Bankers Lose to Congressmen Among Americans Furious Over Pay
By Alison Fitzgerald
Dec. 10 (Bloomberg) -- Wall Street firms are recovering. Their standing with the American public isn’t.
Executives at financial firms, coming off two years of failures, bailouts and writedowns, are less popular than Congress, lawyers and insurance companies. As they prepare to give out year-end bonuses, they risk another wave of public fury, according to a Bloomberg National Poll.
Two-thirds of Americans say they have an unfavorable view of financial executives. More than half say big financial companies are only out to enrich themselves and also say they shouldn’t have received government aid. And most Americans don’t want to see bankers collecting fat checks at the end of the year if their companies were bailed out by taxpayers.
“The fact that they’re even in existence should be bonus enough,” says Cassie Swihart, a 58-year-old retired registered nurse from Warsaw, Indiana, who responded to the poll of 1,000 U.S. adults, conducted Dec. 3-7 by Selzer & Co., a Des Moines, Iowa-based firm. The margin of error is plus or minus 3.1 percentage points.
Banks that got taxpayer help through the Troubled Asset Relief Program -- the $700 billion financial rescue plan passed by Congress last year -- shouldn’t pay any bonuses, according to 75 percent of those polled.
Of those, 51 percent say even the banks that have paid the government back shouldn’t be rewarding their employees so soon.
“Why would you want to give somebody a bonus who put us into this situation?” said respondent Elijah Brown, 42, an unemployed union contractor from California.
Bailouts Bad Idea
Brown is also among the 64 percent of people who said bailing out banks was a bad idea. To avoid future rescues, just over half of respondents said banks should be subject to stricter regulation. A minority, 31 percent, would allow troubled banks to fail and an even smaller number, 10 percent, favor breaking up big banks.
President Barack Obama has chastised financial companies for “bloated bonuses.” He has proposed an overhaul of financial rules that avoids breaking up large, healthy companies or that throws big banks in financial trouble into bankruptcy. A majority of respondents say Obama strikes about the right balance, coming off as neither pro- or anti-business.
The public opposition to Wall Street firms paying bonuses shows the widening disconnect between executives such as Goldman Sachs Group Inc.’s Lloyd Blankfein, who argue they need to pay generously to retain good employees, and the broader public that blames big banks for an economic collapse and doubling of the unemployment rate in two years.
Job Losses
The U.S. economy fell into its deepest recession since the Great Depression in December 2007. More than 7 million jobs have disappeared. Some economists, including Federal Reserve Chairman Ben S. Bernanke, say the recession has likely ended. Unemployment, at 10 percent in November, has been slow to recover.
Many large banks have roared back to profitability on the leading edge of the recovery. Goldman Sachs, Morgan Stanley and JPMorgan Chase & Co.’s investment banking unit will hand out a combined $29.7 billion in bonuses, according to analysts’ estimates. That’s a record, beating out the $26.8 billion in 2007 and up 60 percent from last year when all three took billions in support from the Treasury to weather the financial meltdown.
Compensation Set Aside
Goldman alone set aside $16.7 billion for compensation and benefits in the first nine months of 2009, enough to pay each worker $527,192. Goldman has paid back $10 billion in TARP money with interest.
“If you cut bonuses it will just let people go elsewhere. It will be a talent drain from the U.S.,” said Garson Li, 27, a Houston-based consultant at Deloitte who was among the 23 percent of poll respondents who approved of banks’ paying bonuses if they took government aid.
Banks are rushing to pay back the Treasury to get out from under compensation limits that come with accepting taxpayer largesse. Bank of America Corp. said last week it will repay the $45 billion it borrowed as it tries to recruit a new chief executive to replace the outgoing Ken Lewis.
Goldman’s bonuses, likely to be paid in January, will come as Congress tries to complete an overhaul of financial regulations aimed at cutting the risk-taking that drove outsize profits and triggered huge bonuses, and ultimately led to the financial crisis and recession.
‘Little Control’
Devin O’Leary, 41, a film critic from Albuquerque, New Mexico, welcomed tougher oversight. “They’ve had little control up to now and if you give a big corporation little control, they’re going to do everything they can to get away with things.”
Karen Thomas, 65, who runs a land-surveying business with her husband in Greeley, Colorado, said the government should let teetering banks fail, a view shared by 31 percent of poll respondents.
“That’s our capitalist system,” she said. “No one’s going to bail us out and I wouldn’t even ask for it.”
To see the methodology and exact wording of the poll questions, click on the attachment tab at the top of the story.
To contact the reporters on this story: Alison Fitzgerald in Washington at afitzgerald2@bloomberg.net.
Last Updated: December 9, 2009 18:00 EST |
