Obama describes Wall Street payouts as ‘shameful’

WASHINGTON: With more sour economic reports this week, the government announced that the percentage of the work force receiving unemployment benefits reached a 25-year high in mid-January. Home sales plunged last month to their lowest rate since 1967. And it was the worst year for manufacturing since 2001.

With this, came news that Wall Street companies paid senior employees large bonuses as the firms took government dollars to stay solvent. Despite losing hundreds of billions of dollars on risky loans and accepting massive cash injections from taxpayers to stabilize their businesses, Wall Street firms paid out an estimated $18.4 billion in cash bonuses, says New York’s state comptroller. While the hefty payout to bankers was 44 percent lower than 2007, it was still the sixth-largest bonus pool in history. A big chunk of Wall Street employees’ annual income is in the form of performance-driven bonuses. The bonus revelation was greeted with outrage by President Barack Obama, as well as some lawmakers and compensation experts, largely because the cash was doled out at a time when the US economy is suffering its worst downturn since World War II and nearly 5 million Americans are collecting unemployment welfare. Obama described the payouts as “shameful,” and said the Wall Street behavior was “the height of irresponsibility,” while hosting a meeting in the Oval Office with Treasury Secretary Timothy Geithner and Vice President Joe Biden.

Obama said he and Geithner would send a message to Wall Street players that “there will be time for them to make profits and there will be time for them to get bonuses. Now is not that time.” With the world’s financial system on the verge of collapse, Obama on Thursday promised a comprehensive financial plan to address the economy’s deepening woes, and said his plan to reignite growth would include not only the massive stimulus plan moving through Congress but also steps to unfreeze credit markets and overhaul financial regulations. But he said these were not the only steps needed.

Obama, who has blamed the financial crisis on lax Wall Street regulations, has promised to revamp financial rules.

“We expect that even as the reinvestment and recovery package moves forward ... these other legs of the stool will be rolled out systematically in the coming weeks so that the American people will have a clear sense of a comprehensive strategy designed to put people back to work, reopen businesses, get credit flowing again,” Obama said.

But, despite his efforts to work with the minority Republicans in Congress, he received precisely zero votes from Republican lawmakers for his $819 billion stimulus package this week. Obama has said the fiscal plan is essential to shoring up the economy. This led economic experts to predict that Obama’s bipartisan aspirations may already be in tatters barely a week after assuming office. White House officials are pinning great hopes on peeling off moderate Republicans in the Senate when it votes on the package next week following Wednesday night’s resounding ‘No’ from their colleagues in the House. “The question is whether the House Republican vote is going to be the rule rather than the exception,” Matthew Bennett, vice-president of the Third Way, a centrist Democratic think-tank, told reporters. “If it’s the rule, then President Obama is not going to make much progress with his ‘post-partisan’ agenda.” Obama has gone to great lengths to restore a civil tone to politics, even having Republican lawmakers round for cocktails in the White House on Wednesday night shortly after they had voted against his bill. No such invitations were issued to Democrats by the teetotalling George W. Bush. Obama has made some substantive gestures to the Republicans, including removing a couple of big-ticket earmarks — pet projects inserted by individual lawmakers — from the bill that passed the House. He has also incorporated a higher share of tax cuts, which amount to about a third of the stimulus, than his Democratic colleagues had wanted.

Meanwhile, journalists on Thursday night embraced Obama’s vilification of those working for Wall Street firms who got a bonus last year. Known as “No Drama Obama” by many in the media, CBS’ Katie Couric led with, “We found out what it takes to get Barack Obama angry,” that “employees of financial companies in New York collected nearly $18.5 billion in bonuses last year” and “the president called it ‘shameful.’”

Echoing Couric, ABC anchor Charles Gibson announced, “The President did not mince words this afternoon. Indeed, he was angry.”