Talk Back

   By Brett Philbin and Annie Gasparro
   A DOW JONES NEWSWIRES COLUMN

  NEW YORK (Dow Jones)–If Congress has its way, brokers may not get much of a taste of their coveted retention bonuses.

  Aimed initially at big bonuses received by executives and traders at American International Group Inc. (AIG), legislation passed by the U.S. House of Representatives also appears to encompass retention bonuses received by brokers at Morgan Stanley (MS), Citigroup Inc.’s (C) Smith Barney, Bank of America Corp. (BAC), and Merrill Lynch Global Wealth Management.

  The special tax, as passed Thursday in the House, would claim 90% of bonuses paid after Dec. 31, 2008, to employees with a household income of $250,000 or more by companies that received at least $5 billion from the government’s Troubled Asset Relief Program. The Senate is considering its own version, which differs.
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   By Brett Philbin and Annie Gasparro
   A DOW JONES NEWSWIRES COLUMN  

  NEW YORK (Dow Jones)–The heat over bonus payouts at American International Group Inc. (AIG) is spreading to Morgan Stanley (MS) and Citigroup Inc.’s (C) Smith Barney, and some brokers are starting to feel it.

  Many brokers are bristling over a threat to what they see as customary and legitimate compensation. Securities industry lawyers contend that, just as was argued with AIG, the law obliges the brokerages to make good on promised bonuses.

  Morgan Stanley has fallen under political scrutiny for its plan to dole out $3 billion in retention bonuses to 6,500 top financial advisers at the firm and Smith Barney, with which it is forming a joint venture. Morgan Stanley and Citigroup both received taxpayer funds from the Troubled Asset Relief Program.

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After calls for more transparency, AIG disclosed Sunday that roughly two-thirds of the $173.3 billion in federal aid it received has been paid out to trading partners such as banks and municipalities in the U.S. and abroad.

The disclosures came as AIG was lambasted for about $450 million in bonus payments planned for employees at a business unit that lost $40.5 billion last year. The unit’s woes pushed the company to near-collapse, forcing the government bailout.

Do you think AIG should be paying out bonuses after taking $173.3 billion in federal aid?

The Dow Jones Newswires column,  BROKER’S WORLD: Wall Street Retention Strategies Challenged by Annie Gasparro says the new Wall Street, the pay-to-stay strategy of brokerages is being challenged.

  While Morgan Stanley is going the traditional route and offering retention bonuses to high-performing brokers in its merger with Citigroup’s Smith Barney unit, Well Fargo chose not to give stay bonuses to any of the 14,600 Wachovia Securities brokers it has acquired.

  Both companies announced their plans Friday, and their opposing  strategies has been the talk among brokers since. Analysts say it remains to be seen which method will be more successful.

Newswires reporter Annie Gasparro wrote recently about how the bonus program at Smith Barney is changing.  Here’s what she wrote:

NEW YORK (Dow Jones)–Citigroup Inc.’s (C) Smith Barney brokers will not be able to have the best of both worlds when it comes to bonuses this year.

The brokers who are receiving a new liquidity award, called the Partners Award, next month, will have that bonus deducted from their retention program, which is set to be announced by the end of the month, according to a person familiar with the matter.