January 10th, 2010
12:12 PM ET
12 years ago

Romer: Prospect of big banker bonuses 'offends me'

Washington (CNN) – One of President Obama’s top economic advisers took aim Sunday at the large bonuses Wall Street bankers are expected to receive soon.

“We will see in the next week or two, five-, six-digit, seven-digit, maybe even, some say, eight-digit bonuses for people in the banking industry,” CNN Chief National Correspondent John King said Sunday on CNN’s State of the Union. “Is there a message from the Obama White House to the banks as they prepare to make these big [bonus] announcements?”

“For Heaven’s sakes people,” Christina Romer, Chair of Obama’s Council of Economic Advisers, said in response, after pausing and appearing at a loss for words. “It does seem really ridiculous. We have had to take extraordinary actions to rescue the financial system. We always did it because that’s what had to be done for the American people. No one wanted to bail out the banks just for the banks’ sake. It’s because we know that credit is the lifeblood of a modern economy.”

“You would certainly think that the financial institutions that are now doing a little better would have some sense. This big bonus season - of course it offends the American people. It offends me,” Romer also told King.

Romer was circumspect when asked about the nation’s economy which continues to struggle more than a year after the financial crisis of late 2008 threatened another depression.

Asked to make a longer-term prediction about where the national unemployment rate, currently at 10 percent, will be at the end of 2010, Romer said “we are continuing a pattern of moderating job loss.” The top Obama economic adviser pointed out that job losses in the first quarter of 2009 averaged 691,000 per month. That figure dropped to 69,000 per month in the fourth quarter of 2009, Romer said. “That’s still way too many. It’s not job gains but it’s about a tenth of when we came to office,” Romer told King.

Related video: Good news in job numbers?

And Romer called the administration’s prediction that job growth would turn positive by the spring of 2010 “a realistic estimate.” She also said that the nation’s gross domestic product, a key measure of the economy’s overall health, needs to grow at roughly two and a half percent annually in order for the unemployment rate to begin to decline.

Pressed by King about whether the unemployment rate will be lower in November when Democrats are expected to face a tough political landscape during the midterm elections, Romer said, “I don’t want to make a prediction just because there is so much uncertainty.”

“What I know is we are seeing steady progress. I’d absolutely expect that progress to continue through next year, and, I hope accelerate.”

Filed under: Christina Romer • Economy • State of the Union
soundoff (51 Responses)
  1. Dean

    It is not only the bankers screwing Americans, it is all of corporate America and our government. On a daily basis coprporations are still outsourcing jobs and opening new manufacturing plants overseas to increase their profits at our expense. Our goverrnment does nothing. When are they going to understand that when all the people here are un or under employed that we will join the ranks of the third world. Obama do something.

    January 10, 2010 12:23 pm at 12:23 pm |
  2. michael armstrong sr. TX.

    The banks are confident that the government will bail them out when they screw the American people again nothing has changed the big oil and banks are working together to destroy America.

    January 10, 2010 12:23 pm at 12:23 pm |
  3. Claudia, Houston, Tx

    John McCain's son took his bonus one month before Silver Bank of Arizona failed and left investers dry, go after him. Bank of America took over Silver Bank to help investers and we the tax payers bailed out Bank of America. John McCain is a fraud and crook, always has been and always will be.

    January 10, 2010 12:32 pm at 12:32 pm |
  4. Tom

    Don't blame the Obama Administration, blame the banks. Just pull your money out and put it in regional and or local banks, closer to home where it will be used.

    January 10, 2010 12:34 pm at 12:34 pm |
  5. Carolina

    It offends the you-know-what out of me.

    January 10, 2010 12:37 pm at 12:37 pm |
  6. Jim in Phoenix

    Banks are beyond offensive! Put the Glass-Steagle act back in place and eliminate interstate banks. If banks are too big to fail, they are too big, period!! It will create new jobs and will eliminate the stranglehold that these big behemoths have on Washington.

    January 10, 2010 12:37 pm at 12:37 pm |
  7. Dwight

    What else do you expect? This is the way they did business before the meltdown and this is the way they plan to do business in the future. While the always hopeful American people bought into this bailout thinking that management would change their nature out of gratitude, there was zero evidence that they would do so.

