Morning Coffee: JPMorgan for socialists, Goldman Sachs for capitalists. Getting fired during a “catch-up”
“Easy for Jamie to say that – he’s already made his money”. That was apparently the reaction of David Solomon on being told that the JPMorgan CEO had said he’d be happy to pay higher taxes. It’s possibly a joke, possibly told to break the ice while Solomon was being coached for an appearance before a Congressional committee. But it’s a joke that contains a serious message – in a really good bonus season, where the top ranks are pulling in eight-figure sums that don’t start with a one, how should banks talk about the morality and politics of big numbers?
The temptation is always to go folksy, like Rich Handler of Jefferies, who says things like “Every one of us in our industry is overpaid … When you go home and look at yourself in the mirror, every one of us should count our lucky stars”. This sort of comment goes over well in press coverage, but in order to get away with it, you need to have whatever the equivalent of comic timing is for humblebrags.
At one level of consciousness, Rich Handler no doubt means what he says. But in objective reality, you have to say that if the management of Jefferies really thinks that top bankers are overpaid, they’ve got a funny way of showing it. According to “people with knowledge of the matter”, they have paid north of $25m to “some of the best perfomers”. “Performers”, plural. It gives something of a double meaning to the phrase “count our lucky stars”.
Which raises the possibility of an alternative approach to justifying the bonus pool, summarized by the old Hollywood aphorism “we’re overpaying them, but they’re worth it”. The driver of top banker bonuses is the labour market. Industries adjacent to banking, like private equity, hedge funds and even trading imaginary monkeys currently pay a lot more, and if the industry wants to keep top players, it has to pay them at least enough to keep them thinking that cryptocurrencies and medicinal cannabis startups aren’t worth the risk.
This applies at the top level too. Being CEO of a bulge bracket bank means you’re unlikely to be poor, but it’s nowhere near the richest job on Wall Street. People like Solomon keep at it because it gives them two things as well as the money. First, the psychic reward of being one of the most important people in the global financial system. And second, it’s a position that lets you build wealth over time, with considerably less risk of losing it all than most hedge funds, let alone cryptoassets.
Which is, of course, what Jamie Dimon has done. He’s richer than the Queen, but that’s not because he gets paid better than his peers; it’s because he’s been doing it longer than them. As David Solomon said, he’s made his money. Which means he has the ability to justify his salary with the ultimate humbleflex – a smile, a shrug and a “sure, raise my taxes”. More than expensive tequila or penthouse apartments, the greatest luxury in banking is the ability to talk like a socialist.
Elsewhere, every fan of TV cop shows will be aware that the first rule of getting arrested is not to say anything without a lawyer present, except “I want my lawyer”. But did you know that there’s a similar principle to guide you when a boss who doesn’t like you calls you into their office for “a quick chat”?
If you’re in London, the employment law says that at anything which is going to turn into a disciplinary or grievance meeting you have the right to be accompanied – not necessarily by a literal lawyer, but potentially a friend, colleague or other representative. But you have to ask for it. A tribunal case this week has established that if the boss just calls you in, and you go with the flow, you lose your chance.
This is only true if your contract is covered by UK law, of course. In New York, bankers are usually employed on an “at-will” basis, so the only person likely to accompany you in the meeting is the security guard who accompanies you out of the meeting. Conversely, in European financial cities, you might actually be a member of a union; it’s your responsibility to know your rights. Just remember that as with law enforcement, there’s really no such thing as an informal chat.
Legal associates at Willkie Farr are being offered a bounty of as much as $75k for introducing an “experienced lateral hire” who ends up staying with the firm two years. This is more than banks generally pay their employees for a finders’ fee (nothing), but considerably less than the $200k bounties that Willkie has been promising to professional recruiters in some particularly hot markets. (Business Insider)
If you decided to “learn to code” out of a fear that artificial intelligence would take over your job, bad news; they’ve invented an artificial intelligence that writes code. (FT)
Citi has formed a special group in its global spread products trading unit that focuses on Black-owned banks in the USA. This is partly motivated by commitments made last year during the BLM protests, but it is also a specialist niche; for banks classified as “minority owned” there are some specific regulatory treatments to be aware of. (Bloomberg)
“I felt like getting rich was a ripoff,” he said. “I expected somebody to show up one day and be like, ‘ok, Mr. Zurrer, all of your problems are solved.’ And that never came.” So Ryan Zurrer set up a business providing family office services to newly-minted crypto billionaires; if you want to work there, practice saying “Bored Ape Yacht Club” without smirking. (Decential)
You might not have heard of Alantra, but the Spanish boutique investment bank has 550 employees, is growing fast and recently opened a Dubai office. (Reuters)
If you’re not wearing a suit or a tie, there’s really nothing left to restrict your choice of shirt; tomorrow’s bankers might be in turtlenecks or (less likely) boiler suits. (FT)