Wall Street Bonuses

Wall Street's image is undergoing a public flogging after financial firms here paid out bountiful bonuses in 2008 — one of the worst years in financial market history.

However,President Barack Obama believes the multi-billion dollar bonuses that Wall Street banks awarded themselves for 2008 are "outrageous", White House spokesman Robert Gibbs said on Thursday.

Despite losing hundreds of billions of dollars on risky loans and accepting massive cash injections from taxpayers to stabilize their businesses, Wall Street firms paid out an estimated $18.4 billion in cash bonuses, says the New York state comptroller.

While the hefty payout to bankers was 44% lower than 2007, it was still the sixth-largest bonus pool in history. A big chunk of Wall Street employees' annual income is in the form of performance-driven bonuses.

The New York comptroller reported this week that Wall Street firms paid out $18.4 billion (12.8 billion pounds) in bonuses to employees, despite receiving multi-billion dollar payouts from the government to save them from collapse in the face of the worst financial crisis in decades.

The bonus revelation was greeted with outrage by President Obama, as well as some lawmakers and compensation experts, largely because the cash was doled out at a time when the U.S. economy is suffering its worst downturn since World War II and nearly 5 million Americans are collecting unemployment.

President Obama described the payouts as "shameful," branding the Wall Street behavior as "the height of irresponsibility."

"We're not going to be able to do what is needed to be done to stabilise our financial situation if the American people read about this type of outrageous behaviour," he said.

Gibbs said Obama would talk in more detail about the issue before meeting his Treasury Secretary Timothy Geithner at the White House later on Thursday.

The New York comptroller said it was unclear if the banks had used taxpayer money for the bonuses but he urged the Obama administration to examine the issue closely.

Gibbs also said the White House believed that the first $350 billion of the financial bailout programme had failed to live up to Americans' expectations. The Obama administration and many lawmakers have said there were too few strings attached to the money released to shore up banks.

After a meeting with Treasury Secretary Timothy Geithner, Mr. Obama said:

One point I want to make is that all of us are going to have responsibilities to get this economy moving again. And when I saw an article today indicating that Wall Street bankers had given themselves $20 billion worth of bonuses — the same amount of bonuses as they gave themselves in 2004 — at a time when most of these institutions were teetering on collapse and they are asking for taxpayers to help sustain them, and when taxpayers find themselves in the difficult position that if they don’t provide help that the entire system could come down on top of our heads — that is the height of irresponsibility. It is shameful