The typical American's tolerance for federally rescued banks and other institutions that continue to award bonuses? Very little. Three-quarters of Americans say Goldman Sachs (NYSE: GS), Citigroup (NYSE: C) and other bailed-out and taxpayer-assisted companies should cancel all bonuses this year, a new Bloomberg News / Los Angeles Times poll shows.
Further, a majority of respondents also said the U.S. government should have a voice in how these companies are managed, while two-thirds favor tighter financial sector regulation. The poll was conducted December 6-8.
Economist Richard Felson said it's understandable that Americans would express concern about bonuses in financial institutions that accepted federal assistance.
"Awarding bonuses does send the wrong signal. It's also arrogant in the view of many citizens. In our nation, hundreds of thousands of taxpayers are being laid-off with no federal assistance to cushion their loss of income, and down the street a bank executive of a bank who received federal bailout money could be collecting a $300,000 bonus. It gives the appearance of the federal government paying for these bonuses . . . paying for large compensation despite these business flops," Felson said. "It's an arrogant and incorrect policy."
Still, Felson recognized that some compensation structure has to remain in place to retain talent at a time professionals in these bailed out institutions may be considering more stable companies. A better policy, in Felson's view? Bailed out banks and institutions should postpone 2008 bonuses, and implement a performance-based bonus structure that rewards professionals two or three years down the road, if and when the company returns to health. "You could structure it so that bank professionals would make more in the long run for superior performance than under the current bonus framework," Felson said.
Fiscal Policy Analysis: Economist Felson added he does not expect the new U.S. Congress to cap salaries at $400,000 at companies that accepted federal assistance. Nevertheless, in light of still substantial large bonuses at bailed out companies, the view from here argues Congress should pass new legislation limiting bonuses for federally-assisted companies for 2009 and beyond, until the taxpayer money has been repaid.
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Reader Comments (Page 1 of 1)
12-11-2008 @ 1:31PM
3018c133 said...
Congrees should be ashmed of themselves for treating the auto executives like criminals who are asking for a loan of less than 5 percent of what Congress gave the financials who continue to use it on spa trips and bounses.congress should call those bankers to the hill and ask the questions the auto executives were.At least the automakers didnt get in the mess they are in by greed which the financial executives did
12-11-2008 @ 3:46PM
Allen said...
It funny how CEO's and top management aren't hesitant about giving themselves big bonus's and perks when their business is failing even if they have too lay off people to get it. Then they blame the workers and their cost as if their bonus's and perks aren't killing their complanies.
12-11-2008 @ 3:12PM
John said...
My Goodness, lets not stop all the Million Dollar Bounses for the terrific leaders!!! After all they ran the Banks right in the ground!!!
A high school student could have done a better job, why pay these clowns Million of Dollars to Ruin BANKS!!!
12-11-2008 @ 7:20PM
Donna said...
How insane to give ANYONE such a huge bonus!! All those bankers want is a nice cushy check to go with their nice cushy house, car, and jobs. Who give a **** if the "little people" get sucked into a vaccuum and depleted??? After all, little people are a dime a dozen, aren't they??
12-11-2008 @ 7:21PM
Tony said...
"No Tickey No Laundry"
12-12-2008 @ 12:10AM
longlastting said...
We should stop all bailouts, otherwise, the US economy will fall into deeper depression.
Why should AIG's ceo got 3 million dollars for their bonuses after the bailouts. All banks are looking for a way to get these free money. Why should we and taxpayers pay for it later? ...STOP ALL BAILOUTS...
12-12-2008 @ 9:42PM
anthony said...
theres going to come a time when america is going to have to rise up againset the goverment.This is a joke givning all these banks this money they should give it to the auto guys so we all can go back to work.greater depression here we come.friends and family are losing jobs that they worked hard for and these butt clowns are getting bonuses. come on STAND UP PEOPLE and speak out. yes blue coller is a dime a dozen but when were gone whos going to buy the new cars or a home or go shopping at the mall or kmart thanks for reading this