Wall Street bonuses could wipe out deficits in all 50 states

SEIU Blog

By Matt Browner-Hamlin

December 15th, 2010

 

Once again, Wall Street is on track to pay astronomical bonuses to its star traders, even as the rest of America is reeling from the devastation the banks have unleashed on the global economy. These billion-dollar bonuses come at our expense, have no rational justification, and only serve to destabilize the larger economy. It is time to rein in banker compensation to get the economy working for Main Street again and to prevent another global economic catastrophe in the near future.
Today SEIU has released a new report, Big Banks Bonus Bonanza. From the report:

Despite unleashing havoc on the global economy, Wall Street is once again getting ready to pay astronomical bonuses this year. The nation's six largest banks alone are on track to pay their bankers a staggering $143 billion in bonuses, benefits and compensation ("bonus and compensation"), more than enough to fill the $130 billion2 total budget gap for all 50 states in FY 2011. If Wall Street pumped this money directly into the economy instead of paying it to its bankers, it could create 3.6 million new jobs, and lower the unemployment rate by 2.3 percent. Bank of America tops the list, with $35 billion in bonuses and compensation set aside for its bankers.

Additional metrics for the scale of Wall Street's bonus bonanza:

If even a fraction of the big banks' $143 billion in bonuses and compensation were used to fund important policy priorities, we could bring about a real economic recovery in this country:

• If $143 billion were injected directly into the economy as a cash stimulus, it could create 3.6 million jobs, at no cost to taxpayers.
• Just half of the money the top six banks are getting ready to pay in 2010 would provide the $73 billion needed to give all underwater homeowners in the country loan modifications with principal and interest rate reductions to market value.
• The banks' bonus and compensation pool for 2010 is more than enough to fill the $130 billion budget gap in every single state for FY 2011.
• Just 28 percent of the total payout could finance a $40 billion federal jobs initiative to create 1 million jobs in early childhood education, in-home services for the elderly and people with disabilities, and other community services.
• $10 billion, less than a third of what Bank of America alone is doling out to its bankers, could fund an increase to Head Start that would create 330,000 new jobs and better prepare children for school.
• The full $143 billion could extend unemployment coverage for each of the 15 million unemployed workers in the United States by more than seven months or buy individual health insurance plans for 65 percent of the nation's uninsured, changing the lives of more than 29 million people in the process.

$140.5 billion comes to $549 million each work day for bonuses and compensation. Even if the bankers donated just one day's pay to our communities, it could change lives.

• One day's pay at the top six banks could save 141,000 homes from foreclosure by providing mortgage payment assistance to struggling families.
• It could fund a 14-week extension of unemployment benefits for 134,000 laid-off workers.
• It would be enough money to fund full yearlong scholarships for 72,000 college students, allowing them to attend an in-state public university for free.

You can download the full report on Big Banks Bonus Bonanza by clicking here (PDF link).