Obama aides lash banks over bonuses

• Article
• Comments ()
• Click-2-Listen

By Tom LoBianco

Obama administration officials blasted record payouts to the nation's top Wall Street executives Sunday, calling them "offensive" and advocating new financial regulations they say would prevent future taxpayer bailouts.

The nation's top financial firms, including many who benefited from spending paid out by the federal government through the Troubled Asset Relief Program (TARP), are on track to receive billions more in compensation than they did last year.

"The bonuses are offensive," White House senior adviser David Axelrod said Sunday on ABC's "This Week," warning companies that took TARP money that "the paymaster at Treasury is working on that, to try and limit that."

Mr. Axelrod also attacked the banks' business practices, saying the government passed out the TARP bailout funds to encourage more lending and contending the banks have failed to live up to their end of that bargain.

"The most offensive thing is, we haven't seen the kind of increase in lending that we should," he said. "They have responsibilities. They ought to meet those responsibilities. They ought to express them by increasing the lending, which is what we need right now, and by standing down and allowing the kinds of reforms we need to protect consumers and protect the country from the sort of disaster weve seen."

Wall Street payouts were set to increase 20 percent this year over the $117 billion paid out last year, according to the Wall Street Journal. The news was coupled with continuing job losses and stagnant lending - two of the economic woes the TARP funds were supposed to counter.

President Obama's top political adviser also expressed frustration about the bonuses as indicating that Wall Street has not learned a lesson.

"The bonus is an issue because people are frustrated that Wall Street is back to behavior having just basically four months ago been in a different situation and the only way they got out of it is through the good graces of the government and the taxpayers," White House Chief of Staff Rahm Emanuel said Sunday on CBS' "Face the Nation."

Sen. Christopher J. Dodd, Connecticut Democrat and chairman of the Banking, Housing and Urban Affairs Committee, said on Sunday's "Meet the Press" that he would like to see whether some of the bonuses can be blocked.

"What are these people thinking about at these companies? We have poured a lot of ... taxpayer money into these firms to stabilize them, to get our economy moving again," said Mr. Dodd, who has been accused himself of being too cozy with Wall Street over his financial relationship with subprime lender Countrywide Financial Services.

Senate Republican Whip Jon Kyl, however, cautioned against being too aggressive in any attempt to curb compensation.

"Well, in the event that the government basically bails one of these outfits out, it has the, the right and the ability currently, as Chris just noted, to put limits on the compensation and the kind of compensation. But I think we need to be a little careful about this," the Arizona Republican said on "Meet the Press."

He noted specifically the health care reform bill recently passed by the Senate Finance Committee puts "a limit on insurance company salaries; not just for the top executives, but any employee or any consultant, the people that work for any consultant that's hired."

"So let's be a little bit careful that we don't get the government intruding in the business of America to the extent that our free-enterprise system is crippled by business regulations," he said.

Job losses have slowed recently, but the national unemployment percentage remains close to 10 percent, which has added fuel to the political fire against the record Wall Street payouts.

Mr. Axelrod and Mr. Emanuel used their TV appearances to renew a push for tighter financial regulations, something many firms have sought to dilute recently.

"As soon as stability was achieved, and things had a sense of normalcy, what [do] some of the titans in the financial industry do?" Mr. Emanuel asked on CNN's "State of the Union," answering his own question with: "Literally going and fighting the very type of regulations and reforms that are necessary to prevent, again, a crisis like this [from] happening."

Mr. Axelrod also warned that the bonuses fuel a populist backlash and resentment against lenders that may only make things worse for them.

"I think what [financial institutions] need to understand is: On the same day that you saw stories about these bonuses, you saw a story about how wages are at a 19-year low. The American people have limited tolerance for this," he said. The nation's big banks "ought to do the things that they should to help this country, and thats lending ... and thats standing down on financial regulatory reform, letting us move forward on the reforms we need."

Mr. Emanuel agreed: "I think the American people have a right to be frustrated and angry."