Wall Street Bonuses Continue

(Thumbnail image: The Wall Street Journal)

“If you’re on Wall Street it may just be the best of times, an analysis by The Wall Street Journal suggests. Looking at 23 top banks, hedge funds, and money managers, The Journal predicts a record high compensation pool of $140 billion, on track to top 2007’s record payout of $130 billion.” (CBS)

Recently, the Dow Jones closed above 10,000 for the first time since the recession hit.  Some say large profits posted by financial giants like AIG, Goldman Sachs and Citi Group helped the recovery.  However, the payment of big Wall Street bonuses to these companies have generated mixed reactions among media sources.

We look at perspectives from CNBC, MSNBC, The Wall Street Journal, CBS, FOX News, and The Los Angeles Times.

On CNBC, political commentator Keith Boykin argues that the payment of these bonuses should prompt stricter government regulations on Wall Street.

 “And it needs to have some real teeth. We need to have claw-back provisions to make sure the government gets its money back or the public gets its money back if we are investing in CEOs, in business people who aren’t performing in the end or who are performing shadily... If you are getting money from the taxpayers, the government has the right to say how much the CEOs and executives get paid.”

However, NBC’s chief White House correspondent Chuck Todd points out that because bailout funds given to AIG were not technically taxpayer money, but treasury monies, imposing legal regulations may be difficult.  

“You’re hearing the words everything that can legally be done...and the fact is, there might not be recourse on this...It appears the campaign here is going to be shame. This idea that the more everybody in Washington collectively gets angry about this, from the president, to bipartisan groups of Congress, to the treasury secretary, to the federal reserve chairman, that that collective anger might shame AIG into rescinding the bonuses or redoing the structure.”

The Wall Street Journal takes a different perspective, arguing that the bonuses are not necessarily a bad thing, and in fact, may be essential to keeping the industry healthy.   

“The TARP bailout was done to basically save the financial system, and that’s exactly what’s happening.  Great revenues, great profits, nice pay packages, that is what we want, that’s what will keep the economy going.”

CBS analyzes a commonly used argument that they are needed to attract and retain high quality talent to keep firms competitive.

“But it’s always the same argument. Unless you pay high bonuses people will move elsewhere, and we’ll lose everybody to unregulated firms or abroad to London."

But FOX News looks at how bonuses are being paid not only to Wall Street bankers who bring in the business, but to unessential personnel as well.  

“We’re talking about a $7,700 bonus for a kitchen assistant. A $7,000 bonus for a mailroom assistant. A $700 bonus for a file administrator.  Since when do those jobs come with bonuses?...The bigger question here is why do they even pay these bonuses at all.  I don’t begrudge any company who makes a lot of money. Pay your people.  Knock yourself out.  But if you’re on the public dollar you need to rethink that.”

A writer for The LA Times contends that outrage over Wall Street bonuses is someone muted, a sign perhaps other issues have moved to the forefront.  

“There was little of that tea-party outrage that might have been expected…Have we moved on? Arguing that the country is now more concerned with Afghanistan and healthcare, the Wall Street Journal said of bonus outrage: ‘That’s so last March.'”

What do you think?  Do these Wall Street employees deserve such lucrative bonuses?  Should more regulations be put on these companies?