Washington, D.C. – In a hard-hitting speech on the Senate floor today, U.S. Senator Sheldon Whitehouse (D-RI) sharply criticized Wall Street firms that retained lavish compensation packages for high-ranking executives and spent huge sums on luxury items while at the same time receiving billions of dollars of taxpayer-funded assistance.
This week alone saw reports that Citigroup, one of the recipients of federal money, planned to purchase a $50 million private jet; that executives at Merrill Lynch, now a Bank of America subsidiary and also a recipient of federal funds, spent hundreds of thousands of dollars on office furnishings; and that last year, Wall Street employees received an estimated $18.4 billion in bonuses – the sixth highest total in history.
“Firms on the brink of extinction, that were saved only by the U.S. taxpayer, still saw fit to reward the people who had created this mess,” Whitehouse said. “The Wall Street culture of lavish self-indulgence is not likely to change, but something very important has changed – the taxpayer is now paying for it, and they’re not going to stand for it for long.”
Last year, the federal government committed hundreds of billions of dollars to support the ailing financial services industry, intending the money to be used to restore confidence in the banking system and to persuade the firms to jump-start stalled consumer lending. But today, months after the firms received the first injection of capital, lending remains slow, and the national economy is struggling badly.
The Wall Street Journal reported last October that “[f]inancial giants getting injections of federal cash owed their executives more than $40 billion for past years’ pay and pensions as of the end of 2007.” The paper’s analysis found that firms including Goldman Sachs, J.P. Morgan Chase, and Morgan Stanley owed their executives billions of dollars in deferred compensation, including bonuses, and special executive pensions. “$40 billion in taxpayer dollars will end up in the pockets of the very executives who tanked those firms,” Whitehouse said.
Whitehouse announced plans to introduce legislation “to take reasonable steps to restrain the lavish self-indulgences to which these masters of the universe have become accustomed.”
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