Nov 12, 2008 7:43 pm US/Eastern
Are Wall Street Bonuses Being Bailed Out Too?
Bloomberg News Report Says Despite Tough Times, Trader/Manager Bonuses Aren't Drying Up
NEW YORK (CBS) ―
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What has many people angry is that these investment firms are receiving part of the $700 billion in federal bailout money, money Congress never intended to go to the pockets of Wall Streeters.
AP
Many of the people doing the actual trading on Wall Street, and their managers, receive generous year-end bonuses. This dire economic climate hasn't curtailed that practice, not even for some of the investment firms getting those federal bailout dollars.
When the markets are bullish, Wall Street traders and managers are flush, buying a lot of nice toys. Now that tough times have hit, will those lucrative bonuses dry up? According to a report by Bloomberg News, no.
Goldman Sachs, for example, has set aside $6.8 billion for bonuses, or $210,300 per employee. Morgan Stanley has set aside $6.4 billion, or $138,700 per employee.
Chairman of the House Financial Services Committee Barney Frank is outraged.
"These are people who lost enormous amounts of money. How do you give a bonus for someone who failed so badly as many of these people did?" Frank said.
What has many people angry is that these investment firms are receiving part of the $700 billion in federal bailout money, money Congress never intended to go to the pockets of Wall Streeters.
"All of the money is to go into new loans, none of it is to go into compensation of any kind for the employees," argued Frank.
Many New Yorkers agree, even on Wall Street.
"I don't think that's fair. I don't think it's proper. Why should we bail out a company that more or less throws our money away on bonuses?" said Nassau County resident Mike Penna, who works in the Financial District.
New York Attorney General Andrew Cuomo has opened an investigation into Wall Street bonuses, demanding nine financial institutions give "a detailed accounting regarding your expected payments to top management in the upcoming bonus season."
"These are tax dollars that are going to these institutions and I believe the tax payers have a right to hold these institutions accountable for what they're doing with their money," said Cuomo.
Even without bonuses, the average annual salary for a securities industry employee was just under $400,000, ten times more than the average working American.
The bailout package specifies the top five executives of a company cannot get a golden parachute, but doesn't limit compensation for any other employees. And keep in mind, much of New York's economy thrives on those bonuses when they're spent on luxury items like cars.
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