthen the fundamentals of the economy—on a tragic, unnecessary war in the Middle East. In 2008, the Iraq War had left the U.S. unprepared both psychically and fiscally to handle an economic crisis, but this time will be different.

Hang on, it sounds like a Monday CNN article has something to say:

The Trump era has been very good to Iraq War hawks

Fifteen years and a few days after the war began, the Iraq hawks are flying high again—thanks mostly to President Donald Trump, who has called the invasion a mistake but on Thursday night made one of its leading proponents, John Bolton, his national security adviser.

Well, shit.

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