President Obama has slipped in recent polls on the question of his handling of the economy and health care, and voters have serious concerns about the skyrocketing federal deficit. On top of that, White House officials know that potentially compounding these worries are big Wall Street bonuses. Financial institutions receiving taxpayer assistance face a deadline this month to submit executive compensation pay package proposals to a U.S. Treasury Department official to approve.
These pending bonuses come separately from a new report investigating compensation showing that nine banks that accepted $175 billion from the federal government's Troubled Asset Relief Program doled out $32.6 billion in bonuses last year. New York Attorney General Andrew Cuomo's report also said that the bonuses for some of the executives were "substantially greater" than the banks' net income.
"To say that the taxpayer is going to foot the bill and the bank executive is going to walk away with a million-dollar bonus when it was a terrible year for the bank, that doesn't make sense to me," Cuomo said.
Some of these banks, and others, have 10 days to submit their plans for this year's executive compensation packages to the "pay czar" at the Treasury Department, Kenneth Feinberg. The big question is whether Feinberg will OK bonuses.
For Andrew Hall, Citigroup's money-making energy futures trader, that's a multi-million dollar question.
Hall, owner of a German castle and the man behind Citigroup's energy trading unit, could get up to a $100 million bonus if Feinberg approves it.
On one hand, some say Hall deserves the bonus. He is said to have made the bank $2 billion. But on the other hand, taxpayers did bail out the troubled bank with $45 billion.
Some argue that while executives who did not perform are not entitled to bonuses, individual traders have done their jobs and should be rewarded if they want to be kept.
"Government dropped the ball on that if they wanted to curb the bonuses," said Steve Forbes, chairman and chief executive at Forbes.
Forbes said if the government restricts bonuses for people such as Hall, they will likely take their talents elsewhere. And Forbes blamed the government for not imposing tougher rules on executives and curbing bonuses.
The public anger in March over the $165 million in AIG bonuses took the administration by surprise, but they argued that those had been set up by the previous administration. But now, they have no previous administration to blame, just pre-existing contracts. Some officials say the point of these packages is to retain top talent.
White House Press Secretary Robert Gibbs said last month that "the justification of setting outsize salaries is this notion [of having] a series of unique skills or traits that can't be replicated by anybody on the planet, I don't know that the president would necessarily buy that notion. "
"We want these firms to earn money," Christina Romer, the president of the White House Council of Economic Advisers, said Sunday on CNN's "State of the Union." "We want them to pay the taxpayers back, and so absolutely what he's working at is ... sort of balancing off the ... are they going to be able to retain talent with our sense of outrage."