Obama right to be furious over $20bn Wall Street bonuses

Friday, January 30: Barack Obama yesterday tore into "shameful" Wall Street bankers who appear to have spent nearly $20bn of the $700bn bailout money allocated in October on bonuses in December and January. In a statement released from the Oval office, Obama accused the bankers of displaying "the height of irresponsibility" – a phrase that deliberately recalls his inauguration speech, in which he demanded "a new era of responsibility".

Though bonuses fell by around 44 per cent, the Wall Street payouts were still the sixth largest in history and averaged out at around $112,000 per banker. "They have to start acting in a more responsible fashion if we are going to get this economy moving again," said Obama. "[The American people] don't like the idea that people are digging a bigger hole even as they're being asked to fill it."

In the New York Times, Sheryl Stolberg and Stephen Labaton say Obama was clearly furious. "It was a pointed – if calculated – flash of anger from the president." But they remind readers that it comes as the White House prepares to ask Congress to move quickly on a second stimulus package that will cost in the region of $900bn. They also report that Vice-President Joe Biden mirrored his boss's fury, saying: "I'd like to throw these guys in the brig. They’re thinking the same old thing that got us here, greed. They're thinking, 'Take care of me'."

In the Los Angeles Times, Christi Parsons and Jim Puzzanghera point out that because the conditions of last year's bail-out don't prevent generous bonuses, stern warnings like this are a necessary tactic. "In issuing the harsh words, the President reached for the most effective tool at his disposal right now: public shame."

And "Obama has had success with the tough talk lately," they say. When he chastised Citigroup executives for trying to buy a new private jet even as they appealed for bail-out money the sale did not go through.

Writing today on The First Post, Alexander Cockburn says that despite Obama's strong words and plans for the dire US economy, he has not revealed any fresh thinking. "There's been no exciting surprise or originality in Obama's opening engagements with the reeling economy," says Cockburn. "His team is flush with economists and bankers who helped blaze the path to ruin."

And the further $900bn bailout he is trying to push through Congress is only a short-term solution to the crisis. "If anything can make Wall Street smile bravely through the hail of public ridicule for the way it's been handing out the previous wad of bail-out money in the form of bonuses, it's the prospect of getting further truckloads of greenbacks to lend out to Americans already crippled by debt," Cockburn says.

Also on The First Post, Charles Laurence reports that the credit crunch appears to be spawning a new generation of 'Bonnie and Clyde' outlaws, feeding off public anger towards greedy Wall Street financiers.

FIRST POSTED JANUARY 30, 2009