President Softens Language on Wall Street Bonuses He Once Called ‘Obscene’ and ‘Shameful’

Feb 10, 2010 7:44am

As recently as just a few weeks ago, President Obama called massive Wall Street bonuses “obscene,” language that fit right in with his previous descriptions for them such as “the height of irresponsibility” and “shameful,” an “outrage” and a violation “our fundamental values.” 

But in an interview published today with Bloomberg Business Week, the president struck a different note.

Asked about the $17 million bonus given to Jamie Dimon, the CEO of JPMorgan Chase & Co., and the $9 million bonuses going to Lloyd Blankfein, CEO of the Goldman Sachs Group Inc. CEO, the president said, “I know both those guys; they are very savvy businessmen. I, like most of the American people, don’t begrudge people success or wealth. That is part of the free-market system.”

"I do think that the compensation packages that we've seen over the last decade at least have not matched up always to performance," the president said — a rather serene response relative to some of his previous language on the matter.

The seeming shift in tone comes at a time that Wall Street executives have been relaying to the White House that the president needs to be more encouraging of their efforts if he expects them to be part of the solution in terms of job growth. Several business executives have told the administration that attacking businesses so vociferously doesn’t exactly help create a positive business climate.

White House press secretary Robert Gibbs denied that President Obama had changed his tone at all, pointing out that the president has said "countless times" that he doesn't begrudge wealth or success.

Gibbs insisted that the president was not saying he doesn't begrudge the bonuses.

In the half-hour interview with Julianna Goldman and Mike Tackett, the president expressed approval for the fact that the Dimon and Blankfein bonuses were paid in stock, thus requiring “proven performance over a certain period of time as opposed to quarterly earnings.” The president called that a “fairer way of measuring CEO success and ultimately will make the performance of American businesses better.”

He renewed his call for “say on pay” legislation, which would allow stockholders a non-binding vote on executive compensation.

Discussing the bonuses, Mr. Obama told the reporters, "listen, $17 million is an extraordinary amount of money. Of course, there are some baseball players who are making more than that who don't get to the World Series either.  So I'm shocked by that as well."

That echoed – much more benignly – comments the president made in private to bank executives in December.

Back then, a White House official told ABC News that on the subject of executive compensation, President Obama told bank executives, “you guys are like overpaid pitchers on a team doing poorly. The concern is less when your team is successful — but you guys didn’t win the World Series this year.”

– jpt

*This post has been updated with Gibbs' response and some more quotes from the interview. I also changed the headline after the White House vociferously insisted that the president was not referring to the bonuses when he said he didn't "begrudge" wealth or success – though his reaction to the bonuses was the question directly posed to him and the title of the original Bloomberg/Business Week story was "Obama Doesn’t ‘Begrudge’ Bonuses for ‘Savvy’ Blankfein, Dimon."

UPDATE: One other note that occurs to me, for some context: Dimon is a Democratic contributor whom, the Wall Street Journal reported last week, is being wooed by Republicans, who are questioning why Wall Street executives give money to Democrats rather than to the Republicans who are trying to block President Obama’s push to enact financial regulatory reforms.

House Minority Leader John Boehner told reporters last Thursday that he “did in fact have a conversation with Mr. Dimon to talk about some of the bizarre policies coming out of this administration. I also pressed them to help our team."



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