$350 Billion Dollar Government Bailout Plan Coincides with $Billions in Wall Street Bonuses

By Robert Weiss

The same Wall Street financial institutions that are recipients of a $350 billion bailout stimulus package - the first half of a total planned $750 billion dollar package from the government - have been found to have paid out $18.4 billion dollars in bonuses in 2008. The $350 billion dollar stimulus package, known as TARP (Treasury Department's Troubled Asset Relief Program), was intended to remove toxic assets from banks and other financial institutions, thus enabling them to continue on with their present operations and also limit the amount of unemployment within these institutions. In reality, many of these organizations received billions of dollars in government aid, distributed millions in bonuses to its executives and then announced thousands of employee layoffs. This is contrary to helping the economy and is working to increase unemployment.

For example, Eagle Bancorp received $38 million from TARP and doled out $1.967 million in executive bonuses and option awards. Bank of America failed to stop Merrill Lynch from issuing $4 billion dollars in year-end bonuses as it was taking over the company.

How did the government miss these bonuses? Those charged with handing out the TARP money were very knowledgeable of the Wall Street model. Hank Paulsen was the acting Treasury Secretary for the Bush Administration at the time that the $350 billion dollars in TARP money was distributed. He also was the CEO for Goldman Sachs until 2006. Neel Kashkari was the head of the TARP plan during the Bush administration and he has been asked by Obama to continue in his position. He is also a former Golden Sachs executive. They should have and were most probably aware of what was happening in regards to the bonuses that were distributed within these companies.

The government wrote checks to the banks instead of buying their toxic assets even though congress was told that TARP funds would only be used to buy toxic assets. In truth, the government walked away from this matter, because it was quicker and easier to give the banks money due the worsening economic crises. Now the banks are stuck with these toxic assets making it more difficult for them to invest in healthier assets. Hopefully the remaining $350 million will be distributed with more insight. A new system of checks and balances is being implemented to protect the interest of the consumers and workers.

Now President Obama and democrats in congress are moving to cap Wall Street bonuses and pay to $400,000, which is the salary paid to the President of the United States. They are also seeking to create a court to restrain Wall Street's massive indulgences. Wall Street firms argue that bonuses are necessary in order to secure good competitive workers and are used to entice talented workers to their firms. Rudy Giuliani defended corporate bonuses telling CNN last week that cutting bonuses would mean less spending in restaurants and stores. These may be valid points, but the truth is that bonuses by definition is a reward for work above and beyond normal expected performance, and if a company needs millions of dollars in bailouts from the government, the executives receiving these bonuses are not performing at beyond level expectations. The resulting job losses by mostly hard working ordinary Americans cannot adequately justify the extra spending in the stores and restaurants.

As a a result of the government mishandling the TARP money and corporations paying out huge bonuses to executives, many hard working Americans are paying the price. Thousands of employees are being laid off. The American taxpayers are directly paying for the government TARP bailout plan. The taxpayers are also paying attorneys' fees for the large financial institutions that are being investigated for their mishandling of the TARP money. This in turn affects many workers' pension and retirement funds.

Rights for America is committed to defending the rights of ordinary Americans who are in danger of losing their hard earned retirement and pension funds due to unethical financial decisions by the government and the big financial institutions. Rights for America has years of experience fighting Wall Street firms and the resulting corruption, neglect and fraud that is associated with it. If you are in danger of losing your hard earned retirement and pension funds, you owe it to your self to contact Rights for America today. [more...]