    January 10, 2010 12:41 pm at 12:41 pm |
  8. El Kababa

    These huge bonuses are just a legal form of theft. Let's say that Banker Bill gets a $10 million bonus on top of his $3 million paycheck, and $1 million in stock options for $14 million gross pay. That's about $6700.00 per hour. I would like to follow Banker Bill around with a video camera so as to tape one of those hours and see what the corporation gets for its money.

    I speculate that we could find an MBA graduate of a superb business school in India who could do all of those things for a lot less money. Let's face facts: America's corporation leadership did not achieve their positions because they are the smartest people available. Instead, they are the most cunning, often the most obnoxious, certainly the least compassionate, and usually the least troubled with ethical issues. A man will do pretty much anything for $10 million. If he won't, the Board of Directors will find someone who will.

    I know that Conservatives believe that the "free market" works by God's magic to pay people exactly what they deserve, to the penny, but that is stupid.

    January 10, 2010 12:46 pm at 12:46 pm |
  9. Don

    Romer dodged another question. Obama has broken his pledge to not raise taxes. Has anyone looked at their first paycheck of the new year. The federal gov't (i.e. the democrats) is now taking more morning from our checks because they let the tax cuts expire. In my world that is an increase and being that we make under 250K that is a broken pledge. Come on John don't let these people off the hook. Ask them to explain how this is not a broken pledge.

    January 10, 2010 12:48 pm at 12:48 pm |
  10. Keith in Austin

    Romer is a liberal Berkley professor largely responsible for writing Obama's failing economic strategy including the pork-laden stimulous plan promising that unemployment would NEVER go above 8 percent!

    Her expertise is overshadowed by her left-wing wealth-shifting, socialistic agenda.

    The Banking Industry and it's leaders were propped up with taxpayer dollars. Banking executives abusing bonuses is remeniscent of the Government's abuse of power and robbery of the American Taxpayer! Lesson learned on both accounts! Time for fiscal responsibility and the overhaul of both entities!

    January 10, 2010 12:55 pm at 12:55 pm |
  11. magella

    It stinks but what can be done about it? We were told the bailout was really an "investment." So if the banks now have significant returns that they can pay out bonuses to their executives, why wouldn't an appropriate portion of that profit go back to the government as a major stakeholder?

    January 10, 2010 12:55 pm at 12:55 pm |
  12. Sorensen

    They are always laughing all the way to the bank.
    It will never change, until the politicians change the system.
    It makes the USA a banana-republic.
    This kind of capitalism is a cancer.
    Unfortunately, and the little capitalistic bastards know that very well,
    the electorate is too uneducated and slow and brainwashed to ever
    do anything about it.
    Have another banana!

    January 10, 2010 12:56 pm at 12:56 pm |
  13. Dwight

    "I know that Conservatives believe that the "free market" works by God's magic to pay people exactly what they deserve, to the penny, but that is stupid."

    A True Conservative would never have voted for the bailout. The Free Market called for these banks to fail, but their shills in Congress and the Presidency stepped in to save them.

    January 10, 2010 12:58 pm at 12:58 pm |
  14. sara

    bankers should give their bonuses to people shopping at walmart

    January 10, 2010 01:21 pm at 1:21 pm |
  15. Audrey in VA

    Christina Romer's salary "offends" me.

    January 10, 2010 01:28 pm at 1:28 pm |
  16. Keith in Austin

    The Bush administration (and Liberal-Democrat Congress turned their backs on fiscally-responsible conservatism. Starting November and 2012, you will see a prompt return to government sanity with a host of New Blood conservatives that will return our Nation to The People!

    Bet on it!!!!!

    January 10, 2010 01:37 pm at 1:37 pm |
  17. Joe Jones

    Hey Christina-I'll remember your comments as I start year 3 with the same pay at a bank-there is a difference between Wall St and the banks we all see on our street corners.

    January 10, 2010 01:37 pm at 1:37 pm |
  18. Dick

    Where are the stockholders in all of this? These bonuses are coming out of the pockets of the people who own the bank's stock by reducing dividends and the stock price. I would think that they would be raising holy hell over these bonuses.
    The only way anyone is going to put a damper on bonuses is to forbid banks from using banking assets for non-banking activities. We have to put a stop to the banks gambling with our money.

