"Last year we had an understanding that the economy was turning up again -- at least for the first two quarters of last year," Alois Pirker, research director of financial research firm Aite Group. "But it didn't turn out to be accurate. We've had challenging quarters and have a difficult year ahead."
Pirker said banks have turned away from focusing on investment banking services, which are very profitable in good times, but extremely volatile. Wealth management, or brokerage, services are much more stable, he said.
"In a downturn, wealth management is the steady hand," Pirker said. "Its revenue also goes up and down but not with as big swings as investment banking."
But The New Bottom Line, a coalition of local, state and national grassroots organizing groups gathered on behalf of struggling and middle-class communities, published a report forecasting the biggest banks by assets will pay high bonuses and compensation.
"Whether it's $180 or billion or $150 billion, there are billions of dollars going to executives who crashed the economy," Tracy Van Slyke, co-director of The New Bottom Line, said," when instead they should be reducing the principal for all underwater homeowners and paying their fair share of taxes."
Van Slyke forecasts the six largest banks will have a near record year of bonuses and compensation.
The report projects total bonus and compensation for Bank of America, JPMorgan Chase, Wells Fargo, Citigroup, Morgan Stanley and Goldman Sachs will total $146.7 billion for 2011. The actual previous high was $146.8 billion in 2007 for the same banks, which included banks that have since been acquired, like Washington Mutual and Merrill Lynch, by the biggest firms.
Van Slyke said members of her group, who have participated in various Occupy Wall Street and Occupy Our Homes movements across the country, are preparing to raise their concerns about potentially high Wall Street bonuses and unfair foreclosure practices later this month. She launched Move Our Money campaign to boycott banks that she says pay executives excessively.
"The banks are finding every way to pad their bottom line while they take from everyone else's," said Van Slyke, whose group partnered with the Rainforest Action Network for a website criticizing Bank of America's banking practices.
Saqib Bhatti, senior researcher for Service Employees International Union who helped compile the report for The New Bottom Line, said there tends to be no correlation between profits and compensation, but there is a correlation between revenue and compensation. Therefore, even if some banks reported smaller or flat profits, they could still pay high bonuses.
For the latest report, Bhatti looked at banks' earnings announcements of the first three quarters of the year and rounded to forecast annual bonus amounts. Typically the banks will generally pay 40 percent of total revenues in bonuses and compensation, he said.
In an unstable economy with a high level of unemployment, whether bonuses are high or not, some bankers may not complain.
"Having a secure job is a bonus by itself," Pirker said.