Executive bonuses 'shameful'

[krycor]

30/01/2009 09:56 - (SA)

Washington - President Barack Obama lashed out at Wall Street on Thursday, saying it was shameful that employees were paid more than $18bn in bonuses while their crumbling financial sector received a historic bailout from US taxpayers.

Obama was responding to reports that Wall Street executives were paid billions in bonuses last year as Congress poured hundreds of billions into the financial system to address an economy reeling from souring debt, defaulting mortgages and choked lending.

With new Treasury Secretary Timothy Geithner at his side, the president said the payouts were "the height of irresponsibility".

"It is shameful," Obama said. "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 said there was a time for corporate leaders to make profits and take home bonuses but now is "not that time".

Obama's comments came as the federal government was in the process of developing new plans for spending $350bn - the second half of a $700bn financial system bailout package Congress agreed to at the request of the Bush administration late last year.

That programme sits alongside a second huge spending and tax cut measure that passed the House of Representatives on Wednesday night. The $819bn stimulus package was expected to grow as it works its way through the Senate, with a vote expected in the upper house next week.

Failed to win any Republican support

Obama hopes to have the money in hand by mid-February as he battles to put a floor under the stumbling American economy in the midst of the worst downturn since the Great Depression of the 1930s.

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".

The executives who appeared with Obama are not leaders of the Wall Street financial companies that the president targeted, but rather heads of such well-known manufacturing and technology giants as IBM, Motorola, Xerox and Corning. Still, they get paid handsomely.

Most of those who stood with Obama earned a total 2007 compensation package of between eight million dollars and $21m, according to a review by The Associated Press. Those calculations include the executives' salary, bonus pay, incentives, perks, the estimated value of stock holdings and other compensation.

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 as the economy keeps reeling.

Washington was buzzing on Thursday over the fact that Obama failed to win any Republican support when the House approved his stimulus plan, despite his heavy courting of opposition lawmakers in both houses of Congress.

The House vote late on Wednesday broke along party lines - 244-188 with 177 Republicans unanimous in opposition, along with 11 mostly conservative Democrats.

Objections

In unanimously opposing the massive spending bill that Obama says is crucial to reviving the economy, they signalled they are not cowed by his November win or his calls for a new era of bipartisanship.

White House press secretary Robert Gibbs said on Thursday morning that Obama would continue to work with Republicans to craft a stimulus package supported on both sides of the aisle.

Gibbs told NBC television that Obama understands that "it's going to take longer than a few days to change the ways Washington works".

The measure next goes to the Senate and then back to the House with revisions. Lawmakers hope to have it ready for Obama's signature by mid-February.

While the stimulus plan may find a friendlier welcome from some Republicans in the Senate, the minority party's objections mirrored those of their House colleagues.

"We don't need to have everything Republicans want, but we at least have to feel good enough that the bill actually will grow the economy, create jobs so it's just not a massive spending bill," said Republican Sen John Ensign of Nevada, as several Senate conservatives lambasted the measure at a Thursday news conference.

"This is about spending money we don't have for things we don't need," added Sen Tom Cobra, an Oklahoma Republican.

Legislative hurdle

Obama made no reference to his failure to garner any bipartisan backing.

"This recovery plan will save or create more than three million new jobs over the next few years," the president said in a written statement released after the House voted. He later welcomed congressional leaders of both parties to the White House for drinks as he continued to lobby for the legislation.

With the first legislative hurdle behind him, Obama and his wife, Michelle, left the White House around 08:15 for the ride to the suburban Washington campus of the Sidwell Friends School, a private institution where their seven-year-old daughter, Sasha, is in the second grade.

The Obamas spent a little more than an hour at the school attending a class presentation before they returned to the White House. Michelle Obama's mother, Marian Robinson, joined them. Older daughter Malia, 10, is a fifth-grader at Sidwell's middle school in Washington.

The president then signed into law an equal-pay bill that is popular with labour and women's groups and is expected to make it easier for workers to sue for decades-old discrimination.

- AP

Again about time someone said something.. yet in SA our folk in gov are quite quiet.

 

[sox63]

Again about time someone said something.. yet in SA our folk in gov are quite quiet.

I for one am all for executive bonuses when a company is doing well. But for the american finance execs to take $18Billion in bonuses when they have to beg for money from goverment to survive is just plain criminal, IMO.

The original package was what? $700 Billion? So a large chunk went straight out the door for bonuses! Shocking.

 

[Paul_S]

I've been doing some thinking.
Salary increases have generally been lower than the interest rate for the past few years yet our economy has up until recently been growing a relatively healthy pace.

