Early Bonus Season

Christmas might come early to Wall Street this year . WIth higher taxes in 2011 and beyond a distinct possibility, Wall Street banks are looking to do right by employees and pay out their bonuses before the anticipated IRS onslaught.

So what is the general future of banker bonuses? It's easy to say that this is a one time thing, but with the feds continuing to breathe down Wall Street's back like a lames on necks in tight elevators, is it time to rethink the bonus structure? Self regulation has always been less painful than federal intervention.

Credit Suisse MDs in London (for example) are getting a mid-year payout, to make up for last year's tax hikes. They can't take the cash home until 2012 or 2013, however, and still may have to jump through hoops to get it all.

With the potential of top tax bracket percentage jumping from 35 to 39.6 in the U.S., we're talking about an extra $45K in taxes per $1,000,000 in income. Populists will cry that this is a full year salary for some Americans and therein lies the intrinsic problem. The disconnect between finance professionals and the rest of gen pop.

So, what to do (if anything) with the long term compensation structure of investment banks. With regulators around the world pushing for more influence over bonuses and talk of supranational regulatory bodies, this is an issue that can be ignored...but all bubbles burst even the ones in our heads. Plenty of needles abound in today's landscape, all aimed at the same target.

There does seem to be a "business as usual" attitude returning to general market related affairs, as the panic seems to be subsiding. But remember, November is coming and this will again be an issue pounded into the heads of the voters.

With the economy still stagnant, the usual suspects may soon be drummed up again.

How amped up would the next generation of monkeys be if their bonus, was no longer a guarantee? We have seen a good deal of Bulge Brackateers jumping ship for their own shops in recent months and years.

I have asked before and I will ask again....are Boutiques going to poach the Bulge Brackets dry over the next decade? I feel like it's deja vu, in some respects. Ten years ago AOL and Time Warner merged, creating a corporate hydra that head butted itself into perpetual stupor. The same thing can happen in reverse.

Is the slowly changing bonus structure a cause or an effect? Is this just penalty payment for the past? Or prologue for the future?