The $18.4 billion in bonuses handed out by banks are “the height of irresponsibility” after the companies took billions of dollars in bailout funds, President Obama told reporters yesterday at the White House.
Obama responded after New York State Comptroller Thomas DiNapoli reported that the 2008 bonus pool at New York City financial companies was the sixth-largest ever. Senator Banking Committee Chairman Christopher Dodd went further, vowing to use “every possible legal means to get the money back.” At stake, Dodd said, is congressional approval for any additional money needed to shore up financial institutions.
These bonus payments may lead to new pay limits and management restrictions as the price for companies seeking more U.S. aid.
“You know it’s coming politically,” said Paul Miller, an analyst with FBR Capital Markets in Arlington, Virginia, predicting restrictions on further aid. “You know it looks really bad giving someone $10 million.”
The administration is drafting a package of measures to arrest the worst financial crisis since the Depression and is likely to announce its plans next week, according to people familiar with the matter. Treasury Secretary Timothy Geithner met over the past two days with Federal Reserve Chairman Ben S. Bernanke, Federal Deposit Insurance Corp. chief Sheila Bair and other regulators to work out the details.