Investment Banks Still Planning to Pay Out Billions in Bonuses

This goes beyond absurd. Many of the investment banks that have required public money to stay afloat, and some that haven't stayed afloat, are still planning to pay out billions in bonuses. This is an outrage.

This goes beyond absurd.  Many of the investment banks that have required public money to stay afloat, and some that haven't stayed afloat, are still planning to pay out billions in bonuses.  This is an outrage.

That's billions of dollars of capital that could be used to strengthen their financial position and minimize the amount of money the public has to invest in their overcollateralized, leveraged-to-the-hilt, publicly-supported businesses.  I could have used a stronger word here.

So, here's how it works.  These banks get taxpayer money to stay afloat and then pay out billions to overcompensated employees who caused this mess in the first place.  Am I missing something here?

Bloomberg writes:

"Goldman Sachs Group Inc. and Morgan Stanley, both still on track for profitable years, have set aside about $13 billion for bonuses after three quarters, down 28 percent from a year ago. Even some employees at Lehman Brothers Holdings Inc., which declared the biggest bankruptcy in U.S. history last month, will get the same bonus they received a year ago."

You might be able to make the case that Goldman can pay out any bonus it wants.  It never seemed to be in need to taxpayer dollars.  If I was a Lehman shareholder though, I'd be pretty upset that the guys who ran the company into bankruptcy are getting paid for it.  And Morgan.  Before the Treasury Department pumped $25 billion into it, Morgan was days away from failing.

Here's another quote from Bloomberg:

"I'm just flabbergasted that the financial community has failed to show any sense of leadership on this issue and doesn't seem to understand how angry people are at them,'' said Nell Minow, editor of Corporate Library, a Portland, Maine-based corporate-governance research firm. ``They are just a bonus away from having the villagers come after them with torches.''

Hell yeah.  I'm Fed up.

Sam Cass
Sam Cass: Sam Cass, MBA, JD, University of Texas at Austin. Always a fan of Leonardo Da Vinci.

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Comments

  • Dead Wood

    October 28, 2008

    I'm a small business owner and haven't seen any problem with my business. I think it's all hype to justify these ridiculous bailouts. Talk about a massive transfer of wealth. My kids and their kids are going to be paying for years so some fat cat on Wall Street can get his bonus in 08. I'm damn mad.

  • Pat

    October 28, 2008

    I don't know. You can't blame all Wall Streeters for what happened. Some were actually making money. I think its a bit more nuanced than it being presented.

  • disgusted !!!

    October 29, 2008

    When will someone stand up and say, "I'm mad as hell & I'm not going to take it anymore"...We need a grass roots movement to say, enough of this bogus bail out with our money...Let's all not pay our taxes April 15. A way of US, People of the U.S. to take back the money we are loaning Wall Street to pay for the Fat Bonuses that WE ARE PAYING FOR !!!!

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