President Barack Obama is calling the size of bonuses Wall Street firms paid employees in 2008 the “height of irresponsibility” and “shameful.”
The New York Comptroller reported that that the bonus pool paid by Wall Street to its employees in New York City totaled $18.4 billion in 2008. The size of the bonus pool was the sixth largest on record, but it was also a decline of 44 percent from the bonus pool in 2007.
“One point I want to make is that all of us are going to have responsibilities to get this economy moving again,” Obama said. “And when I saw an article today indicating that Wall Street bankers had given themselves $20 billion worth of bonuses -- the same amount of bonuses as they gave themselves in 2004 -- at a time when most of these institutions were teetering on collapse and they are asking for taxpayers to help sustain them, and when taxpayers find themselves in the difficult position that if they don't provide help that the entire system could come down on top of our heads -- that is the height of irresponsibility. It is shameful.”
Obama said he would speak with the heads of Wall Street firms and ask for them to show some restraint.
“We're going to be having conversations as this process moves forward directly with these folks on Wall Street to underscore that they have to start acting in a more responsible fashion if we are to together get this economy rolling again,” he said. “There will be time for them to make profits, and there will be time for them to get bonuses--now is not that time.
The New York comptroller arrived at the $18.4 billion bonus pool figure by looking at personal income tax collections and other factors, including industry revenue and expense trends.
For the past decade, the Comptroller's office has released its estimate of bonuses paid to securities industry employees who work in New York City (whether they are city residents or commuters). Bonuses paid by New York City-based firms to their employees outside of the city (whether in domestic or international locations) are not included. The estimate also does not include stock options that have not yet been exercised, which could increase the value of bonuses realized.
The average bonus was $112,000 in 2008, a decline of 36.7 percent from 2007. The decline in the average bonus was smaller than the decline in the bonus pool because the pool was shared among fewer workers as the industry shed jobs.
Employment in the securities industry in New York City declined from 187,800 in October 2007 to 168,600 in December 2008, a loss of 19,200 jobs, or 10.2 percent.