President Decries 'Shameful' Bonuses For Wall St. CEOs
Friday, January 30, 2009
President Obama yesterday scolded Wall Street bankers who received millions of dollars in bonuses last year, calling the payouts "shameful" and chiding the executives for a lack of personal responsibility at a precarious time for the nation's economy.
"There will be time for them to make profits, and there will be time for them to get bonuses," the clearly irritated president said. "Now's not that time. And that's a message that I intend to send directly to them."
Obama's comments came on the same day that the Democratic chairman of the Senate Banking Committee threatened to bring before his committee any Wall Street executives who take big bonuses after their firms are propped up with public money.
"Whether it was used directly or indirectly, this infuriates the American people and rightly so," said Sen. Christopher J. Dodd (D-Conn.). "So I say to anyone else who does it: If you do it, I'm going to bring you before the committee."
The president said he was reacting to a New York Times report about Wall Street executives who had given themselves almost $20 billion in bonuses in 2008, the same amount they received collectively during the much more bullish 2004.
The article was based on a report by the New York state comptroller's office that said last year's total of Wall Street bonuses was the sixth-highest ever, despite the poor economic performance of the firms.
"Part of what we are going to need is for folks on Wall Street, who are asking for help, to show some restraint and show some discipline and show some sense of responsibility," Obama said as he ended a private meeting with Treasury Secretary Timothy F. Geithner.
"The American people understand that we've got a big hole that we've got to dig ourselves out of," Obama said. "But they don't like that people are digging a bigger hole even as they are being asked to fill it up."
Obama had already been critical of executives who take big bonuses and companies that make big purchases. Last week, he directed Geithner to call Citigroup to express the administration's displeasure at the struggling company's impending purchase of a $50 million jet.
"We shouldn't have to do that, because they should know better," Obama said, sounding more like a frustrated schoolmarm than a president. "We will continue to send that message loud and clear."
A day earlier, however, Obama passed up a chance to send that message publicly.
The president stood with 13 CEOs in the East Room of the White House on Wednesday to push for congressional passage of his $816 billion stimulus package. He talked broadly about personal responsibility but did not specifically refer to excessive pay, even though several of the executives have made many millions of dollars a year.
Samuel J. Palmisano, chief executive of International Business Machines, made $24.35 million in 2007, the last year for which numbers were compiled by Forbes. That included $5.8 million in bonuses. David M. Cote, the CEO of Honeywell International, earned $6.23 million, including $4.2 million in bonuses.
"Part of what led our economy to this perilous moment was a sense of irresponsibility that prevailed from Wall Street to Washington," Obama said after the closed-door meeting. "That's why I called for a new era of responsibility in my inaugural address last week."
Participants in the meeting described it as a round-robin discussion in which the president asked all of the CEOs to describe their sense of the economy and to explain how their own businesses might be helped by the stimulus package.
Michael R. Splinter, chief executive of Applied Materials, a Silicon Valley company best known for building machinery that makes computer chips, said in an interview after the meeting that the president did not raise his concerns about executive compensation.
"We really didn't get off into any side things about car-company guys taking jets or stuff like that," Splinter said. "I mean, because he knows that, you know, we're all working hard to improve our companies, and if we improve our companies it will be a big part of the economy improving. A lot of the GDP was represented in the room today."
Obama "didn't raise his frustration, and we really stayed focused," Splinter added. "Once the press left, we really got down to business very fast."
Instead, Splinter described the meeting as a "candid" exchange about the struggles that some of the country's biggest businesses face. The core businesses for Applied Materials "have slowed down dramatically," Splinter said he told Obama, citing lower demand, lack of confidence and the tight credit market.
Obama aides said the president did mention the Citigroup jet purchase to the group and talked about the need for corporate responsibility.
"The president doesn't meet with CEOs where he doesn't talk about responsibility," press secretary Robert Gibbs said in his daily briefing with reporters. "They specifically talked about the jet purchase."
Staff researcher Madonna Lebling contributed to this report.