Obama Defends Bank CEO Bonuses

Friday, February 12, 2010
Jamie Dimon

Enormous Wall Street bonuses have been roundly criticized by President Barack Obama in the past, calling them “obscene,” “shameful,” an “outrage” and a violation “our fundamental values.” But now Obama doesn’t feel the need to “begrudge” the combined $26 million that the heads of JPMorgan Chase and Goldman Sachs are getting.

 
In an interview with Bloomberg News, the president said he knows JPMorgan CEO Jamie Dimon ($17 million pay package) and Goldman CEO Lloyd Blankfein ($9 million) and added that many pro athletes take home even more money than Wall Street tycoons, which doesn’t shock him either.
 
“I know both those guys; they are very savvy businessmen,” Obama told Bloomberg. “I, like most of the American people, don’t begrudge people success or wealth. That is part of the free- market system.”
 
Obama also said he was okay with the bonuses for Blankfein and Dimon because they accepted them in stock rather than cash, calling it a “fairer” measure of their success.
 
Both JPMorgan and Goldman had to be bailed out in 2008 with billions of taxpayer dollars, which has since been paid back to the U.S. Treasury.
 
Obama’s softer stance on Wall Street compensation left him open to attacks from political opponents and others. Republicans immediately pointed out that he had flipped from his previous tougher stance, while MIT Professor Simon Johnson blogged that “the White House has a major public relations disaster on its hands.”
 
Nobel Prize-winning economist Paul Krugman called Obama “clueless,” adding: “First of all, to my knowledge, irresponsible behavior by baseball players hasn’t brought the world economy to the brink of collapse and cost millions of innocent Americans their jobs and/or houses.”
 
Still others suspect that political fundraising has a place in this story. Jake Tapper of ABC News notes that the Republican Party is trying to win over Wall Street donors, such as Dimon, who have traditionally contributed to the Democratic Party.
-Noel Brinkerhoff
 
Obama Doesn’t ‘Begrudge’ Bonuses for Blankfein, Dimon (by Julianna Goldman and Ian Katz, Bloomberg News)
Clueless (by Paul Krugman, New York Times)
GOP Chases Wall Street Donors (by Brody Mullins and Neil King, Jr., Wall Street Journal)

Comments

Joseph Goldman 1 year ago
If most of the pay is in stock options, that are tied to long term gains,5 year or more, then the incentive is no longer the quarterly gains of the stock and makes for a more proper performance measure. The vetting period for stock options should not be less than the vetting period for worker pensions.

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