Bonus Bonanza: Your Tax Dollars At Work
A new report from the New York State Attorney General's Office "No Rhyme Or Reason: 'The Heads I Win, Tails You Lose' Bank Bonus Culture" details the massive bonuses paid out by failing Wall Street firms while they received tens of billions in federal bailouts.

The report reveals that Citigroup and Merrill Lynch lost a combined $54 billion in 2008 while they "paid out nearly $9 billion in bonuses and then received TARP bailouts totaling $55 billion." Three other major Wall Street firms paid bonuses in 2008 "substantially greater than the banks' net income." For example, "Goldman earned $2.3 billion, paid out $4.8 billion in bonuses, and received $10 billion in TARP funding." Similarly, Morgan Stanley which also received $10 billion in TARP funds, earned $1.7 billion and paid $4.475 billion in bonuses.

The short report provides a wealth of detail. Bank of America, which received $45 billion in TARP funds, paid $3.3 billion in bonuses in 2008, of which $2.9 billion was discretionary. 172 BoA employees received at least $1 million with the top four recipients receiving a combined $64 million. The "next four bonus recipients received a combined $36.85 million." At J.P. Morgan Chase which received $25 billion in TARP funds, more than 1,600 people received over $1 million.

The report also shows that the bonus bonanza continues in 2009. At Goldman Sachs, compensation was 260% of net income in the 1st quarter of 2009 and almost 200% in the 2nd quarter. That seems high until it's compared to JP Morgan where compensation was over 350% of first quarter net income this year and over 250% in the second quarter. This compensation-performance ratio could still be considered as rather modest compared to Morgan Stanley where remuneration in the 2nd quarter of 2009 was over 2,600% of net income.

Perhaps it's time for Congress to help fund the bailouts by instituting a new withholding tax on every American worker so that pay stubs would include a line item labeled "Wall Street Bailout Tax." The new revenues would reduce the deficit while reminding everyone of what happens when the Washington is trusted to wisely spend hundreds of billions of borrowed dollars to help the economy.

See NY AG Bonus Report