January 30th, 2009
02:21 AM GMT
Share this on:

NEW YORK — News this week of big bonuses paid out at financial firms on government life support has sparked outrage. AIG is paying $450 million to roughly 400 people at a financial products unit - the same unit that directly contributed to massive losses at the insurer. The company calls them “retention bonuses”.

 A woman holds up a sign near Wall Street on September 22, 2008, in New York City.
A woman holds up a sign near Wall Street on September 22, 2008, in New York City.

They are not alone. The New York state comptroller’s office said cash bonuses paid by Wall Street firms totaled $18 billion in 2008. That is down sharply from the boom times, but still unbelievable considering that these companies would be out of business if not for taxpayer bailouts.

Those headlines stand in stark contrast to another story told to me this week. A medium sized company, hit hard by frozen credit markets and clients that are behind in payments, found itself running low on cash. The bosses made the difficult decision of asking their workers if they would skip a pay period. It was totally voluntary. Ninety percent agreed, with many coming up to the bosses after to express their support and willingness to pull together to make it through this crisis.

Another story crossed our desks about a Michigan pancake restaurant where workers got together and agreed to work a shift with no pay to help the restaurant owner bring down costs. Local patrons, hearing the news, left more generous tips to help make up the difference.

These are not big bosses worth millions of dollars who make a big show of taking a dollar salary as a public relations move. These are real people with real bills who are making big sacrifices to try to save their jobs and the companies they are loyal to.

Maybe we should require CEO’s at companies taking taxpayer money to do a job swap and go spend some time out in the real world. They might find out that you don’t need to pay million dollar bonuses to find employees that are worth holding on to.



soundoff (21 Responses)
  1. hideaki nagano

    crisis is not good.
    i read negri.
    so what do you read?

    January 30, 2009 at 2:40 am |
  2. Andrew

    Ordinary workers will only take so much before they get a little angry. There is some disturbing news from France today that the leftist groups are fermenting dissent amongst workers there. Politicians and business leaders can take the lead and be seen to be sacrificing like we all will need to, otherwise the fruit of dissent will be there for the picking in the US as well. (www.jwsgoldsilver.com)

    January 30, 2009 at 3:47 am |
  3. Rebecca, GA

    Greed! Those Wall Street guys paid themselves (18.4 billion) as much or more than our country spends on one social program annually. I can’t stand the hypocrisy of conservatism. Greed! Also, I find it strange that these billionaires share a party with strong christian fundamentalist…more hypocrisy. If they were truly christians and they tithed 10%, our churches would be very wealthy. Imagine the grand cathedrals and priest bonuses!!

    January 30, 2009 at 4:13 am |
  4. Su Y

    Those shameless greedy CEOs are just like vampires that suck all the blood from innocnet people.

    January 30, 2009 at 4:14 am |
  5. Michael

    'Retention bonuses' for overpaid financial types are a cynical, venal joke in the best of times. In current conditions, they cross the line to mind numbing immorality. This is why a much sharper progressive tax is needed in the US.

    January 30, 2009 at 4:25 am |
  6. LC

    Retention bonuses???! ! While AIG employees in Asian insurance subsidiaries (who totally had no hand in this mess) are facing possible job loss b/c the subsidiaries are being sold. What gall!

    January 30, 2009 at 5:29 am |
  7. Sheila

    Yes, its the ordinary people who suffer. And during these times we it is very hard to understand the logic of the actions taken by governments bailing out those largely responsible for the financial mess the world is in.

    January 30, 2009 at 5:42 am |
  8. alex argote

    we just saw the decline and fall of capitalism, so it is time to embrace another ism..

    January 30, 2009 at 6:42 am |
  9. Cday

    Those Wall Street bankers, blinded by their greed, have lost track of reality. After creating such a mess, all they care is still how to fill their own pockets, without realizing that average Americans are struggling to hold one to their jobs and the survival of many companies. The American taxpayers have the rights to be angry. Wake up, the Wall Street bubble has burst, for good.

    January 30, 2009 at 7:10 am |
  10. Mark

    There seems to be a disconnect with reality in the financial services industry. The industry has been changed fundamentally by the events of the past year. How can they not understand that it is no longer the same industry it was even six months ago?

    The idea of "retention bonuses" is laughable. Which cash-rich, high-flying competitor is going to offer exorbitant salaries and bonuses to whisk away their treasured employees? Investment banks exist no more, the majority of the risky instruments the industry hawked for massive profit no longer have any (positive) value. and the remaining players are struggling to stay afloat.

    How can they justify bonuses they would have never received without the government's handout?

    January 30, 2009 at 7:51 am |
  11. bwana

    Top management sure has learned their lesson! Not!

    Bonuses during 2008 or even the end of 2007 are total B.S.!

    $18 billion of bonuses in 2008 is simply criminal! Specially if these same companies have received government assistance.

    January 30, 2009 at 8:15 am |
  12. Dave Scott

    This is what happens when the government gives money without strings attached. There should be NO BONUSES paid to anyone. Bail out money is supposed to SAVE the company from foreclosure and NOT reward people that caused the losses in the first place.

    I would LOVE to see Congress pass a bill that would automatically disallow CEO's from getting bonuses etc if their company isn't making a profit.

    Obama would be very correct if he froze the money already pledged to these businesses until they agreed to use it properly and not pay bonuses to high level execs who worry about missing a payment on their daughter's Ferrari.

