A story by Reuters on Friday, about the “retention awards” at Morgan Stanley and Citigroup’s Smith Barney, has a classic paragraph, which goes a long way towards explaining the bonus culture of Wall Street, and casts a very dubious light on its profitability model:

According to the newspaper, not all of the joint venture’s 20,000 brokers would get retention payments. It said a broker who brought in $1 million in revenue last year might expect to get $500,000 to $1 million, depending on how much he continues to produce.

A broker who brought in $1 million in revenue last year may get a bonus of $1 million. That’s on top of salary, of course. After all, if you don’t pay your brokers more than the revenue they bring in, the whole system would fall apart, wouldn’t it?