Wall St bonuses spark outrage on Main Street USA
Reuters reporters spoke to people in half a dozen towns and cities across the country at the end of last week — and while the survey was far from scientific, it left no doubt many people are upset bankers are still pulling in big bonuses while many people struggle to make ends meet.
Ask Ahmet Rika, 22, and his father, Tony, as they work around hot ovens at Lizzano’s Pizza, their family owned pizza and pasta restaurant in Euless, a town near Fort Worth, Texas, how they feel about multibillion-dollar bonus pools by banks bailed out by taxpayers and their disdain is obvious.
“It’s not right,” said Ahmet. “All our taxes go to them. It will be bad for the government.”
Tony interjected: “They give them this bonus! They must give the bonus to the poor people so they can spend it!” he said as he wiped his hands on his apron, shaking his head in disgust.
In particular there is anger over the fact Wall Street firms are setting aside billions of dollars to reward employees at year-end so soon after the industry needed taxpayers to lend them hundreds of billions of dollars to stay afloat.
Even U.S. documentary maker Michael Moore is tapping into the anger, planning to release his latest movie, “Capitalism: A Love Story.” The filmmaker, who aims to show how capitalism is evil and benefits only the rich, stokes the public sentiment by demanding that financial firms repay the billions they borrowed.
The outrage comes at a time when the unemployment rate has reached 9.7 percent, the highest since 1983, and families continue to lose their homes to bank foreclosure at alarming rates.
If left unaddressed it could come back to haunt President Barack Obama who began his time in the Oval Office by condemning massive bonuses for bankers during the financial crisis, but has since become much quieter on the topic.
U.S. Sen. Sherrod Brown, a Democrat, spent much of the past month in his home state of Ohio, which has been one of the hardest hit by the recession.
“You need about a day out there to see that people are really angry,” Brown said in an interview with Reuters. “Some of this crowd helped to bring down our economy and they don’t seem to have learned their lesson. Too many are still given big bonuses for a job that has been bad for our economy.
“We need to dog some of these companies that sort of tend to be dismissive toward the public.”
LOST TOUCH WITH REALITY
Goldman Sachs Group Inc and American International Group Inc have been among the poster children for the industry’s addiction to massive bonuses.
Soon after receiving $10 billion in taxpayer bailouts, Goldman set aside $11.3 billion for year-end bonuses. AIG paid out $165 million in bonuses to employees who contributed to the company’s meltdown.
While Goldman has paid back the government, the size of the bonuses it is reserving for its employees — averaging $768,000 based on the first six months but projected over the entire year — does not play well on Main Street.
“Wall Street has lost touch with reality, paying themselves such huge bonuses when the taxpayers who bailed them out are suffering,” said Ruth Santini, a retiree living in the western suburbs of Chicago. “They put us in this mess, so I’d rather see some of them go to jail than get a bonus.”
The fact that Wall Street bankers and traders seem to get paid handsomely, win or lose, is most damning to some, especially as they see their savings dwindle.
“I guess I ended up in the wrong career,” said Mark Benson, 39, a restaurant manager in downtown Chicago. “It must be nice to work on Wall Street, when you profit you get a bonus, when your company fails you get a government bailout then a bonus.
“I’m all for free enterprise, it’s what built America. But when Wall Street screws up so badly that the government has to print money to bail them out, I confess the bonuses they’re still paying themselves make me feel sick.”
Some who know Wall Street say the culture really is changing and bankers and traders are now more cautious. Their pay is also becoming closely tied to their performance, said Brad Hintz, a stock analyst with Sanford C. Bernstein, and a former executive with Morgan Stanley and Lehman Brothers.
“Is Wall Street going to continue to be well paid? Yes,” Hintz said. “The Wall Street people won’t be selling pencils or apples on the streets.”
And not everyone on Main Street cares about what Wall Street players get paid — especially as more banks move to repay the billions they borrowed from taxpayers with interest.
“If that is the case, then those banking officers deserve to be compensated well,” said George Fleming, 64, a career transition coach in Phoenix, Arizona. “I have been somewhat critical of executive compensation in the past, but you know what, if they are returning the money that the taxpayers have loaned them with that kind of return, then I’m certainly a big fan.”
Fleming seems to be in the minority.
At a shopping mall in Nashville, Tennessee, Annie Phillips, a 48-year-old housewife, used profanity to describe Washington’s handling of Wall Street.
“Out here in the real world, people are unemployed and hungry and those bankers and the other big shots don’t give a damn,” Phillips said.