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Obama calls Wall Street bankers' US$18B bonus 'shameful'
Source: Agencies |
January 30, 2009, Friday
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Online Edition
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US President Barack Obama issued a withering critique yesterday of Wall Street corporate behavior, calling it "the height of irresponsibility" for employees to be paid more than US$18 billion in bonuses last year while their crumbling financial sector received a bailout from US taxpayers.
"It is shameful," Obama said at the White House. "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 US$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 executives who appeared with Obama are not leaders of the Wall Street financial companies that the president targeted, but rather heads of such well-known manufacturing and technology giants as IBM, Motorola, Xerox and Corning. Still, they get paid handsomely.
Most of those who stood with Obama earned a total 2007 compensation package of between US$8 million and US$21 million, according to a review by The Associated Press. Those calculations include the executives' salaries, bonus pay, incentives, perquisites, the estimated value of stocks and other compensation.
Lashing out at Wall Street bonuses, Obama 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 such bonuses were down 44 percent, but at about the same level they were during the boom time of 2004.
Vice President Joe Biden chimed in, too, saying the level of bonuses "offends the sensibilities."
"I mean, I'd like to throw these guys in the brig," Biden said in an interview with CNBC.
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 US$800 billion; the Senate is considering its own version.
Separately, Congress also passed a US$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.
"It is shameful," Obama said at the White House. "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 US$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 executives who appeared with Obama are not leaders of the Wall Street financial companies that the president targeted, but rather heads of such well-known manufacturing and technology giants as IBM, Motorola, Xerox and Corning. Still, they get paid handsomely.
Most of those who stood with Obama earned a total 2007 compensation package of between US$8 million and US$21 million, according to a review by The Associated Press. Those calculations include the executives' salaries, bonus pay, incentives, perquisites, the estimated value of stocks and other compensation.
Lashing out at Wall Street bonuses, Obama 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 such bonuses were down 44 percent, but at about the same level they were during the boom time of 2004.
Vice President Joe Biden chimed in, too, saying the level of bonuses "offends the sensibilities."
"I mean, I'd like to throw these guys in the brig," Biden said in an interview with CNBC.
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 US$800 billion; the Senate is considering its own version.
Separately, Congress also passed a US$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.
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