Yesterday it was reported that Wall Street banks dished out $18.4 billion in bonuses during 2008. Today, President Obama and Senator Chris Dodd had some harsh words for those bonuses:
Bonus round: Obama, Dodd hammer Wall Street over $18.4B largesse
Following the report that Wall Street firms had handed out $18.4 billion in bonuses last year amid the financial meltdown, Senate Banking Committee Chairman Christopher Dodd (D-Conn.) said he would look for "every possible legal means" to get the money returned.
"I'm going to be urging - in fact not urging, demanding - that the Treasury Department figures out some way to get the money back," Dodd said. "This is unacceptable."
However, here is what you didn't hear from either President Obama or Senator Dodd as they blasted the bonuses: legislation they are blocking makes it possible to retroactively strip those bonuses. Two weeks ago, the House passed legislation, Finance Chair Barney Frank's HR 384, which retroactively strips recipients of bailout money from receiving bonuses (more in the extended entry):
[HR 384] Adds the stricter executive compensation limits from the auto bailout bill to firms that receive TARP money. The stricter limits include a ban on bonuses and incentives for to the 25 most highly compensated employees of a company, "any compensation plan that would encourage manipulation of such institution's reported earnings to enhance the compensation of any of its employees," and a mandate to divest in private airplanes. Notably, these stricter limits would apply retroactively to executives from companies that have already received TARP money.
This legislation was passed by the House only eight days ago, over the objections of all but 18 House Republicans. It is still be possible for Senate Democrats to pass a mirror to HR 384, and send it to President Obama's desk. In fact, such a bill would have to first be passed through the Banking Committee, chaired by Senator Dodd. Further, if Democratic Senators were urged to pass this legislation by the Obama administration, it is likely that such legislation could be passed next week, given the massive influence President Obama has with Senate Democrats. And then, poof, the excesses of the bonuses would be solved.
However, as reported on multiple occasions on Open Left, this simply isn't happening. Instead of passing this law, and stopping the bonuses, Senator Dodd and White House NEC chair Larry Summers simply exchanged letters of assurance. They could have stripped these bonuses, but they themselves chose not to do so.
There are some very good things happening with the Obama administration (check out today's new campaigns against Republicans on the stimulus, for example) but this simply isn't one of them. It is disingenuous for President Obama and Senator Dodd to complain about Wall Street bonuses when they are the two major obstacles to passing legislation that would actually strip those bonuses. This legislation isn't abstract, either, as it already written, and has already passed the U.S. House.
Quite frankly, either Senator Dodd and the White House needs to start pushing for mirror legislation to H.R 384 in the Senate, or they need to stop complaining about Wall Street bonuses. If they actually believed those bonuses were a bad idea, and were not simply just scoring political points by complaining to the media about them, then it would be easy for either of them to strip those bonuses. It is time to take on the responsibility that comes with being in the majority.