As more jobs and company wealth were lost around the world and policymakers prepared more drastic action to inject life into the global economy, President Barack Obama issued a withering critique on Wall Street greed yesterday.
It was "the height of irresponsibility" for employees to be paid more than $18 billion in bonuses last year while their crumbling financial sector received a bailout from taxpayers, Obama said from the Oval Office.
"It is shameful. And part of what we're going to need is for the folks on Wall Street who are asking for help to show some restraint, and show some discipline, and show some sense of responsibility."
The president's comments, made with new Treasury Secretary Timothy Geithner at his side, was in response to a report that employees of the New York financial world garnered an estimated $18.4 billion in bonuses last year. The figure, from the New York State comptroller, drew prominent news coverage.
Yet Obama's stand also came just one day after he surrounded himself with well-paid chief executives at the White House. He had pulled in those business leaders and hailed them for being on the "front lines in seeing the enormous problems in our economy right now."
Obama said the public dislikes the idea of helping the financial sector dig out of a hole, only to see it get bigger because of lavish spending. The comptroller's report found Wall Street bonuses were down 44 percent, but still at about the same level as during the boom time of 2004.
Obama said he and Geithner will speak directly to Wall Street leaders about the bonuses, which threaten to undermine public support for more government intervention.
His statements drew endorsement from New York Attorney General Andrew Cuomo, whose office began reviewing Wall Street bonuses in September.
"Over the course of our investigation it has become apparent that, while Wall Street melted down, top executives believed that, unlike the rest of the country, they still deserved huge bonuses," said Cuomo in a statement. He may demand return of $4 billion in bonuses paid by Merrill Lynch & Co. just before it was acquired by Bank of America Corp. last month, a person familiar with the matter told Bloomberg yesterday.
"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," Obama said.
"There will be time for them to make profits, and there will be time for them to get bonuses," Obama said. "Now is not that time."