Top bailed-out banks to pay $30 billion in bonuses

By John Byrne
Monday, November 9th, 2009 -- 8:27 am
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goldman sachs Top bailed out banks to pay $30 billion in bonusesThree 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.’”

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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.

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Story comments are below...

  • reuterspiel
    Criminals. Evildoers. The American people should rebel and stand up for themselves. These guys are doing nothing but playing a game. They laugh at the masses, while spending their money.
  • dorkparticle
    Wall Street's Naked Swindle
    http://www.rollingstone.com/politics/story/3048...

    JP Morgan, Goldamn Sucks and these other Wall Street profiteers are a cancerous parasite- vampire squid is right- confiscate the ill gotten gains of these corporate criminals who crashed the global economy, bar them from public office, corporate boards and executive management and put them in prison for life. "social purpose"- Blankfein is bullshit
  • bopomunch
    OMG! America is so weird. It is hard to believe what I read hear at Raw Story. It is hard to comprehend right-wing comments online as well. It beyond a joke, it is surreal, borderline bizarre.
  • Aurelio
    Are you surprised at this? They are capitalists. This is capitalism. They will use any means necessary, including taxpayer bailouts, to make money.
  • This is not capitalism. This is some kind of sick and twisted CORPORATISM. There is a difference. Capitalism is about free market. This is about the Federal Reserve who prints the money, the Banks who invest the money, and the Government who protects them both, all in bed with each other and all trading favors. Again I say, Capitalism is about free market. If America had Capitalism all these banks would have been out of business a LONG time ago. But Americans in our fear aren't willing to go through some short term turmoil that will come with these companies collapsing so we continue to trade long term freedom and liberty for a little bit of short term security.
  • Bradwhg
    Hey,why blame the banks? If the dimwits in Congress and the White House hadn't given them the money, none of this would be an issue. It is like everything in life. If you offer it or make it available someone or entity will take advantage of it. Human nature. This is no different then the housing loan market. If you are offering to put people into house ownership and they have to have no credit or down payment, they will still take it because it is better then renting. They have nothing to lose.

    While the banks are greedy and the Fed Reserve needs to be dismantled, the blame for the money going to the bankers and their Wall Street cronies rests solely on the shoulders of Congress and the White House. It is more then stupid to think bankers and their ilk are going to do the right thing. Most of us knew the bailouts were a scam and should never have been done, but Congress doesn't care what the public thinks except at election time. You can't control the banks, but you can sure as hell control what congress is going to do with your vote. Get rid of them all!
  • emkay
    re: Bradwhg.
    I feel the same way but to refer to those in Congress and the White House as "dimwits" is a gross misrepresentation. They are not dimwits,they are complicit,enablers,who knew EXACTLY what they were doing! The only "dimwits" I can see in this equation are the American public for allowing these criminals to get away with the biggest bank heist in the history of mankind,right under their American Idol watching noses! We are fucked! Plain and simple!
  • Bradwhg
    I have to say dimwits, because they have to be pretty dang dim to think they are not going to pay for their short sighted decisions. Of course your description is also accurate. The political class in this country likes for the American public to be struggling. If your working your ass off, worrying about family and paying the bills, you don't have the time or the inclination to become informed. Apathy is the elites best friend. TV is escapism. After a long hard day at work, the commute home, helping the kids with home work, dealing with life's other little problems, all many want to do is have a bit of a break. You really can't fault them on that. If they watch the news at all, many just catch glimpses of it while doing other things. Not many people who work 40 or more hours a week outside a desk job, have the time to sit in front of the computer for hours or read a major newspaper from front to back. Rather then dimwits, I would say a lot of them are just uniformed or just beaten down.. That is changing as more and more people are unemployed and now actually have the time to read and discuss issues with other people. Congress actually believes that the American people are going to forget the bailout and the assorted other disastrous decisions they have made by re-election time. I think they are in for a surprise.
  • Savantster
    .
    "If you offer it or make it available someone or entity will take advantage of it. Human nature. "

    no, learned behaviors.

    The single biggest hurdle we have as a society is to get it through our heads that we're teaching people that they are "better" if they do these things.. not middle class families, but those doing these things learned it from some place. Virtually everything about someone came from things they saw and heard and felt; how you put it in the various boxes in your mind is based on what boxes you already had when you experienced something. Education is about interactions from those around us helping us find a better box to put things in than if we are left to our own devices. Culture is learned, greed is learned, abusing others is learned, helping others is learned, not taking what you don't need is learned, as is taking everything you see just to take it.

    The core of our society is currently sick. The masses have been taught to live in this box, teaching them how to live outside of it will take a lot of work.
  • Bradwhg
    But don't those conditions learned or otherwise make up the human condition or human nature as we know it today? While some things we call human nature may indeed be learned, some are instinctual and go back to man's earliest beginnings. Greed or to horde things of value were ingrained into the human mind as a survival mechanism as readily as instinctual responses to fear.
  • kpjr278
    Real simple, if you want investment banks to help the general economy, tax said bonuses pursuant to the unemployement rate, say 9 times. The investment bankers need more of the whip, less of the carrot. Suddenly, the "best and the brightest?" may be working for americans, not against them.
  • Savantster
    .
    Hence the argument for taxing capital gains and very steep taxes at the top of the scale. If there's no benefit to making $500,000,000 in a year, they won't bother trying to make it, and over all costs magically fall.
    .
  • rsb1
    Mr.Byrne, your article neglects to apprise your readers of the math behind the results of the BAILOUT. Based on the FIAT BANKING RULES, the US$45 BILLION referenced above was really an injection of 4.5 TRILLION. Is it surprising that these 'institutions' are now able to repay a measly 10% and pay bonuses to their employees of only 5% ?. The TARP LEGISLATION also allowed these same banks to deposit their BAILOUT FUNDS with the FEDERAL RESERVE BANK (nothing 'Federal' about it) in 'interest bearing' accounts. If you really want to discuss the TOTAL EFFECT of the BAILOUT, it should include the FIAT BANKING ROLL-ON plus the INTEREST GAINS from the deposits with the Federal Reserve Bank, shouldn't it ? This results in TRILLIONS OF DOLLARS of unreported, undisclosed, and hidden gains. You, Sir, have an obligation to uncover and report the true extent of this MONUMENTAL SCAM that was planned for years, and executed in 'plain sight'. They're laughing all the way to their own Banks !!
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