Some recent commentators have reminded those now frothing over bonus payments that the bonuses paid are small in the scheme of things. Today, WNYC radio host Brian Lehrer noted that "no fewer than four" New York Times stories told the public to calm down about bonuses.Sure, $165 million paid out by AIG in bonuses pales against the $180 billion it received in government aid ('taxpayers don't diminish the company you now own!' ABC news recently chided us).
Similarly, the less publicized bonuses that Citi paid its Smith Barney brokers were nothing compared with its $300 billion-plus in government aid-and just $3,000 apiece versus $1 million for many AIG beneficiaries!
Bart Narter, SVP of the banking group with Celent, a Boston-based research firm, is on the side who view Citi's broker bonuses as incidentals. Brokers have the power to leave and take client business with them, Narter reasoned with BS&T- granted, before the bigger AIG debacle broke. "The client doesn't say, ' I do business with Smith Barney. They say, 'I do business with Joe Broker,'" Narter says. "So, it's in the shareholders best interest to pay bonuses and we [taxpayers] are shareholders."
What those who view as incidental the payment of bonuses while Rome is burning, so to speak, are missing is that that bonus culture is symptomatic of what caused today's problems. Whatever their size, the payment of bonuses in times of general pay freezes or cuts is unseemly. And if those bonuses are rewarding those who have destroyed the livelihoods of many others, as at AIG, uproar is warranted.