As bonus season begins on Wall Street, U.S. banks are bracing for the inevitable public backlash against multimillion dollar executive compensation as the nation struggles to climb out of an economic crisis.
Despite the recession, financial firms had a blockbuster year. For some chief executives and top producers, they could be getting bonuses with six, seven or even eight figures, reports CBS News correspondent Jeff Glor.
Service Employees International Union head Andy Stern tells the Financial Times of the bonuses: "They (banks) backed the truck up to Fort Knox in broad daylight. They emptied it out, we rescued them and they get $150 billion in bonuses."
Another union official tells FT that executives were using banks "like ATMs."
According to the Wall Street Journal, banks are telling employees that the bonuses will contain more stocks and less cash in effort to show the public it is sensitive to their anger amid the economic crisis. The employees, in turn, the Journal reports, are concerned that less cash will restrict their abilities to take care of household expenses such as mortgage payments. ($)
"I don't think it's just whining," one person at a Wall Street firm told the Journal. "There are legitimate liquidity issues that people have."
This week, the financial crisis inquiry commission begins hearings with the nation's top bank executives expected to attend. The commission was created by congress to investigate the near-collapse of the financial system," Glor reports.
Former New York Gov. Elior Spitzer blasted U.S. banks, telling CBS' "The Early Show" Monday their profits were built solely on taxpayer-funded bailouts. "They (banks) believe they are entitled to these crazy sums of money," Spitzer said. "It is inequitable, it is wrong."
Of the major investment banks to receive bailout money, Goldman Sachs is likely to get the lion's share of scrutiny thanks to its soaring profits and list of alumni holding key government positions.
One analyst tells the Journal he expects Goldman Sachs to dole out $18 billion in bonuses, a 64 percent increase from 2008.
Goldman Sachs is trying to buffer itself from criticism by considering telling its top-earners they have to donate a certain percentage of its earnings to charity, The New York Times reports. However, the Times reports Goldman employees could make an average of almost $600,000.
Goldman Sachs declined to talk to both the Times and the Journal for their stories.
In any case, White House Economic Adviser Christina Romer fired the administration's latest shot toward Wall Street, saying Sunday that the bonuses were "ridiculous," adding that it will "offend the American people."