Nine banks that got taxpayer bailout bucks paid huge bonuses to employ ees last year, reports Attorney General Andrew Cuomo.
Outrageous? Maybe.
But, for New York’s sake, let’s hope the big-bonus bucks keep on flowing.
Actually, it’s hard to know what to say about Cuomo’s report — other than to note that, contrary to its spirit, public officials have no business either routing tax dollars to private firms or regulating private-sector pay.
Not that Congress can resist populist posturing, either: On Friday, the day after Cuomo released his report, the House voted to empower federal regulators to cap compensation at some firms — in what Rep. Pete Sessions (R-Texas) called “unprecedented government intervention in the free-enterprise system.”
Sure, the bonuses — some $33 billion in all — seem large. The banks showered $1 million or more apiece on some 5,000 employees. At JPMorgan Chase alone, 1,626 people got million-dollar-plus windfalls.
Cuomo’s gripe? Bonuses aren’t tied to firms’ performances. “There is no clear rhyme or reason to the way banks . . . reward their employees,” the AG says.
He decries “the ‘heads I win, tails you lose’ bank-bonus culture” — made more outrageous by the fact that these firms got billions in federal bailout cash.
So: Were taxpayers, in effect, paying for outsize bonuses to folks who nearly wrecked their firms — and almost brought down the entire national economy, to boot?
Uh, not so fast.
For starters, total compensation and benefits, Cuomo reports, went down at five of the nine banks — and held steady or went up more slowly at the others.
And the AG doesn’t cite individuals who didn’t merit bonuses; he just wants all workers to share in a firm’s woes.
If Jones generates $10 million in profits but 50 other workers cause $11 million in losses, too bad; Jones must suffer, too. And never mind that he can quit and join his firm’s competitor for more pay.
Such shortsightedness undermines Cuomo’s own stated goal of driving firms “towards decision-making that promotes long-term actual growth.”
Anyway, where does it all end?
If bonuses are tied closely to profits, as Cuomo wants, should workers also share in a firm’s losses? Surely, Cuomo’s Big Labor friends wouldn’t like that.
For this state, there are more dire concerns. Wages here this year “will experience the largest annual decline recorded,” a state report warned Thursday. This reflects “the impact of securities-industry losses on bonus compensation” and will have “a severe impact on virtually all of the state’s revenue sources.”
Let’s face it: Wall Street’s “largesse” fuels New York’s economy — and sustains public spending for teachers and cops and entitlements for the poor. All of which Cuomo no doubt supports.
Why would Cuomo want to cap it?
Even he admits that “the private sector is the appropriate forum” for reform.
Still, he wants government to have the final say.
No matter. The confusion in his own report makes clear: Public officials should steer clear of private markets.