Merrill Lynch Bonus Payments Dwarf A.I.G.

t r u t h o u t | Merrill Lynch Bonus Payments Dwarf A.I.G..

In its last days as an independent company, Merrill gave performance-based bonuses exclusively to employees earning $300,000 a year or more and holding a rank of vice president or higher, according to their financial statements. $3.62 billion was handed out to these executives - a sum equal to 36.2 percent of the $10 billion in taxpayer funds that were allocated to Merrill as part of the Troubled Asset Relief Program (TARP) before the bonuses were paid.

The company had been failing as a result of misadventures in the now infamous mortgaged-backed securities market which began crumbling with the decline of home values as the bubble burst. The performance bonuses were determined by Merrill's compensation committee on December 8, 2008, before Merrill revealed that it lost $15 billion in the final three months of 2008, unusual timing according to court documents filed by New York Attorney General Andrew Cuomo in an ongoing suit against Merrill's former CEO.

In prior years, Merrill paid performance bonuses of this type after the end of the year, in January or February of the next year.

Comments

[Alain]

Hi Jodi

I do not know if you had seen this but I thought you would find it curious. When Obama was out in California a couple of weeks ago trying to gather support for his stimulus and budget, he said the following about AIG and the big banks: "Here's the problem...It's almost like they've got -- they've got a bomb strapped to them and they've got their hand on the trigger. You don't want them to blow up. But you've got to kind of talk them, ease that finger off the trigger." Now maybe he was just using a very strained metaphor but it sounds like he perceives the situation with the bankers as a form of blackmail? It just struck me as very revealing.

Take Care.

[Jodi]

I didn't see that--it's an incredible metaphor. Thanks for letting me know.

[Alain]

Hi Jodi

I hope it is OK to keep pointing these out, but the latest Newsweek has our friend Paul Krugman on it and the lead article is titled "Obama’s Nobel Headache." It seems that it confirms what you have been showing here: that among the ruling elite there is a growing criticism of the way Obama and his team is dealing with the financial crisis. I thought this quote quite revealing:

"If you are of the establishment persuasion (and I am), reading Krugman makes you uneasy. You hope he's wrong, and you sense he's being a little harsh (especially about Geithner), but you have a creeping feeling that he knows something that others cannot, or will not, see. By definition, establishments believe in propping up the existing order. Members of the ruling class have a vested interest in keeping things pretty much the way they are. Safeguarding the status quo, protecting traditional institutions, can be healthy and useful, stabilizing and reassuring. But sometimes, beneath the pleasant murmur and tinkle of cocktails, the old guard cannot hear the sound of ice cracking. The in crowd of any age can be deceived by self-confidence, as Liaquat Ahamed has shown in "Lords of Finance," his new book about the folly of central bankers before the Great Depression, and David Halberstam revealed in his Vietnam War classic, "The Best and the Brightest." Krugman may be exaggerating the decay of the financial system or the devotion of Obama's team to preserving it. But what if he's right, or part right? What if President Obama is squandering his only chance to step in and nationalize—well, maybe not nationalize, that loaded word—but restructure the banks before they collapse altogether."

Leaving aside the psychophantic rhetoric, it seems that some of the plutocrats who are not in finance are starting to get nervous - otherwise I doubt this article would ever have been published in Newsweek. They see what alot of us see - that puting our economic fate into the hands of those who have brought us to the eve of destruction may not be a very good idea.