Study: Bank Bonuses Far Exceeded Profits

Several Bailed-Out Banks' Bonuses Topped Their Net Income in 2008, According To N.Y. AG's Report

(CBS)  Several financial giants that received federal bailout money in the last year paid out bonuses to employees in 2008 that greatly exceeded the amount of profit generated by the banks, according to a study on executive compensation released by New York State Attorney General Andrew Cuomo Thursday.

Despite claims by bank executives that bonuses are tied to the company's performance, the report states that "there is no clear rhyme or reason to how the banks compensate or reward their employees."

Cuomo's investigation "suggests a disconnect between compensation and bank performance that resulted in a 'heads I win, tails you lose' bonus system."

According to the report:

• Goldman Sachs, which earned $2.3 billion last year and received $10 billion in TARP funding, paid out $4.8 billion in bonuses in 2008 - more than double their net income.

• Morgan Stanley, which earned $1.7 billion last year and received $10 billion in bailout funds, handed out $4.475 billion in bonuses, nearly three times their net income.

• JPMorgan Chase, which earned $5.6 billion in 2008 and received $25 billion from the government, paid out $8.69 billion in bonus money.

• Citigroup and Merrill Lynch lost a combined $54 billion last year. They received a total of $55 billion in bailouts and paid out $9 billion in combined bonuses. ($5.33 billion for Citigroup; $3.6 billion for Merrill Lynch, which was subsequently acquired by Bank of America.)

Click here to read the full report

The report does note that some of the banks claim to have accepted the government bailout money unwillingly.

Bonuses have been a hot-button issue surrounding these federally bailed out banks for months, with company executives facing heat from White House, Congress and local officials like Cuomo angered by the exorbitant compensation plans for the same people widely seen as responsible for the country's financial crisis. The report is likely to increase pressure on Washington to reign in executive pay, reports CBS News correspondent Kelly Wallace.

Mr. Obama went so far as to appoint Kenneth Feinberg as White House executive pay czar, charged with reining in what the administration sees as outsized bonuses.

But banks have insisted the huge bonuses are necessary for retaining top talent that will be integral to the firms' efforts to stabilize their operations and become profitable again. In some instances, the bonuses are written into previously negotiated contracts that the banks feel they must honor.

In one such case, Citigroup appears poised to clash with the White House over a scheduled $100 million bonus to star energy trader Andrew J. Hill.

But not all banks' bonuses topped their net income, according to Cuomo's report. Bank of America earned $4 billion in and paid out $3.3 billion in bonuses in 2008. The bank received $45 billion in TARP funds.

Other banks pared back bonuses even more amid the harsh downturn. State Street Corp. earned around $1.8 billion and paid out nearly $470 million in bonuses. They received $2 billion in bailout money.

Bank of New York Mellon made posted a net income of $1.4 billion and paid out $945 million in bonuses. They took $3 billion in government aid.

The report lists the banks, the number of bonuses issued and the total amount of bonus money. It does not give names of bonus recipients.

[shylove2]

Corporations can get away with anything since they aren't people they are entities for escaping responsibility for anything they do. The profits and bonuses and fines and penalties one way or another come from the consumer bailout or not. Wall Street driving public companies to produce excessive profits also is paid by the rest of society some of whom have had salaries steadily going down over the years. This is a prescription for a suicidal society. It is like vultures feasting on themselves or cannibals eating themselves. Everyone is interdependent in this world and one part feasting on another is just a form of cannibalism.

[Milford833]

I can see how they would want to give such large bonuses to retain the people who got us into this mess in the first place. Probably to cover up other things they have been doing under the radar so it does not go public.

If the bank does not make a profit, no bonuses, period. If the person leaves, good, he was probably part of the problem. Are they worried about him taking confidential information with him to another bank? Please, I hope somebody does something about this, but I doubt somebody will.

[mary-miami]

Unfortunately, there is so much greed and selfishness among these CEOs that it seems, they won't change their ways unless there is some kind of government regulations put forth. I really think that left to their own devices, these executives will just go on receiving outlandish bonuses. There should be new laws that cap the amount of bonuses they get...Or not get any bonuses at all...They make millions already anyway.

[noloyalisti]

This is what happens in fascist countries where big corporations run EVERYTHING. They are just using taxpayers to fight and die in their wars for profit and to give them corporate welfare.

Welcome to America where it is capitalism for the poor and middle class and socialism for the rich.

[rocketjl]

Please pass my thanks to those morons in Congress.

Please ask the folks writing dictionaries to expand the definition of crook.

[noloyalisti]

Well Congress is bought and paid for by these corporations, what do we expect?

