The President Is Wrong On Wall Street Bonuses

The problem I am seeing is the continuing statement about these "wall street" bonuses. I do believe Obama and Pelosi are moving as fast as possible towards socialism. By constantly talking about "wall street" bonuses, they are developing a grass roots disgust for "wall street". The american people havent bailed out "wall street"!! We have bailed out the "banks" not all of "wall street". By saying wall street they promote thier agenda and cause disdaine for business and all of wall street making it easier to push thier anti-business agenda.

I agree with the president that the average american like me want to workbut the one that have money and dont need it every week to just get by. I call the rich people and people that dis agree with the president pathetic and one them selve and to everyone that think you have it good and deserve bonus think again because i am a farmer and the life we give you you neeed to thank us and stead of winning about your money and how your life is.

I normally would not take issue with a bonus structure, however, this is a complete rationalization of bonus's. If a private sector business goes out of business, guess what, no one gets a bonus unless it was already expensed and there is enough cash flow to cover it. If there is no cash flow to cover it, guess what, no one gets paid... From the top office to the bottom. If there is not enough cash flow, no one get's paid... and your out of business... In these instances, these companies on Wall Street would be going out of business if it were not for our taxpayer bailouts. The bail out money should not become part of the available cash flow for bonus's.. It should be for operating a business that is in distress so it survives for the future. The past is over, they esentially went out of business except for their fortune of taxpayer bailout. I personally am part of an incentive bonus plan and I can tell you that if my employer goes out of business, I can pretty much kiss recieving my bonus good bye. Unless of course my government and my neighbor want to pay me.

I agree. If I were promised and due a bonus for what I had earned then it is fair I get it.

brian, another point I find it funny really that Obama comments on this. He needs to talk to his experts before shooting off his mouth- the Govt- both federal and state are partners in the bonus issue . Since the govt takes 30% and the state takes 10%, the disbursed figure is actually 12 billion and also 25% of the bonuses are usually in stock which could lose its value and if not the govt gets 40 % of that profit as well. Discounting that, the total is closer to 10 billion. Really the govt is paying almost half to itself - if the workers did not get any bonuses the fed would need to make the stimulus larger . Joe

Bryan, The Bloomberg article was great as was yours. The Feds wasted $100 billion in 2008 on government contracts and paid billions in bonuses on contracts that failed. All according to their own numbers audits. Now we the people are going to let these people establish the rules on how to run businesses. I am willing to bet that there is not one elected official in congress that ever had to make a payroll or attract investors.

I agree, the problem with obama is that he is a socialist!!!!!!!!!!!!!!! He just doesnt get it like Marx didnt get it. Look what happened in the old USSR, BANKRUPT!!!!!!!!!!!!!!!!!

Brian: While I am no fan of FBN's political leanings, your position on the Wall Street bonuses is right on. Let's do the math...Eliminate 18 b. in bonuses and NY state loses a billion in tax revenue,New York city loses several hundred million in City Income Tax revenue, the Federal govt loses 3-4 billion in tax revenue, another several billion is not spent in the economy, leading to several hundred million in lost sales tax revenues. How's that for an economic stimulus plan? As the old bromide goes, "Don't throw the baby out with the bath water". Far better to craft rules that limits total compensation of DECISION MAKERS at firms accepting TARP funds.

There is a big difference between "sales commission" and "bonus". A sales commission is a contracted part of compensation that must be paid based on actual sales performance. "Bonus" compensation is usually a discretionary part of compensation that may or may not be tied to specific performance parameters. So, the question is...are the huge Wall St. bonuses "discretionary" or bound to specific sales performance numbers?

Brian - My complant is not the bonuses given but the EXCESSIVE bonuses.What one CEO can justify earning 10 50 or 100 million a year?

Bryan, I am sure you have heard of insolvency. I agree that financial institutions that are healthy and not holding taxpayer monies can do what they choose based on laws that exist. If they choose to follow down the same path in years to come the likely result will be more insolvent banks. Will those banks then claim the "systemic risk" excuse and come begging to get taxpayer monies as well. The only way to stop the cycle is to stop the bailouts. In the meantime it is fraud if you, knowing you are insolvent, choose to take on additional debt, or pay vendors, debtors, investors, or insiders (employees)called preferred payments. Theses bonuses paid by insolvent banks if not fraudulent, is absolutely unethical and without doubt "shameful". Too big too fail too big to exist. Mark

Brian, You have forgotten that the government bailed out these businesses, ie. prevented them from bankruptcy. Who would get bonuses then? No one. Everybody would be out of work. If a business is in failure, and money comes in to keep it just barely propped up, how can you honestly say that anyone deserves any additional money? They ALL obviously did not do a good job since the company failed! They ALL should count their chickens that they still are working. Besides, how can ANYONE rationalize making millions of dollars a year for failure! I go into business, calling myself a bank. I fail. I get a billion dollars from the government. I pay my employees, and take 20 million for myself and live happily ever after in Aruba, after I bow out gracefully from my CEO position. Thank you Washington.....

Has everyone forgotten that the Politicians had a big hand in starting the whole mess? Washington mandated that the banks loan to individuals that were not credit worthy. Perhaps a noble attempt at making homeownership available to more, but a huge mistake. Perhaps all the Senators and Congressmen that voted for this disaster should return their salary for the last couple years.

