Could they salvage the real estate market?
So everyone was surprised that Goldman Sacs CEO Lloyd Blankfein had to settle for “only” a $9 million bonus. Yes, it clearly reflects how the investment bank decided to rein on the CEO’s annual perks after massive tempest against excessive Wall Street bonuses in a very troubled economic period grew more loudly before the bank announced the compensation. It was a far cry from what Blankfein earned in 2007 which was 7 and a half more than his present deferred stock bonus.
Other investment bank chiefs also announced their bonuses but with a much larger value like JPMorgan Chase’s Jamie Dimon with $16.6 million and Wells Fargo’s John Stumpf with $18.4 million.
But amidst all these uproar against bank bonuses, many critics have forgotten about the bonuses of those Ivy Leaguers who found their careers in investment bank, driven by cut-throat competition in the market and willing to spend 80-hour work weeks. They’re also receiving hefty bonuses too even in a struggling economy. So what do they do with their cash? New York Times has the answer.
In its recent feature, NYT reported that the NYC real estate market is bracing for the coming of banker bonuses. That is, those who’ll be smiling out of their way of the bank have grown in number and are expressing their interests in taking advantage of bottom housing prices. The report states, “With the outsize bonus returning to Wall Street this year, brokers and sellers are holding their breath. For the past few months there have been signs that the market is reawakening, and an infusion of “banker cash” could be just the catalyst it needs to spark a full-fledged recovery… By that she means that reports of large bonus pools at Wall Street firms have contributed to an overall sense among prospective buyers that things are getting better, not worse. And brokers say that the rise of the stock market last year, along with very low mortgage rates and prices that have sunk a good 20 to 25 percent below 2007 highs, had already started to calm the nerves of buyers at all income levels. Now there is a growing sense that the best deals will be history once the bonus buyers start signing contracts.”
This is an annual uptick in property sales awaited by agents but through the years, we’ve observed some incorrigible habits of investment bankers who plan on using their bonuses to buy properties.
First, they don’t check properties without being fully guaranteed of an exact bonus offer.
Second, they can always dismiss the offer of a broker once they find out that their actual bonus doesn’t amount to what they were expecting.
Finally, they’re the epitome of buyer’s remorse once they start to feel the gut of a slowing economy.
But at least, they’ve gotten smarter with their spending habits this time since they’re investing their money the right way instead of basking for five days in San Juan or surprising their wives with a Harley Davidson.