January 29th, 2009
04:32 PM ET
9 years ago

Obama blasts bonuses for struggling Wall Street

[cnn-photo-caption image= http://i2.cdn.turner.com/cnn/2009/images/01/29/art.obamageithner0129.gi.jpg caption="President Obama rebuked Wall Street Thursday during a meeting with new Treasury Secretary Timothy Geithner."]
WASHINGTON (CNN) - President Barack Obama called the prospect that some of the $700 billion Wall Street bailout could end up paying for bonuses to managers of struggling financial institutions "shameful" Thursday.

Watch: Pres. Obama takes Wall St. to task

New York's state comptroller raised that prospect in a Wednesday report that found the bonus pool for the financial industry is still the sixth-biggest on record despite a 44 percent decline from 2007. Speaking after a meeting with his top economic advisers, Obama said it was the "height of irresponsibility" for executives to pay bonuses when their companies are asking for help from Washington.

"The American people understand we've got a big hole that we've got to dig ourselves out of, but they don't like the idea that people are digging a bigger hole even as they're being asked to fill it up," he said.

"There will be time for them to make profits, and there will be time for them to get bonuses. Now is not that time," Obama added.

The president's latest concerns come two days after struggling banking giant Citigroup - which has taken about $45 billion from the government's Troubled Asset Relief Program - reversed plans to accept delivery of a new $42 million corporate jet under Treasury Department prodding.

"We shouldn't have to do that, because they should know better - and we will continue to send that message loud and clear," Obama said.

The bailout program restricted bonuses for top executives of firms that received federal funds. But New York Comptroller Thomas DiNapoli's report Wednesday noted that the program does not limit bonuses for lower-level staff.

"There needs to be greater transparency and accountability in the use of these funds," DiNapoli said in a statement accompanying his report. "Every dime counts, especially when they're taxpayer dimes, and taxpayers ought to know if
these funds were used to buy corporate jets, pay dividends or bonuses."

White House spokesman Robert Gibbs said the president had a one-word response to DiNapoli's report: "Outrageous." Asked whether the administration
could take any action to head off those bonuses, Gibbs said, "That's what we're
looking into, and that's what we're working on recommendations for."

Obama's remarks came after a meeting with Vice President Joe Biden, Treasury Secretary Tim Geithner and other members of his economic team.

Filed under: Economy • President Obama • Tim Geithner
soundoff (120 Responses)
  1. Unshrub

    Fire the bums..

    January 29, 2009 05:23 pm at 5:23 pm |
  2. linda from South Dakota

    you get em,, president obama,,,, right where it hurts the most,, get em!!!!!!,, how dare these executives pay out bonuses when we are struggling,,,,its time it all stops and NOW!!!!

    January 29, 2009 05:27 pm at 5:27 pm |
  3. Amazed

    I heard an NPR report on this last night, that said the lower-level executive bonuses are something akin to gratuities that waiters and waitresses rely upon – something like that salaries were artificially low on the expectation that a primary source of income would be bonuses. If this is true, then perhaps these people DO deserve their bonuses, enough to elevate their salaries to maybe $150K or so – but when they start talking about bonuses in the millions that's a little far fetched, one helluva tip! It would be far more sensible to the outsiders looking in if these Wall Street people got paid some sort of standard salary depending on rank and title and longevity, etc., and then bonuses were either the $50 in an envelope before the holidays or a commission that is tied by a rigid formula to the amount of business brought in. This year, those commissions likely would be pretty meager.

    January 29, 2009 05:27 pm at 5:27 pm |
  4. EC

    BRAVO Mr. President.

    These Financial Institutions and Corp. CEOs better recognize there's a new sheriff in town, and his name is President Obama. It's NO LONGER business as usual. They better knock off all these foolishness or GIVE US OUR MONEY BACK!! Bottom line.

    January 29, 2009 05:27 pm at 5:27 pm |


    January 29, 2009 05:28 pm at 5:28 pm |
  6. sheri riley

    Whyis the gov't giving billions of dollars to those on wall street who have proven to be greedy and rich and then expect them not to be greedy. When will the government give the everyday, hard working, tax paying, home buying, daily contributor to the economy thru their paid tuitions, bought groceries, purchased cars,etc a check that will help bail us out.

    January 29, 2009 05:29 pm at 5:29 pm |
  7. Doug in New Mexico

    They not only should not get bonuses but should be out of work. If the rest of us had made these kinds of errors in our work where do you think we would be?

    January 29, 2009 05:29 pm at 5:29 pm |
  8. Ron Chapin

    A Comment/Suggestion Regarding the huge bonuses wall street executives granted themselves. New Rule: If you got a bonus and the company you worked for lost money and/or is getting bail out funds from the taxpayers, the income tax rate on your bonus is now 100%. This rule is retroactive to the beginning of the recession.

    January 29, 2009 05:30 pm at 5:30 pm |
  9. Ray Fisher

    It's well past time that someone pointed out the obvious. The very first step in any stimulus/bailout must be to STOP all bonuses and special compensations for the term of the stimulus/bailout in other words, till the loan is repaid!!! America must not subsidize private business nor allow loans to them for the good of the nation to go unpaid. Now that interest rates are below zero it is time they either recover or allow the free-market to replace them.

    January 29, 2009 05:31 pm at 5:31 pm |
  10. Ruth Rose-Hawkins

    Outrageous is putting it mildly! What is wrong with these guys? Do they even care just a little bit?Thank God we have a President that is paying attention to what is really going on. Airplanes,large bonuses etc.it is so ridiculous what .these wall streeters are doing among others.

