At least one congressman would like to prevent Morgan Stanley from paying retention bonuses to brokers who work for the new asset management joint venture between Morgan Stanley and Smith Barney, reports Reuters. As we've noted, brokers who generate at least $1.75 million in revenue a year are eligible for a payout worth up to 105 percent of their annual production. Morgan Stanley, which owns 51 percent of the venture, obviously intends to stay competitive against its rival Merrill Lynch, which is also paying retention bonuses.

Despite the outrage, this situation is not quite the same as the AIG situation, where the people responsible for much of the harm were being paid. Retail asset management remains a legitimate business, and such bonuses are a legitimate aspect of the business. It will be interesting to see what becomes of the Wells Fargo wealth management business; it has decided not to pay retention bonuses to brokers it acquired via the Wachovia deal.  It is sending a powerful message. 

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