Only in America-Bailed out Bonuses

Fall out to handout. Bailout to bonuses. That is the new order for you on Wall Street.

Sometimes I wonder, is Main Street serious when helping Wall Street only to find out that they have taken the liberty to pay themselves bonuses even higher than earlier years before the onslaught of the sub-prime woes. Is there not a caveat somewhere when bailouts are being done to ensure excesses like paying bonuses are kept to a bare minimum?

Let us read a Reuters report touching on this matter circa 18 October 2009. I have paraphrased to ensure brevity.

White House has lashed out at Wall Street firms for handing out huge bonuses while the rest of the economy struggles and small businesses cannot create jobs because of a lack of credit. Case in point: Goldman Sachs Group Inc's $20 billion bonus package, which make this year a record year of bonus at the firm.

Similarly, compensation is also soaring at several other big firms riding on the back of good times at Wall Street.

But Wall Street is an oasis of sorts as the national economy remains weak and unemployment, now at 9.8 percent, may climb further above 10 percent.

David Axelrod, a senior adviser to President Barack Obama, said on the ABC News program, "This Week." that the bonuses are “offensive”. He added, "There are a lot of small businesses, credit-worthy businesses around this country who still can't get the capital they need to grow, which is important for our economy." He said that they are considering a variety of options to boost the economy and rekindle job growth and at the same time, they are mindful of the budget deficit.

White House is currently proposing for a broad rewriting of financial regulations aimed at preventing a repeat of Wall Street's worst crisis since the Great Depression in the face of vocal opposition to block these reforms. The finance sector, which was saved from the brink of collapse by a $700 billion bailout from the U.S. government, has a duty to back the financial reforms. In fact, they should the first to support financial reforms.

A bill approved by the House of Representatives would impose new limits on executive pay, but the Senate has not yet acted on the issue. For firms that still owed the government money under the bailout program, Treasury's pay czar, Kenneth Feinberg, says he has the means to crack down on these shameless compensation packages.

For those who have already paid back the bailout money, "moral suasion" will be used. This included such firms as Goldman Sachs which are no longer subject to the Treasury's oversight of compensation.

Obama has faced criticism over the financial bailout program and his $787 billion stimulus plan enacted earlier this year. The financial bailout program was begun by the Bush administration in September 2008 and continued under Obama.

Republicans have labeled the stimulus package wasteful and say the high jobless rate is evidence it has not worked.

Meanwhile, Obama administration officials say the stimulus plan helped save the economy from disaster and it will take time to fully feel its positive effects.
While there are possible moves to consider additional steps to give the economy a jolt, the Obama Administration are reluctant to use the label "stimulus" to describe any possible further measures. Whatever the case, they are determined to prevent the economy from "cascading backward into a recession.", saying President Obama is paying close attention to the U.S. budget deficit, which hit a record $1.4 trillion in the just-ended 2009 fiscal year.

That is the latest snapshot from Main Street and Wall Street. I think the picture is getting less murky.