This one really frosts me. The recent “outrage” is the fact that Wall Street handed out $18.4 billion in bonuses last year.
That’s one way of putting it.
Here’s an example of a story you might have seen:
Obama calls $18B in Wall St. bonuses ‘shameful’
WASHINGTON – President Barack Obama issued a withering critique Thursday of Wall Street corporate behavior, calling it “the height of irresponsibility” for employees to be paid more than $18 billion in bonuses last year while their crumbling financial sector received a bailout from taxpayers. “It is shameful,” Obama said from the Oval Office. “And part of what we’re going to need is for the folks on Wall Street who are asking for help to show some restraint, and show some discipline, and show some sense of responsibility.”
The president’s comments, made with new Treasury Secretary Timothy Geithner at his side, came in swift response to a report that employees of the New York financial world garnered an estimated $18.4 billion in bonuses last year. The figure, from the New York state comptroller, drew prominent news coverage.
Yet Obama’s stand also came just one day after he surrounded himself with well-paid chief executives at the White House. He had pulled in those business leaders and hailed them for being on the “front lines in seeing the enormous problems in our economy right now.”
The president said the public dislikes the idea of helping the financial sector dig out of a hole, only to see it get bigger because of lavish spending. The comptroller’s report found that Wall Street bonuses were down 44 percent, but still at about the same level as they were during the boom time of 2004.
Obama said he and Geithner will speak directly to Wall Street leaders about the bonuses, which threaten to undermine public support for more government intervention as the economy keeps reeling.
The House just approved an economic stimulus plan that would cost taxpayers more than $800 billion; the Senate is considering its own version.
Separately, Congress also passed a $700 billion plan last year to shore up the financial sector, one that drew howls of criticism about a lack of transparency.
“We’re going to be having conversations as this process moves forward directly with these folks on Wall Street to underscore that they have to start acting in a more responsible fashion if we are to, together, get this economy rolling again,” Obama said.
“There will be time for them to make profits, and there will be time for them to get bonuses,” Obama said. “Now is not that time.”
Obama said Geithner has already had to step in to stop one company from taking delivery of a new corporate jet it planned to buy even after receiving billions of dollars of support from the government. That bank, Citigroup, canceled the deal earlier this week.
Obama’s strong words overshadowed the other part of his message, that he wants to roll out, in the coming weeks, new plans to regulate Wall Street and get more credit flowing to consumers again. The president considers such steps to work in tandem with the economic stimulus measures unfolding in Congress.
One idea under consideration by the Obama administration is the creation of a “bad bank” that could take over the soured debt, like defaulting mortgages, that have corroded the balance sheets of banks and helped choke off lending. The president did not talk about that proposal or any others.
Ok, now contrast that with this one:
Wall Street Bonuses Fell 44% in 2008, Report Says
Wall Street firms cut cash bonuses for their New York City employees by 44 percent in 2008 after record losses in the securities industry, the New York State comptroller estimated in a report on Wednesday.
The total cash bonus pool fell to $18.4 billion last year, from $32.9 billion in 2007, Comptroller Thomas P. DiNapoli said. That was the largest decline ever in terms of dollars and the biggest percentage drop in more than 30 years. Still, Mr. DiNapoli said, the size of the bonus pool was the sixth-largest on record.
The average bonus declined by 36.7 percent to $112,000 in 2008, Mr. DiNapoli’s report said. The decline in the average bonus was smaller than the decline in the bonus pool because the pool was shared among fewer workers as the securities industry shed jobs.
“The securities industry has already lost tens of thousands of jobs and the industry is still continuing to write off toxic assets,” Mr. DiNapoli said in a statement. “It’s painfully obvious that 2009 will probably be another difficult year for the industry.”
The securities industry lost 19,200 jobs, or 10.2 percent of its work force, in New York City from October 2007 to December 2008, ending the year with 168,600 workers, the report said.
As our colleagues at City Room note, the big drop in total bonuses will result in about $1 billion less in taxes being paid to the state and about $275 million less to New York City, according to the report.
The comptroller’s report noted that at the beginning of 2008, there were several major financial firms based in New York City. Since then, Bear Stearns was acquired by JPMorgan Chase and Merrill Lynch was acquired by Bank of America, based in Charlotte, N.C.; Lehman Brothers failed; and Goldman Sachs and Morgan Stanley converted into commercial bank holding companies.
Mr. DiNapoli also estimated that losses from broker-dealer operations of member firms of the New York Stock Exchange exceeded $35 billion in 2008, more than three times the record set a year earlier.
Securities industry losses were actually much greater when other business services, like mergers and acquisitions, were factored in, he said.
And what they are undoubtedly not telling you is that not all of the Wall Street companies are taking TARP money, or that some were forced into taking TARP money. You don’t say “no” to the federal government.
Plus, what they’re also not telling you is that not every single financial company is Bear Sterns. Some made money last year, and thus could pay out bonuses. I know that many people who live as parasites on the backs of private industry – government bureaucrats – don’t realize that some people take a lower base salary, and make up the difference in performance bonuses. This is why it is all a shock to them that bonuses actually got paid.
But as long as we’ve got dictator wannabes like Barack “The Nazarine” Obama running around wanting to control or dictate what everyone makes, we’re going to have more political class envy BS. I guess what Obama is really saying here is that he’s outraged people are making a living.
Shades of things to come.