    January 29, 2009 05:34 pm at 5:34 pm |
  11. gnomepark

    play hard ball Barack.........hold their toes to the fire. That is what we hired you for.

    January 29, 2009 05:35 pm at 5:35 pm |
  12. Griff

    You Failed Obama.. So did your Wife... You were Elected???? I still don't know who you are.... Your Wife is an American.... But just another American "WOMEN"..... She has no Power! Tell me! Please! Who is America????

    January 29, 2009 05:35 pm at 5:35 pm |
  13. Matt

    Well I blast you Mr. President for no Jobs in your bill. I'm all for alternative energy and helping people out. Those things should be done. But you can help a person more by giving them a job and not another hand out.

    Look I have no problem printing 1 trillion dollars that will be a burden to myself and future generations if that is what needs to be done now. But this bill as is is garbage. The infrastructure part of the plan is the least and the only one that produces real jobs.

    Americans don't need some hand out via the tax system and other socialized systems. What they need are jobs doing things. Jobs that are important and improve the lives of everyone. And repairing the broken down infrastucture in America is the best way to do this.

    It's not just filling potholes, its rebuilding the entire water systems for every old city in America. The pipes under your feet are getting old and need to be replaced. It takes time to do that skills and technologies not even invented in most cases to tackle cities like New York, Chicago or Boston. Last year just one of those pipes burst in New York and blew asbestos everywhere and went off like a large bomb.

    Our roads and bridges are horrible. Our ability to control flooding in areas of this country is non existent. There is a lot of real work I would be willing to spend 1 trillion dollars doing. But what is in this bill is not it. Not it by a long shot.

    Where are the jobs in this bill? It's full of welfare and entitlements and subsistence off the government. We need jobs not hand outs. It was jobs building this countries roads and making it great is what got us out of the depression. It is our roads and pipes that will get us out again.

    January 29, 2009 05:37 pm at 5:37 pm |
  14. Lynn in NM

    Donations to your campaign were ridiculous, also. I didn't see you telling people to save their money to pay their mortgages, or other bills, did I?

    January 29, 2009 05:37 pm at 5:37 pm |
  15. tiff of Lithia Springs

    Unfortunately President Obama. They are not going to get the message with words so I hope you have a plan.

    As my husbands grandmother use to say after raising 8 kids you can talk all day long but in the end you have to teach lessons.

    January 29, 2009 05:39 pm at 5:39 pm |
  16. Jeff Spangler, Arlington, VA

    This pontificating is, of course, populist pablum meant for the proletariat. I agree that Merrill Lynch's bonuses for executives who lost lots of clients' and the firm's money are wrong, but there is apparently nothing wrong with it when they're making money, like Rahm Emanuel did. Unless Wall Street firms are getting federal money as they are now, there is nothing the Socialist-in-Chief can do to micromanage their legal business activities.

    January 29, 2009 05:41 pm at 5:41 pm |
  17. Carl

    He blasts bonuses while a majority of Americans blast the Stimulus package... guess we are even...

    January 29, 2009 05:42 pm at 5:42 pm |
  18. Hammer

    What has changed? The same fat cats getting the billions and the same taxpayers paying the bill. The only change in that is now the fat cats are getting taxpayer dollars, they have already stole all of their company's money.

    January 29, 2009 05:43 pm at 5:43 pm |
  19. Havoc

    There is no justification for the exorbitant bonuses executives pay themselves. It's greed plain and simple.

    January 29, 2009 05:46 pm at 5:46 pm |
  20. HEIDI

    The top corporate companies feel they owe this country nothing and that we owe them everything. Here at my company I stopped getting my incentive pay in May 2007 and I still have to be productive and make sure my department runs the numbers daily. What makes them so special?

    January 29, 2009 05:50 pm at 5:50 pm |
  21. shannon

    Maybe when he voted for the bailout, he should have thought to put some restrictions on what the money could be used for. He now wants to give these same crooks millions more, and yet he finds their behavior shameful. Something isn't meshing here, again his actions don't match his words.

    January 29, 2009 05:51 pm at 5:51 pm |
  22. K in MN

    We should make everyone who took a bonus teach in an inner-city school a year for every $30,000 they took. That would improve teacher/student ratios and make them actually earn the money we gave them.

    January 29, 2009 05:53 pm at 5:53 pm |
  23. Ronnie Schuh

    It IS outrageous! Legislation needs to include something or someone akin to a bankruptcy judge to oversee and/or sign off on expenditures being made with public money. The officers and directors of recipient companies are not acting in the best interests of the taxpayers...they actually need to be replaced if not at least monitored more closely.

    January 29, 2009 05:54 pm at 5:54 pm |
  24. LIKIYE

    Transparency and accountability is all what President Obama has been preaching for months now. Bonuses should be paid only when all other aspects of the companies have been met. Paying bonuses to senior or junior staff when there are no surpluses declared is an unvarnished business thought. Bonuses should be paid when the business is in the right path of profit and growth. President Obama is therefore right to call this "shameful" I support his views!

    January 29, 2009 05:58 pm at 5:58 pm |
  25. Larissa - SC

    Lynn – you are really sad, and what is wrong with America. People are addressing "Wall Street bonuses", and you have to turn it around to your disdain for the candidate who won the election? If you did your research, you'd realize that most of the donations given to our President during his campaign were less than $20 each. It just so happened that SO many people supported him and his plan, that those little bits added up. I didn't vote for him, but I didn't vote for anyone. Neither man sold me on their ability to do the job, however one won (and we ALL now need to accept that). As Americans we can only support him, and hope that in the next 4 years (not 100 days like the media is so ridiculously showcasing), something positive will come from him and his team.

    January 29, 2009 06:03 pm at 6:03 pm |
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