This morning the New York Times reported that, despite the recession and the bailouts, Wall St. execs gave themselves huge bonuses:
Despite crippling losses, multibillion-dollar bailouts and the passing of some of the most prominent names in the business, employees at financial companies in New York, the now-diminished world capital of capital, collected an estimated $18.4 billion in bonuses for the year. New York Times (today)
Obama is having none of it:
President Barack Obama Thursday furiously slammed Wall Street titans who raked in billions in bonuses while taxpayers bailed out their industry as "shameful" and guilty of acute "irresponsibility." AFP
Unlike a previous president, it seems Obama actually reads the newspapers:
The president's ire was sparked when he read a newspaper article detailing the 18.4 billion dollars in bonuses collected by Wall Street firms last year, even as stock markets plunged and the economy slumped towards a recession.
Now, it's not clear if they used bailout money for the bonuses, but it is clear the bailout left them more room to do so:
The state comptroller, Thomas P. DiNapoli, said it was unclear if banks had used taxpayer money for the bonuses, a possibility that strikes corporate governance experts, and indeed many ordinary Americans, as outrageous. He urged the Obama administration to examine the issue closely. (NYT)
And it's clear Obama is listerning:
Obama, speaking after meeting Treasury Secretary Timothy Geithner, said he would clearly spell out to Wall Street executives they have to act in a more responsible fashion.
There would be time for them to rake in profits and bonuses later in the economic cycle, he said. "But now is not that time."
"We're going to be having conversations as this process moves forward, directly with these folks on Wall Street," Obama said. (AFP)
And Biden got in the act:
Vice President Joseph Biden also took a shot at Wall Street financiers in an interview with CNBC.
"It's been outrageous. I mean, it's just offensive, it just offends the sensibilities, I mean, I'd like to throw these guys in the brig.
"I do know what they're thinking and they're thinking the same old thing that got us here, greed. They're thinking, take care of me." (AFP)
Some Wall St. managers defended the bonuses, arguing that brokers work on bonuses, not salaries (news to me), or that Obama was just being emotional or playing politics.
Wall St. just doesn't get it.
Update [2009-1-29 18:34:49 by DanK Is Back]: It's been pointed out that many Wall St. brokers do in fact work largely for bonuses, and that bonuses were down 36.7% this year, which is still lower than the overall 44% decline in the market. But, as the New York comptroller said, this is still the sixth largest bonus on record, and is equal in dollar amount to the bonuses paid out in 2004, when the market was riding high.
Brokers and bankers have to eat, too (I have some in my family, so I know). But a bonus is also tied to performance, and in too many cases, it was the performance of Wall St. brokers that got us into the current economic mess. And though other corporate executives got larger bonuses last year, they did not come hat in hand to Washington asking for money (yet). It's that dichotomy that has Obama and the rest us upset.