New York: Early in his presidency, Barack Obama called big bonuses paid to bankers at the height of the financial crisis “shameful” and “outrageous.”
In March, public outrage turned to AIG after the insurance company, bailed out with $180 billion in taxpayer money, paid $165 million in bonuses. In response, Obama told chief executives of the country’s major banks that out-sized bonuses were “just not acceptable.”
After a Group of 20 summit in April, Obama joined other world leaders in calling for “transparency and accountability” in executive compensation.
Obama’s comments raised hopes among Americans losing their jobs and homes that he would crusade against mega bonuses in the financial community. But eight months later, the big paydays are still around and lately there has been barely a whisper about them from the White House.
“The numbers of the bonuses have gotten larger in relation to the earnings and the overall business profits. Nothing has changed very much,” said John Gutfreund, Salomon Brothers CEO in the 1980s, who was once known as the “King of Wall Street.”
Gold on the street
AIG’s CEO Robert Benmosche, interviewed in August at his luxury villa in Croatia, slammed the “pitch fork” mentality that prompted busloads of people to demonstrate in communities where bankers live.
He appeared to ignore public sensitivities about displays of excess by showing off his 12-bathroom villa overlooking the Adriatic sea.
In one meeting with employees, he called New York attorney general Andrew Cuomo a “criminal.” Cuomo has been critical of AIG’s pay practices.
Beyond AIG, as the financial crisis deepened, banks took billions from public coffers. A year later, the bonuses go on.
According to reports, Citigroup plans to pay energy trader Andrew Hall more than $100 million this year.
In July, Goldman Sachs Group Inc said it had set aside $11.3 billion in the first half of the year toward bonuses for its employees.
CEO Lloyd Blankfein warned employees that they should steer clear of flashy purchases because it is not the time to be “seen living high on the hog,” the New York Post reported.
Goldman, facing intense criticism for reporting billions in profit soon after paying back $10 billion it had borrowed from taxpayers, was jabbed in an online Goodfellas parody dubbed “Goldfellas.” In the video, the CEO chastised employees for buying cars and jewelry so soon after its “heist” against the government for billions of dollars.
The average bonus at Goldman is on track to be $768,000 if the company continues setting aside bonus money at the pace it did in the first half of 2009.
Morgan Stanley is on track to pay an average bonus of $189,000, even though it reported losses in the first two quarters of 2009.
And although the biggest bonuses go to senior bankers, star traders and partners, they trickle down.