Henry Waxman joins Andrew Cuomo – let’s talk about that bonus money

Thank you. It is unthinkable that everyone else should suffer due to incompetence, greed and complete mismanagement on Wall Street yet they would still pay out a whopping $70 billion in 2008 bonus money. Outside of Wall Street, Americans are uninterested in sacrificing just so Wall Street can swim in another sea of cash.

The hot-button issues of CEO pay and the Wall Street bailout may soon collide with the real world of Wall Street bonuses, taxpayer and shareholder anger over the financial crisis, and a Treasury secretary with deep roots on Wall Street. And that collision could be loud and ugly.

The first salvos were fired late Tuesday when Rep. Henry Waxman, who chairs the House Committee on Oversight and Government Reform, disclosed that he sent letters to the first nine major banks set to receive a capital injection from the government, seeking information on their compensation and bonus plans for 2008 and other years.

New York Attorney General Andrew Cuomo said Tuesday that he would also be looking into the issues, though he isn’t opening a formal investigation at this time.

Though what’s commonly known as the Wall Street bailout package includes modest restrictions on CEO pay, it hardly prevents participating financial firms from paying bonuses to top executives and others.

And in an environment of beaten-down stock prices, rising layoffs, recession and huge government bailouts, experts and legislators say big end-of-year bonuses will cause a firestorm of public outrage and likely provoke a Congressional backlash.

“The corporate community doesn’t seem to get it,” says a seething Nell Minow, founder of the Corporate Library, which focuses on corporate governance issues. “If the corporate leaders don’t come to the American people with some accountability, they are going to find themselves in a world of pain. Congress will set CEO pay.”

And then some.

“People are going to be demanding that someone go to jail,” say Rep. Peter DeFazio (R.-Ore), who says his constituents have applauded him for voting against the legislation. “It will require Democrats to revisit restrictions [on CEO pay]. “

DeFazio says he would also recommend Congress “empower a division in the FBI and Justice Department to investigate the fraud and misdeeds that went on.”

And the best part…

Rep. Waxman’s letter cited reports about billions in bonuses and quotes an unnamed analyst as saying: “Had it not been for the government’s help in refinancing their debt, they [the companies] may not have had the cash to pay bonuses.”

An American in Paris, France. BA in History & Political Science from Ohio State. Provided consulting services to US software startups, launching new business overseas that have both IPO’d and sold to well-known global software companies. Currently launching a new cloud-based startup. Full bio here.

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