There was a time in the financial industry when the many wouldn’t suffer for the sins of the few (although taxpayers were certainly excluded from this maxim). Well, for the “many” who work at JPMorgan, that is no longer the case because as Reuters reports, JPM employees can forget getting a pay raise in 2013 (although with sub-2% annual inflation as calculated by the BLS one wonders just why anyone should be getting a raise: just hand out an edible iPad or two and the COLA is fixed). The reason for the lack of a raise: “the bank’s massive legal bills” – bills which incidentally were incurred when a select few JPM employees cheated and defrauded the system – illegally – in order to procure massive year end bonuses, most if not all of which were not clawed back, and subsequently were caught (one can only imagine how many of the “few” are still at the bank, doing manipulation and defrauding as usual. And now it is everyone else’s turn to pay because the bank lacked the most elementary supervision of its criminal employees (long since fired) and raked up roughly $20 billion in litigation and legal settlement charges.
Overall compensation per employee was roughly flat with 2012, just as managers had warned employees in November, said the person who was not authorized to speak publicly. While some individuals are getting more money, their payouts have come at the expense of others.
Pay increases have been muted across much of the banking sector in the aftermath of the financial crisis, but 2013 was especially tough at JPMorgan as profits declined because of the cost to settle government and private claims against the bank.
Company-wide compensation expense was $30.8 billion for the year, up a fraction of one percent from 2012. At the same time, JPMorgan reduced headcount by more than 7,500 people to 251,196, with the result that compensation expense per employee rose nearly 4 percent to $122,653, according to data disclosed by the company last week.
In the company’s Corporate & Investment Bank, where its deal-makers and traders work, total compensation expense declined 4 percent and employment remained flat. Average compensation expense per employee in the division was $207,368, down about $10,000 from a year earlier.
And of course, for the workers in the bank’s mortgage origination group – you know, the one product that banks used to rely on most of all before the bank as glorified hedge fund concept came along – the news in 2013 was worse: instead of getting any comp in 2014 they simply got a pink slip.
Most of JPMorgan’ job cuts were from positions handling mortgage loans. Some tellers in bank branches were also replaced with financial advisors selling investment products.
That said, this being JPMorgan, hardly many a tear will be shed. As for our advice to JPM’s workers, please voice your grievances to Jamie Dimon: after all there is a reason why he is “richer than of you.”