[yarabie]

These people need to be horse whipped and put in jail with Madoff.

[pollroller1]

Here is my take on it. Let them have the money. They will spend it and pay taxes on it. Have any of you ever been hired by a poor person?

[noloyalisti]

Basically this is what happens when We the People let right wing corporations run everything. As in other fascist nations, big corporations run the media, the military and the government. And the people are either too stupid or too frightened to get together to bring it down. This is deja vu all over again.

[314Diva]

This is horrible...the government gives you money to keep your doors open and you turn around hand your employees that money plus some....and then your average worker can't even get a dollar raise! but you have billions to pass out up top....wow! this country is great!
Greed...greed....greed!

[noloyalisti]

We won't change anything until we realize that the big corporations are using us to finance the 4 wars we are conducting. And using our money to buy and hold the Congress. Not only is America the most corrupt nation on earth, it is outright blatant and we have a bunch of sheep actually defending the fascism. I guess that is what happened in Germany in the 30's and Spain and Italy. There were people in occupied France that were helping the fascists. Wow, history repeats itself if we remain so stupid and ignorant like the corporate heads and politicians.

[anitaymoore]

All corporations should have a cap on bonuses...period!!! As for those idiotic "retention bonuses", those need to be done away with altogether. I don't receive a retention bonus, no one bus the higher ups in corporate America receives them....and not only are they the greediest of the greedy...they also do the least work for their money. Any money that would be going to "retention bonuses" ought to be going to the hourly workers, and to the salaried workers who aren't in upper management.

[ahrats]

How are these banks still in business? If pay out more then you take in there is no profit except what they stole from the american people. To pay one employee more money then they brought to the firm does not make sense. Is this one gigantic ponzi scheme? What is the interest rate these bank are paying out on the loans they received , if any thing less then what the banks charge consumers 30% then it's FUBAR.

[pepperwood2]

Study: Bank Bonuses Far Exceeded Profits.....Several Bailed-Out Banks' Bonuses Topped Their Net Income in 2008, According To N.Y. AG's Report

Is this what Obama and his Liberal Congress refers to as the American Dream?

[hermitdave]

What's happiness can it buy money? Greed is good. Number one is health number two is money the rest is just B/S. Soon money will buy health and then at last money will be the one true god.

[hungry1968-16]

by RL_Cudd July 30, 2009 9:08 PM EDT
And everyone is crying about the cost of Health Care - - give me a break. The rich want to take all the money, rob the treasury; and then have the nerve to cry about the cost of health care. Maybe it is time to nationalize all the banks and fire everyone who makes more than $250K a year - - the rich killed the American economy with their greed - maybe that is why I don't cry when one takes a gun to himself when his money is gone.







That's why I can't understand why the conservatives sit here and defend "capitalism" like it some great and wonderful system to live under.

The rich get richer, by feeding off the poor and middle classes, and then spoon feed the politicians to make sure that they can keep doing it.

[hungry1968-16]

by grabandgo July 30, 2009 6:04 PM EDT
So why isn't our president demanding bonuses be returned?
nobama is not a good president







Because the president doesn't have the legal authority to kill existing contracts, particularly those created years ago.

[jcbull7]

Not only should this be criminal but I would love to know how many Senators, Representatives, State Governors, etc. or their spouses received a bonus from one of these banks. Just a little curious. And we think Bernie Madoff was bad, at least he admitted that he conned everyone.

[pepperwood2]

Wall St. to Taxpayers: "Thanks for the Bailouts, Have Some Higher Fees"

Wall Street is responding to new proposed regulations in classic form: They're trying to circumvent restrictions on compensation and want to pass along the cost of compliance to their clients, namely you and me.

JPMorgan Chase has informed clients its raising fees on balance transfers and cash advances to 5%, the highest among the nation's big banks. (Earlier this month, Bank of America raised similar fees to 4%.)

In a notice to customers, JPMorgan cited "new federal regulations" as the rationale for higher fees, The LA Times reports.

More of the same change we can count on. Notice this is the NEW Federal Regulations. The Obama, Pelosi, Reid, Geitner. The NEW Rationale for Higher Fee Deal. Pretty Slick Trick on The People Again.

[payasyougo]

So in 2008 had the government not spend my grandchildren's tax payments on these financial institutions all of these folks would be unemployed or in jail. Instead, they are getting bonuses for their "hard work" which initiated this recession.

Why?

[lovegetpeace]

Folks,
Is this what they teach at the Ethical classrooms in the Business schools of the top Ivy Universities?

[lovegetpeace]

Folks,
I learned something new today - Capitalism is Shameless beside Greedy. Capitalism is 'what's in it for me?' instead of 'what's in it for us?'.