President Barack Obama branded Wall Street bankers "shameful" on Thursday for giving themselves nearly $20 billion in bonuses as the economy was deteriorating and the government was spending billions to bail out some of the nation's most prominent financial institutions.
"There will be time for them to make profits, and there will be time for them to get bonuses," Obama said during an appearance in the Oval Office with Treasury Secretary Timothy Geithner. "Now's not that time. And that's a message that I intend to send directly to them, I expect Secretary Geithner to send to them."
It was a pointed — if calculated — flash of anger from the president, who frequently railed against excesses in executive compensation on the campaign trail. He struck his populist tone as he confronted the possibility of having to ask Congress for additional large sums of money, beyond the $700 billion already authorized, to prop up the financial system, even as he pushes Congress to move quickly on a separate economic stimulus package that could cost taxpayers as much as $900 billion.
This week alone, American companies reported as many as 65,000 job cuts, and public anger is rising over reports of profligate spending by banks and investment firms that are receiving help from the $700 billion bailout fund. About half of that $700 billion is still available, but the new administration has yet to announce how it will use it, and many analysts think it will take far more money to stabilize the banking system.
Should Obama have to go to Congress to seek more money for the bailout fund to avert the failure of more banks, he would most likely encounter opposition within both parties and demands for tighter restrictions on pay for executives of institutions that receive government assistance.
Obama was reacting to a report by the New York State comptroller that found financial executives had received an estimated $18.4 billion in bonuses for 2008, less than for the previous several years but the same level of bonuses as they received in 2004, when times were flush."That is the height of irresponsibility," Obama said. "It is shameful. 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
In the meantime, public outrage is already forcing some companies to rein in their lavish spending. John Thain, the former Merrill Lynch executive who was forced out of Bank of America, said this week he would reimburse Bank of America for an expensive renovation of his office that included an $87,000 area rug and $35,000 commode.
But it took the urging of the Obama administration to force Citigroup, which received an infusion of taxpayer funds last year, to abandon plans to buy a $50 million corporate jet. On Thursday, Obama made reference to the jet, without singling out Citigroup by name; his remarks came one day after the president met at the White House with business leaders, including Richard Parsons, the new chairman of Citigroup.
On Capitol Hill, Senator Christopher Dodd of Connecticut, the chairman of the Senate Banking Committee, issued his own warning on Thursday, saying companies would be summoned to Capitol Hill if taxpayer money was involved.
Obama's message on Thursday was reinforced by Vice President Joseph R. Biden Jr., who pledged in an interview with CNBC and The New York Times that the government would spend the remaining $350 billion of the troubled assets money "wisely and prudently and transparently."
Biden said that he, like the president, was outraged by reports of large bonuses going to Wall Street executives.
"I'd like to throw these guys in the brig," he said. "They're thinking the same old thing that got us here, greed. They're thinking, 'Take care of me.' "