I completely agree with Brian. I work for a large retail company. If my store hits our sales goals over a monthly, quarterly, or yearly period I get a bonus. Now is my company bring in less revenue this year than last yes, however, if my portion of the business is successful, if my portion of the business is making our goals, why should I be punished for what the rest of the company is doing. Why would my compensation agreement have to change now. Why do I need to not get what I deserve? And if my company did not pay this money I earned I would leave and take a job with any number of other companies that are pursuing me for potions that would pay just as well or better.

Brian , After hearing your explanation I agree with you . Another good example , to me , is this idea that corporate jets are evil . What about the worker who's job it is to BUILD this jets .They need the work . This is the same reason we (USA) don't build luxuary boats or cruise liners. Which of course cost us jobs.

You ARE a Wall Street apologist and you are completely nuts! I know enough folks that work on WS and the majority of their pay is not in the form of a bonus. That is absurd. Aside from the CEO's, provide names and salaries of "secretaries, administrative staff, and hundreds of other positions that support the company" who receive the majority of their pay in the form of a bonus. Ity can't be done. Guaranteed.

To a politician, all problems and issues are political; and therefore all have political "solutions". The reality of course, is quite different. Good article, Brian.

I believe this article is spot-on! What most don't realize is that for businesses to survive and excel, they must pay their top performers for their hard work. This incents people to try harder to make their number and help the company become more successful (profitable for the share holders). If you cut bonuses, do take away any incentive for people to do their best or strive for greatness, which is an issue we face in America across the board. Businesses must succeed to get this economy going again. It is sad to see this bill passing because of the pork within, much of it going to organizations that helped get Obama and other Dems elected....it's payback. It won't help our economy recover but will help keep Dems in office in future elections. The money should be invested in the American worker who is trying to succeed in their jobs and pay their bills.

A big part of the issue here is the relative size of the "bonus", compensation, or "commission" payments. When you have 31 year old GS Associates making $700k, and 36 year old Managing Directors making $7M - there is a problem. Frankly, these payments are not worth the services that are being performed. I'd argue hard that a GS Managing Director is not adding more net value than a doctor, lawyer, or consultant his same age and with similar education... yet that Managing Director is being paid often 10x what these other professionals are paid. That's not because he's adding more value... it's because of the protectionist fee and compensation systems that these Wall Street firms have collectively been able to promulgate over the last decade. I think the point Obama and the rest of the American people are making is that it's time the compensation for these professions is brought more in line with the value of the services. Unfortunately, the Street had proven it's not going to bring about these reforms to individual compensation levels without outside intervention. My belief is that reform should come from shareholder actions - but it's likely that some government legislation is needed to better empower minority shareholders to take this action. In addition, the USG, as a significant creditor of these banks, should demand this in their covenants. Trust me, when GS loans money or invests venture capital - they impose these same covenants on their investees.

How about this example: line workers in an auto assembly plant worked their butts off last year and did 125% of their hourly assembly rate. Their union contract provides for bonus payments of 15% of their base pay as a performance bonus. But the auto industry is in the dumper. We shouldn't be paying bonuses to anybody! But, you say, there's a contract! And, they're blue collar workers. Guess what? All those Wall Street workers have either written or implied contracts. So, the President attempted to build political leverage through subtle class warfare. Disappointing. Not surprising.

The president should also give up the corporate jet, the subsidized housing, meals and post presidency speaking fees to set a moral example for the executives. He should rent a apartment or house and go to work just like everybody else. A little dose of reality would go a long way to temper the audacity of hope. The executive branch and congress should be performance based. We as voters should make sure it is in the next election.

Brian, this time I think you got it partially right. We get headline news of the sale of a bank to another bank who is in trouble and the CEO is on the job less than 3 weeks and banks a MULTI-MILLION dollar bonus, just for being there, then leaves with his PLATINUM parachute, and we are supposed to feel sorry for him; not this week or even next. You can't justify that one. Or AIG going on their vacation to the tune of $440,000 just after receiving how many millions or was that Billions. I say part right because you are correct with many of the regular people; not those in management who received bonuses for production and did a fantastic job to receive benefit of their hard work... but even you must concede that there are WAY TOO MANY management types that are getting headlines for an over abundance of poor performance and STILL receiving MILLIONS of dollars in bonuses -- UNJUSTIFIABLY at OUR EXPENSE. How many of those Hedge fund managers raked in millions in bonuses THEN after they cooked the books; then let everyone know what was going on? How many companies like Enron were over leveraged and lied to their stockholders; those are the ones we want to hold accountable; AND RETURN THOSE BONUSES... don't you agree? How about taking each situation one at a time; decide who lied to get the bonuses and were in control of the information and benefited; then have THOSE people RETURN the unwarranted bonuses; then we are on the right tract. Each case on ITS OWN MERITS!

Why is President Obama complaining about Wall Street's bonuses when Congressional Democrats are pressing hard for this "stimulus" (really pork) bill? Either he should keep quiet about the bonuses or wave his finger at his fellow Congressional Democrats for loading this bill with items that won't benefit the average American or create jobs.

What you don't seem to get (and nor do the Banker wise guys) is that the world has changed. Writing themselves big bonus checks when the firm was making profits is one thing - but saying that you "deserve" the bonus when your company is essentially insolvent and feeding off the public trough takes a special kind of chutzpah. I'm sure that when other companies go belly-up, there are a lot of talented and hard working individuals there as well - do they get a bonus for a job well done? NO. Why is having a job with a paycheck (financed by taxpayers) considered good enough?

Sounds like another guy trying to boost his ratings by issuing stories like the one above. Remember, Limbaugh signed a contract for 30+ million a year doing the same stuff. Entertainment, remember that. Also, they dont know anything about living on what most Americans make. Their heads are in the clouds.