The Price of Wall Street

In Tom Wolfe’s “Bonfire of the Vanities,” Master of the Universe Sherman McCoy lists all of the daily expenses that are draining his Wall Street pay of $1 million a year.
There’s the $21,000 monthly mortgage payments on the Park Avenue apartment, $116,000 for the place in the Hamptons (those were the days!), entertaining, restaurants, private schools and $65,000 a year for furniture and clothes. “I’m already going broke on a million dollars a year,” he exclaims.
The same might be said of some of today’s Wall Street bankers. In my print column today, I cite a new study by Prince & Associates that looks at how Wall Streeters plan to spend their record 2006 bonuses. The findings are surprising: They spent 11% of their bonus on watches and jewelry, 11% on art and other collectibles, and 16% on homes. They saved or invested 16%.
As I point out, the bankers deserve to splurge since they work so hard and the financial-services business is doing so well. As one banker told me, “I work 18-hour days, six days a week. I’m sitting on planes for 20 hours straight and I’m dealing with high-pressure decisions. I deserve rewards.”
Yet the risks are that the good times won’t last forever — that low savings rate could catch up to them if there’s a downturn. As Wall Street sage Peter Solomon told me, “This is a cyclical business. We’re in a period of easy credit and people throwing money around, and no one in investment banking should assume that next year will be better than last year.”
If only Sherman McCoy had said the same.

(This article is from Wall street Journal)

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