Wall Street: Taking Bailouts, Giving Bonuses?

Right Time for Bonuses?

Nearly everyone agrees that Wall Street has a PR problem.

With Wall Street experiencing its worst season since the Great Depression, and with the federal government stepping in to give money to financial institutions, many are asking whether this is the right time to be handing out any bonuses at all. Bonuses, after all, are supposed to reward good performance.

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Nine banks at the center of the government plan to ease the financial crisis are under scrutiny: Goldman Sachs, Morgan Stanley, Citigroup, JPMorgan Chase, Wells Fargo, Bank of America (including Merrill Lynch), State Street Corp. and Bank of New York Mellon.

Of the nine, JPMorgan Chase and Wells Fargo are considered to be strong banks. They are widely believed to have been forced into the plan, an apparent attempt by the Treasury to treat all major banks as equals.

Wells Fargo released a statement saying that it didn't need "government money to pay for compensation," adding that the company "earned $1.64 billion in third quarter 2008, $5.39 billion in the first nine months of 2008, and $8.06 billion in 2007."

"Good for them, they made some smart business decisions," said Steve Ellis, vice president of Taxpayers for Common Sense. "But it's not like they're not getting money and a benefit from Uncle Sam."

JP Morgan Chase and Wells Fargo are receiving a combined $50 billion in taxpayer money.

Yet, the average American taxpayer, with a median household income of $50,233, might object to the idea of paying part of the seven-figure incomes of bankers.

Similarly, State Street Corp. said in a statement: "We do not intend to use the TARP capital to pay bonuses."

Regardless of their health, all nine banks are, so far, on track to award bonuses this year, experts say.