    January 30, 2009 at 8:31 am |
  13. Rocky Smith

    The goverment can make all kinds of laws, why not one that elimiates all bonuses for any institution receiving any taxpayer bailout money. Simple and easy.

    January 30, 2009 at 8:56 am |
  14. Phil

    Disgusting – disgraceful – after receiving a bailout, AIG and bankers paying out a bonus to their top executives. The American Citizens should go on a rampage and demand their tax money be returned. If the Senate approves the 851 billion stimulus package, it's the same thing all over again. Only the Democrats could be so ignorant to approve this package.
    Where is the bailout of the people out of work? Losing homes and not able to pay their rent while the bailed out idiots get bonuses. No wonder the U.S. is approaching depression. Greedy CEOs and executives – where are the bonuses for the people that do the work?
    Get the names of these Companies who are paying $3M for 30 second ads at the Super Bowl. No wonder the TV stations have money to throw around. These same companies will be screaming bailout later on. The world is blaming the U.S. for the financial condition and with incidents like this, no wonder.
    Pres. Obama says it is shameful what they are doing – and yet pushes for another bailout with his stimulus plan instead of helping the citizens, again bailing out businesses. In the old days when the businesses couldn't manage or control, they went bankrupt. That should be happening today, especially with the big 3 and their Unions.

    January 30, 2009 at 9:39 am |
  15. Nam(South Korea,Busan)

    Obama said "shameful".

    That's what it is.

    January 30, 2009 at 11:47 am |
  16. Deb Yambor

    On CNN this morning I was delighted to hear about a congresswoman from Ohio who was encouraging people whose homes were in foreclosure to stay put – in effect, to sqat. The congresswoman referenced real estate law as having unexplored areas to help people keep their homes. I was relieved. My family is not at risk of losing our home, but I can imagine the panic a family experiences upon losing theirs.
    Along these lines, I also read an article on your website that quoted an official from the banking community who alluded to a rather social Darwinian dynamic regarding homeowning - something like, "it is not the best plan of action to bail out homeowners, because they may not have the financial health to maintain a home" etc, etc... Capitolism in motion. But, the same economic warning needs to be given to the companies the US government has bailed out. GM and Bank of America may not have the economic health to maintain themselves after a bailout. Where did such blatent hypocracy originate? In the Bush Administration. Those people have much to answser for, though they will not be confronted by our country. Their greed has crippled our nation.

    January 30, 2009 at 1:07 pm |
  17. Carl Cripe

    http://mail.isp.netscape.com/email/scripts/index.pl

    Here comes the more of the same.

    January 30, 2009 at 1:53 pm |
  18. Alicia

    It is such bull for these CEO's and coporate heads to be able to pay themselves the ungodly amounts they do for bonuses. Why should the tax payers bail them out on private enterprises just so that they can live high on the hog? This is an outrage! People losing there homes, can't buy food, layed off work or cutting back hours and these heads live the luxury life. There is something terribly wrong in this country for our government to keep allowing this to happen. These people should be made to pay back all their bonuses so that the people who lost their savings could breathe a little easier. When will this maddness stop??

    January 30, 2009 at 2:32 pm |
  19. Michael C. McHugh

    President Obama is certainly being nicer to Wall Street and the big business types than I ever would have been. After all, they got us into this mess, along with their friends in the Republican Party, and now all they have to offer is more of the same.

    Maybe the time has come to start nationalizing some of these big banks and make them operate as a public service, like gas, water and electricity. Maybe we need a National Investment Bank owned by the government to replace these corrupt and failing institutions. Other countries are doing that, and certainly the common people of the US need a banking system that serves their needs and not just those of a privileged aristocracy.

    Frankly, I am amazed at the patience of the American people. Our Founding Fathers would have long ago started another revolution, but perhaps we no longer have the courage they had.

    January 30, 2009 at 2:48 pm |
  20. a name

    Compliments for this issue being brought up.

    I am not an economist, so I don’t know if this is ridiculous, but can people that have extra savings volunteer to offer it up as a new kind of investment? I will gladly invest 20% of my savings into a private venture capital project to get lending going again if it will save us from ruin.

    Can there be a drive, marketing, and advertising for such a thing to happen? I want my kids to grow up in a safe and healthy society. The return is a qualitative incentive that goes beyond any material self interest. I don’t want my kids, grandkids and their grandkids to pay for all the debt that is being generated. I am scared seeing social disorder break out.

    The best and the brightest could head it up. No government, no red tape, no greedy bankers, just people trying to save our nation and perhaps the world. Foolish..never work? What the hell do I know?

    I’m just nauseated watching this crap happen to people.

    February 1, 2009 at 12:00 am |
  21. Dr. Virginia Lubell

    To believe that life's meaning revolves around 'the market' and that workers take the brunt of the careless decisions to the concept that 'the business of business is business' shows that The Free Market has put really meaning to the concept of 'slavery' where you 'owe your soul to the company store'.

    February 11, 2009 at 12:15 am |

Post a comment


 

CNN welcomes a lively and courteous discussion as long as you follow the Rules of Conduct set forth in our Terms of Service. Comments are not pre-screened before they post. You agree that anything you post may be used, along with your name and profile picture, in accordance with our Privacy Policy and the license you have granted pursuant to our Terms of Service.

About Business 360

CNN International's business anchors and correspondents get to grips with the issues affecting world business, and they want your questions and feedback.

 
 
Powered by WordPress.com VIP