WASHINGTON - President Barack Obama sharply crticized Wall Street executives yesterday, calling it the "height of irresponsibility" that they gave themselves and employees huge bonuses last year even as the government was paying out billions to bail out ailing financial firms.
Obama's stern lecture was inspired by a new report finding the executives gave out $18.4 billion in bonuses in 2008 - a big drop from the previous year but outrageous to the president just the same.
Seated in the Oval Office after a meeting with Treasury Secretary Timothy Geithner, Obama said this is not the right time for executives to be raking in huge bonuses.
"That is the height of irresponsibility," Obama said. "It is shameful, and part of what we're going to need is for folks on Wall Street who are asking for help to show some restraint and show some discipline and show some sense of responsibility."
"There will be time for them to make profits, and there will be time for them to make bonuses," the president said. "Now is not that time."
In issuing the harsh words, the president reached for the most effective tool at his disposal right now: public shame. Though the financial bailout passed last fall imposes some limits on executive compensation, for example prohibiting incentives for taking excessive risks as well as excessive severance packages, it doesn't ban bonuses simply because they are too generous.
But Obama has had success with tough talk lately. This week, after he questioned Citigroup's decision to buy a new corporate jet even as it takes bailout money, the troubled bank canceled the order. Aides say he called for responsibility when he met with corporate executives in the middle of the week.
New York Comptroller Thomas DiNapoli's report found that financial firms decreased their 2008 cash bonuses by 44 percent from the prior year, a figure determined mainly through an analysis of personal income-tax collections. Even though the decline was significant, the payouts were still the sixth-largest on record, according to his report. It said the average bonus last year was $112,000.
That sent Obama through the roof, press secretary Robert Gibbs suggested early yesterday afternoon. The president's one-word reaction to the report, he said, was, "Outrageous."
Obama may soon have to make the decision to send more money to the financial system, and news about executive payouts only make his political sales job even harder.
After finishing his afternoon meeting with Geithner, the president said exactly that in a brief meeting with reporters.
"The American people understand that we've got a big hole that we've got to dig ourselves out of," he said. "but they don't like the idea that people are digging a bigger hole even as they're being asked to fill it up."