1 Answer

Simple answer. Inept presidents. 

In an interview with Bloomberg News/Businessweek, President Obama said that “he doesn’t ‘begrudge’ the $17 million bonus awarded to JP Morgan Chase & Co. Chief Executive Officer Jamie Dimon or the $9 million issued to Goldman Sachs Group Inc. CEO Lloyd Blankfein. “I know both those guys; they are very savvy businessmen,” the President continued. “I, like most of the American people, don’t begrudge people success or wealth. That is part of the free-market system.” Mr. Obama went on to compare Dimon and Blankfein to “baseball players who are making more than that and don’t get to the World Series either, so I’m shocked by that as well.”

There are several problems with the President’s analysis, the first is that baseball players, whatever their faults, were not architects of a system which bet the nation’s financial future on ever rising housing prices. Baseball players did not create a system of easy credit that let virtually anyone get a mortgage and then re-package this investment junk as safe investments.

JP Morgan Chase, Goldman Sachs, along with other big banks and Wall Street financial firms built this system and they richly rewarded their executives for it. Goldman Sachs CEO Henry Paulson, for example, took home $101 million in salary, stock options, and bonuses between 2003-2006.

When the financial house of cards these lords of finance built collapsed, too many Americans lost their homes, their jobs, and their retirements. Long term unemployment, teen unemployment, and the number of home foreclosures have all reached records highs.

Wall Street, however, has not suffered, as the $26 million in “bonuses” awarded to Dimon and Blankfein attest. The bonus pool for Goldman Sachs, Morgan Stanley, JP Morgan Chase & Co. for 2009 is $39.9 billion. This is a mere 9 percent below the 2007 bonus pool ($44.7 billion), the top Wall Street pay year on record.

The reason why Wall Street bankers are reaping in millions while working Americans suffer is because the Bush Administration, the Obama Administration, and independent regulatory agencies such as the Federal Reserve Board eliminated “free enterprise” in finance and saved these firms from paying for their mistakes with bailouts. 

Read more: http://economyincrisis.org/content/obamas-savvy-bankers-and-2009-wall-street-bonuses