Backlash Continues Over Billions Paid in Wall Street Bonuses in 2008

JEFFREY BROWN:

A disastrous time for Wall Street and the U.S. economy, yes, but not for bonuses and executive compensation. Wednesday, New York's controller reported that employees at the state's financial companies received $18.4 billion in bonuses last year, the sixth-largest amount ever in a year that will go down among the worst ever.

Today, Democratic Sen. Claire McCaskill of Missouri said she'll introduce legislation to cap compensation. It would bar executives from making more than the president of the United States, $400,000, while their companies receive government aid.

Later, White House spokesman Robert Gibbs said it was, quote, "very safe to assume the administration will take on the pay issue soon."

The strongest words of all came yesterday from Gibbs' boss, President Obama.

BARACK OBAMA, President of the United States: That is the height of irresponsibility. It is shameful. And part of what we're going to need is for the folks on Wall Street who are asking for help to show some restraint and show some discipline and show some sense of responsibility.

JEFFREY BROWN:

And for more on the pay issue, we turn to Nell Minow, co-founder of the Corporate Library, a watchdog group, and Michael Melbinger, a partner at the law firm Winston & Strawn in Chicago, who specializes in executive compensation.

Well, Nell Minow, strong words from the president. Are they warranted?

NELL MINOW, The Corporate Library:

I'd be a little stronger. I think it's more than irresponsible. I think it's stupid.

You know, if Wall Street has a brand, they are deteriorating their brand because they are so completely out of touch. They're showing themselves to have no sense of responsibility. And there's no reason on Earth why the United States will continue to be the financial center if we can't do better than that.

JEFFREY BROWN:

All right, well, let me get a quick word then on Michael Melbinger. What do you think?

MICHAEL MELBINGER, Attorney:

Well, I think the anger in this case is misplaced. I think some bonuses need to be reduced; some bonuses should be cut entirely.

But I think this group of bonuses was not for the highest of the high-paid, but more for the producer level in the folks who are in compliance and keep the trains running on time.

And I think those people, the way Wall Street compensation works, their compensation is all paid at the end of the year in bonus. It's more like a sales commission than a bonus. So I think we need to really look at them one at a time.