This makes me ask the question of: where is the difference being absorbed?
Are the executives raking in the difference and causing the pay gap to widen or is our economy just getting weaker?

 

[2CentsWorth]

I've been doing some thinking.
Salary increases have generally been lower than the interest rate for the past few years yet our economy has up until recently been growing a relatively healthy pace.

This makes me ask the question of: where is the difference being absorbed?
Are the executives raking in the difference and causing the pay gap to widen or is our economy just getting weaker?

Short answer: both.

 

[sox63]

I've been doing some thinking.
Salary increases have generally been lower than the interest rate for the past few years yet our economy has up until recently been growing a relatively healthy pace.

This makes me ask the question of: where is the difference being absorbed?
Are the executives raking in the difference and causing the pay gap to widen or is our economy just getting weaker?

The gap between rich and poor has been growing wider. Our economy has been relatively fine.

 

[2CentsWorth]

The gap between rich and poor has been growing wider. Our economy has been relatively fine.

relative to what? Other world economies, sure. Relative to ourselves: hell no. Have you seen how many jobs are being cut? We may not be in recession according to Manuel, but we certainly have many sectors headed that way.

 

[sox63]

relative to what? Other world economies, sure. Relative to ourselves: hell no. Have you seen how many jobs are being cut? We may not be in recession according to Manuel, but we certainly have many sectors headed that way.

A recession is calculated on GDP and not a few sectors. Job loss is typical in a slowing economy, the investors do not want to lose profits in the face of dropping revenue.

 

[2CentsWorth]

A recession is calculated on GDP and not a few sectors. Job loss is typical in a slowing economy, the investors do not want to lose profits in the face of dropping revenue.

recession is calculated on a widespread decline in the GDP and employment and trade lasting from six months to a year. The sectors are factors of GDP. Their performance correlates to GDP. Arguably the only reason we're not in recession right now is thanks to the spending by the government on WC2010 infrastructure.

 

[JK8]

Why is it that we are getting mixed up in the US recession??
All the news says is tighten your belts and they make everyone worry, then the SA public stops spending and the retail and manufacturing sectors start collapsing and jobs get cut, when SA is not really affected by the world crisis but because of them we make ourselves suffer!!

Am I right?

 

[2CentsWorth]

Why is it that we are getting mixed up in the US recession??
All the news says is tighten your belts and they make everyone worry, then the SA public stops spending and the retail and manufacturing sectors start collapsing and jobs get cut, when SA is not really affected by the world crisis but because of them we make ourselves suffer!!

Am I right?

Of course we're connected to the world economy - our chief export is one of the most traded commodities in the world.

 

[JK8]

Of course we're connected to the world economy - our chief export is one of the most traded commodities in the world.

Yes I agree the mining sector and some parts of the manufacturing sector is affected.

But our retail sector? The malls are reporting a huge drop in traffic, are we creating this out of nothing?

 

[KillerX]

Why is it that we are getting mixed up in the US recession??
All the news says is tighten your belts and they make everyone worry, then the SA public stops spending and the retail and manufacturing sectors start collapsing and jobs get cut, when SA is not really affected by the world crisis but because of them we make ourselves suffer!!


Am I right?

No youre not. Its a global crisis. We are now a global village and we are all in the same boat. If America, EU, and China is doing badly - what makes you think little South Africa will not feel the effects?

The worst is still to come in 2009... It just takes a while for the 'waves' to hit us.

 

[lsuacner]

Only once when you were in such a stressful professional position would you also want to demand high salaries and bonuses.

On the other hand I suppose Obama has a stressful position also.

I know for sure I won't continue working like I do without better remuneration.

 

[JK8]

No youre not. Its a global crisis. We are now a global village and we are all in the same boat. If America, EU, and China is doing badly - what makes you think little South Africa will not feel the effects?

The worst is still to come in 2009... It just takes a while for the 'waves' to hit us.

So everyones just bracing themselves for whats to come?

 

[2CentsWorth]

Yes I agree the mining sector and some parts of the manufacturing sector is affected.

But our retail sector? The malls are reporting a huge drop in traffic, are we creating this out of nothing?

There are so many factors involved that it's hard to point to a particular one and say that is the cause.

The main problem is SA is a nett importer, which means it imports more than it produces. Obviously given the state of the rand and the fact that we have to pay international prices for these imported goods (many of our foods are imported too) in international currencies, a world economic slowdown (less production = more demand = higher cost to import) will impact our own negatively.

It's not only America going through **** either, our main trading partners (Europe and China) are suffering major economic crises as well.