    January 10, 2010 01:43 pm at 1:43 pm |
  19. jackinwatchung

    Magella: The government has made BILLIONS on their investments in the banks through this bailout. Interesting how the press never talks about it. Most of the major banks have repaid any bailout money they took (some were FORCED to take by the government).

    I am sick to death of this populistic "lynch the bankers" mentality. Bankers didn't cause the crisis, people's demand for credit did. I agree that banks were complicit in helping, but they were just giving everyone what they wanted. John Q Public wanted the ability to buy houses his credit and income wouldn't let him afford, so banks figured out a way to make that happen. John Q Institutional Investor wanted higher yielding securities, so banks figured out a way to repackage all of these mortgages in order to have higher yielding product for their clients.

    This is the major problem I have with both Dems and the average citizen these days. No one is willing to accept the fact that the blame for the crisis rests equally on everyone's shoulders...not just the investment banks.

    January 10, 2010 01:56 pm at 1:56 pm |
  20. billy123

    If Christina Romer lost her job maybe she would understand how so many people in this country are so upset.

    January 10, 2010 01:56 pm at 1:56 pm |
  21. tmart

    And the Republicans want to put the brakes on the Democrats for trying to implement some serious reform. In the name of 'free enterprise'. It is truly unfortunate. There are hundreds of workers in low- paying jobs that work hard and deserve decent bonuses, but they won't get one.

    January 10, 2010 01:57 pm at 1:57 pm |
  22. valwayne

    The Louisiana Purchase, the Cornhusker Kickback. Thousands and thousands and thousands of corrupt earmarks signed into law. Trillion and trillion in corrupt spending filling the pockets of the special interests. And we're suppose to believe the Obama administration cares about wall street bonuses. This is like a thousand millions pots calling the kettle black! President Obama, Nancy Pelosi, and Harry Reid should clean up their own corruption. Then we might take them seriously when they point the finger at others!

    January 10, 2010 01:59 pm at 1:59 pm |
  23. El Kababa

    Dwight wrote: "A True Conservative would never have voted for the bailout. The Free Market called for these banks to fail, but their shills in Congress and the Presidency stepped in to save them."

    If those banks had failed, many middle class and lower class Americans would have suffered much more than they are now. Dwight needs to acknowledge to himself that the 18th century concept of a "free market" has no place in a world filled with totalitarian governments and global corporations.

    Adam Smith never discussed how global corporations would subvert democratic institutions. It is routine business now to bribe legislators with campaign contributions, envelopes filled with hundred dollar bills, pretty girls, vacations for the whole family to Switzerland, and executive positions for idiot nephews. The free market is being manipulated and twisted into a pretzel by executives with MBAs who are not the naive blacksmiths that Adam Smith described.

    We live in an unstable global economy. We depend on long fragile supply chains for essential goods like food, clothing, medicines, and even sheetrock. Many of those supply chains originate in or pass through nations governed by dictators who don't give a crap about the "free market."

    The last "true" Conservative in elective office was Barry Goldwater.

    January 10, 2010 01:59 pm at 1:59 pm |
  24. Brunton

    The entire collapse could have been prevented if the DOJ under Bush had simply enforced existing laws. Instead they ignored warnings from the CIA and FBI as far back as 2002 and sued the AG of every state in the union to prevent them from acting on behalf of private citizens. I also fault Clinton for going along with the deregulation as part of his deal making with Republicans in Congress. Newt Gingrich and Phil Gramm were the architects of those policies and deserve as much blame as anyone. Finally, the bankers involved are wise to fly in leer jets and live in gated communities. The only bonus they deserve is a second round to make sure the job is done.

    January 10, 2010 02:01 pm at 2:01 pm |
  25. German,Irish American

    If the bonuses offend you, why did your Idot in Chief Obama sign the bill giving them huge bonuses? Oh, that's right, it HAD to be passed immediately, without being read, to save the economy. This has got to be the stupidist, in common sense or ability to reason, administration in history.

    January 10, 2010 02:03 pm at 2:03 pm |
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