Wall Street, Lehman/Merrill and Taxes

[volinbham]

Given that 3 of the 5 big Wall Street firms have essentially ceased to be - how many high income earners will be removed from the economy?

I realize that not all or even most will be without jobs but BoA is not going to pay what Merrill was paying. Likewise, the jobs that replace the lost ones are likely to pay less than the bonus-fueled mega-salaries that these people were getting.

Given the reliance of the Obama tax plan on generating increased revenues from people just like the ones joining the ranks of the unemployed or declining incomes - what will this realistically do to revenue projections from his plan?

Any effect?

(NOTE: The WPT source of revenue is has already disappeared due to oil's fall).

 

[BigPapaVol]

Given that 3 of the 5 big Wall Street firms have essentially ceased to be - how many high income earners will be removed from the economy?

I realize that not all or even most will be without jobs but BoA is not going to pay what Merrill was paying.

Given the reliance of the Obama tax plan on generating increased revenues from people just like the ones joining the ranks of the unemployed or declining incomes - what will this realistically do to revenue projections from his plan?

Any effect?

(NOTE: The WPT source of revenue is has already disappeared due to oil's fall).

They aren't removed. Merrill just acted to maintain their operation without going as far as Lehman.

If I were to bet, I'd also bet that Lehman remains as well, but without the big MBS origination outfit. Lehman moved hardest in that direction and it killed them. Why wouldn't one of the big foreign houses buy the equity at pennies post bankruptcy and stay in the profitable businesses?

 

[volinbham]

They aren't removed. Merrill just acted to maintain their operation without going as far as Lehman.

If I were to bet, I'd also bet that Lehman remains as well, but without the big MBS origination outfit. Lehman moved hardest in that direction and it killed them. Why wouldn't one of the big foreign houses buy the equity at pennies post bankruptcy and stay in the profitable businesses?

Regardless of the form they take - I'm assuming that many high $ employees will lose jobs that will not be replaced at the same "bonus-level" pay rates.

I have no idea if the total income of this group will fall enough to impact tax revenues but when your tax plan relies on extracting higher amounts from a small group - changes to the small group amplify the effect.

I'm probably totally off on this one but it just struck me as I saw the layoffs (over 100K in the sector so far) and thought about the pay that many make in this sector.

 

[BigPapaVol]

The big financial lick is going to be AIG, if something major happens there. I know the Fed essentially said no to a helping hand.

Those guys prop up large swaths of the financial markets with what amounts to underwriting stupidity insurance.

 

[BigPapaVol]

Regardless of the form they take - I'm assuming that many high $ employees will lose jobs that will not be replaced at the same "bonus-level" pay rates.

I have no idea if the total income of this group will fall enough to impact tax revenues but when your tax plan relies on extracting higher amounts from a small group - changes to the small group amplify the effect.

I'm probably totally off on this one but it just struck me as I saw the layoffs (over 100K in the sector so far) and thought about the pay that many make in this sector.

I hear you, but I think much of those big bonus style operations will stay intact.

BofA will operate Merrill under the Merrill name I'm sure (to quote Dennis Miller: "when are these guys going to stop showing us a bull dragging his crank around in the sand"). Many of those high dollar jobs will remain.

The Lehman that went broke is but a shell of the Lehman Brothers investment bank. It's essentially the trading desk. The I-banking operations have been segregated and are being sold separately.

 

[myrobbins7]

The big financial lick is going to be AIG, if something major happens there. I know the Fed essentially said no to a helping hand.

Those guys prop up large swaths of the financial markets with what amounts to underwriting stupidity insurance.

I couldn't agree more. If AIG doesn't come up with $75B. it won't be nice. Also, AIG just got a downgrade, that's going to hurt them bad. Tuesday is going to be interesting in the markets.

 

[droski]

the fed is nuts if they don't help out aig. completely nuts

 

[BigPapaVol]

the fed is nuts if they don't help out aig. completely nuts

in the end, they will. They will very likely help in the ultimate sale of Lehman, but taking the risk in the CMBS portfolio that Lehman has. Take away the fed mandated write downs of value in those portfolios and my guess is that Lehman is much more solvent than they appear on paper.

 

[myrobbins7]

AIG will get an $85B dollar loan from the Fed. in exchange for an 80% stake in itself.