Ex-Goldman Head Critical of Pay Levels

A former head Goldman Sachs says he's "appalled" by Wall Street's pay levels and warned they've reached "bubble" levels - and bubbles pop.

In an interview with Bloomberg, John Whitehead, who was co-head of Goldman Sachs from 1976 to 1985, said his former firm is leading the compensation run up, calling the firm "leaders in this outrageous increase." Last year the biggest Wall Street firms paid $36 billion in bonuses, spurred not only buy good results, but by the need to keep employees from jumping ship for the rich rewards at hedge funds.

Whitehead seems unimpressed by that motive: "I would take the chance of losing a lot of them and let them see what happens when the hedge-fund bubble, as I see it, ends," he said.

Last year one Goldman alumnus, Edward Lampert, received more than $1 billion in compensation from his ESL Investments. "`That is very tempting to a Goldman Sachs partner who's in that part of the business, to go off on his own, as many have," Whitehead commented. "They've all done very well, much better than they would have done even at Goldman Sachs ... I don't see how it's going to stop.''