With some powerful lawmakers taking the lead, Congress is starting to pile in on the issue of Wall Street bonuses. The U.S. House Oversight Committee asked the nine largest banks -- all set to receive a cumulative $125 billion in equity injections from the government -- for the total compensation paid or projected to be paid to the 10 highest-paid employees over the last three years.
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The committee's chairman, Rep. Henry Waxman, already known for
publicly decrying executive compensation, said in the letter:
While I understand the need to pay the salaries of employees, I
question the appropriateness of depleting the capital that taxpayers
just injected into the banks through the payment of billions of dollars
in bonuses..Some experts have suggested that a significant percentage of this
compensation could come in year-end bonuses and that the size of the
bonuses will be significantly enhanced as a result of the infusion of
taxpayer funds.
The banks asked to supply the information are: Bank of America Corp.
and its newly acquired Merrill Lynch & Co., Bank of New York Mellon
Corp., Citigroup Inc., Goldman, Sachs & Co., J.P. Morgan Chase
& Co., Morgan Stanley, State Street Corp. and Wells Fargo &
Co.
Also weighing in on the issue were Sen. Jim Webb and Rep. Dennis
Kucinich, who called for Waxman's committee to extend its inquiry into
similar information from City National Corp. and KeyCorp. Webb wrote a
letter to Treasury Secretary Henry Paulson expressing concern over
bonuses and executive compensation this year.
Never overly popular with the public, the bailout could pose a thorny
issue for the banks and Paulson, who sold it as absolutely
necessary to save the system. The top talent on Wall Street expects to
receive hefty bonuses, and not doling it out at year's end leaves banks
open to their best dealmakers jumping ship to private equity, hedge
funds and the like. However, after agreeing to take (some might say very
strongly urged by Paulson) government money, the largest banks have
left themselves open to a potential backlash on compensation as taxpayers tighten their belt during the economic slowdown. -
George White
See Dealscape post on Wall Street bonuses
Comments
If there is a concern that the top talent would leave, I suggest that they go. There performance has been questionalble and the results speak for themselves.
I am sure the other smaller banks, etc. would love to pay the multi-million dollar bonuses out of their funds rather than with bailout money.
One step further would be to look at the acquisitions that have resulted using infused capital from the government.
Isn't is odd that we are using tax payers money to determine which failing banks should be revived at our expense??????