Photo: Bloomberg TV screenshot
Today on Bloomberg TV’s “Market Makers” co-anchor Stephanie Ruhle asked Wall Street legend John Mack if he thought there should be celebration of many of the one-per cent living the American dream. The former CEO and chairman of Morgan Stanley’s answer suggests that Wall Street’s compensation and the way it showed off that pay needs to change.
Here’s Mack’s response that Bloomberg TV transcribed (emphasis ours):
“I think it’s simple. If you are unemployed and you see others doing really well for very long period of time and you see friends and families and people you deal with in the community losing their jobs — I assume the number is 23 million, that was thrown out yesterday around 8% unemployment …after a while to say how about me? I can understand that. Let’s be totally honest, a lot of people that have done very well have not handled that wealth very well. That is part of the issue with Wall Street. I think it’s really changing. I think that the kind of money that was made in the way it was flaunted is wrong. I grew up in North Carolina, and I know what it is like to grow up in a small town and have a lot of friends, but there was not a lot of money being made there. People look at me when I was running a company and said look how much money Mack’s making. We have an American dream, and we have to give an opportunity for everyone to do well and when one group does extremely well and there’s a large group not as doing well, we need to make changes.”
That being said, Mack, who came to Wall Street in 1968 earning $8,000 a year at the time, emphasised that there has to be a culture change in the industry.
From the time he started global markets took off and there was more technology and de-regulation. He said they were in the “right place and right time” and took on more risk.
“The money was unbelievably generous,” Mack told Bloomberg TV.
However, now that we’ve gone through a huge financial crisis, the No. 1 focus needs to be on safety and soundness, he said. This means banks need to add more equity to their balance sheet and take on less risk, he explained.
As for banks increasing shareholder value, Mack said there’s already been consolidation and layoffs, but “at the end of the day, the one area that has to be squeezed is the compensation number.”
In 2006, Mack, then-CEO of Morgan Stanley, took home more than $40 million in compensation, including salary, stock and options, according to a CNN Money report.
However, in 2007, 2008 and 2009, Mack refused to accept his year-end bonus, according to ABC News.