Top bailed-out banks to pay $30 billion in bonuses
Three of the largest Wall Street firms — which together received $45,000,000,000 in taxpayer bailouts — are on track to hand out $29,700,000,000 in bonuses this year.
That’s only the three largest firms. JP Morgan Chase took $25 billion in government aid; Goldman Sachs and Morgan Stanley, $10 billion each. All three have paid back the government bailout money they’ve received, but the liquidity and “cheap money” offered by the Fed have kindled record profits at their investment and trading arms.
According to analyst estimates published by Bloomberg News, the financial banking triumvirate will shell out $29.7 billion in bonuses this year — up 60 percent from 2008, and higher than the previous record of $26.8 billion in 2007.
If divided equally among the firms’ collective 119,000 employees, the sum total per worker comes to $250,400 each (which Bloomberg notes is almost five times the median US household income of $50,000).
“Wall Street is beginning to resemble Clark Gable as Rhett Butler in the film ‘Gone With the Wind’: ‘Quite frankly, my dear, I don’t give a damn,’” Paul Hodgson, a compensation expert, told the wire. “It doesn’t seem as if even political threat, disastrous PR, envy, rising unemployment rates and home repossessions is enough to get any of these people to refuse the bonuses they have ‘earned.’”
Goldman Sachs CEO Lloyd Blankfein acknowledged recently that “people are pissed off, mad, and bent out of shape” and that he could “slit my wrists and people would cheer.”
But he defended his bank as having a “social purpose.”
“We’re very important,” he said. “We help companies to grow by helping them to raise capital. Companies that grow create wealth. This, in turn, allows people to have jobs that create more growth and more wealth. It’s a virtuous cycle. We have a social purpose.”
The three banks’ bonuses aren’t the only compensation schemes that have drawn criticism this year, though they will likely be impossible to stop.
Earlier this year, the mega-insurer AIG, which received more than $170 billion in taxpayer bailouts, said they’d pay out $165 million in bonuses to top employees. After public uproar, some of the bonus money was pledged back.
“Managing directors in high-yield credit sales are expected to see some of the largest average increase in bonuses, a 50 percent jump to a range of $1.3 million to $1.7 million,” Bloomberg notes. “The bonuses of directors in commodity sales units may also climb 50 percent to a range of $650,000 to $850,000, the report said. Managing directors in commodities trading will receive the largest bonuses, an average of $4 million to $6 million each.”
Goldman Sachs, perhaps the most prominent target of critics’ wrath because of its ties to top government officials (such as former Bush Treasury Secretary Hank Paulson, a onetime Goldman CEO), was recently dubbed a “vampire squid” by an irreverent reporter for Rolling Stone.