In-depth analysis on Credit Writedowns Pro.

Obama: bank executives making millions "is part of the free-market system”

President Obama made a couple of comments in an interview with Bloomberg BusinessWeek that, while potentially true, point yet again to someone out of touch with populist rage in America.  It seems that Obama is still courting big business, especially Wall Street, after Republicans have said they are going after Wall Street money in the upcoming mid-term elections.

Here’s how Bloomberg reported the discussion:

President Barack Obama said he doesn’t “begrudge” the $17 million bonus awarded to JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon or the $9 million issued to Goldman Sachs Group Inc. CEO Lloyd Blankfein, noting that some athletes take home more pay.

The president, speaking in an interview, said in response to a question that while $17 million is “an extraordinary amount of money” for Main Street, “there are some baseball players who are making more than that and don’t get to the World Series either, so I’m shocked by that as well.”

“I know both those guys; they are very savvy businessmen,” Obama said in the interview yesterday in the Oval Office with Bloomberg BusinessWeek, which will appear on newsstands Friday. “I, like most of the American people, don’t begrudge people success or wealth. That is part of the free- market system.”

Obama sought to combat perceptions that his administration is anti-business and trumpeted the influence corporate leaders have had on his economic policies. He plans to reiterate that message when he speaks to the Business Roundtable, which represents the heads of many of the biggest U.S. companies, on Feb. 24 in Washington.

The problem is not that we have free markets in America, but rather that we have bailouts and crony capitalism. So Americans actually do begrudge people this kind of monetary reward. It has been obvious to me that the bailouts are a large part of why Obama’s poll numbers have been sinking. It’s not just the economy here – so unless the President can demonstrate he understands this, he is unlikely to win back a very large number of voters who see this issue as central to their loss of confidence in Obama.

Is it just me or does this sound like Obama just doesn’t get it?

Update:  Now I have the transcript and a Bloomberg analysis as well below.

BusinessWeek: Let’s talk bonuses for a minute: Lloyd Blankfein, $9 million; Jamie Dimon, $17 million. Now, granted, those were in stock and less than what some had expected. But are those numbers okay?

President Obama: Well, look, first of all, I know both those guys. They’re very savvy businessmen. And I, like most of the American people, don’t begrudge people success or wealth. That’s 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. I think that shareholders oftentimes have not had any significant say in the pay structures for CEOs.

BusinessWeek: Seventeen million dollars is a lot for Main Street to stomach.

President Obama: 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. I guess the main principle we want to promote is a simple principle of "say on pay," that shareholders have a chance to actually scrutinize what CEOs are getting paid. And I think that serves as a restraint and helps align performance with pay. The other thing we do think is the more that pay comes in the form of stock that requires proven performance over a certain period of time as opposed to quarterly earnings is a fairer way of measuring CEOs’ success and ultimately will make the performance of American businesses better.

Source

Obama Doesn’t ‘Begrudge’ Bonuses for ‘Savvy’ Blankfein, Dimon – Bloomberg.com

About 

Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty years of business experience. He is also a regular economic and financial commentator on BBC World News, CNBC Television, Business News Network, CBC, Fox Television and RT Television. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College. Edward also writes a premium financial newsletter. Sign up here for a free trial.

9 Comments

  1. gnk says:

    Obama has just put the electorate on notice. He is not a servant of the people. He is a servant of Wall Street. I regret voting for him – not that I had much choice, I guess. I will never again throw my vote away like that. I am voting third party from now on.

  2. earnyermoney says:

    As long as Mr. Dimon and Mr. Blankfein or Wall Street executives as a class contribute a portion of their bonuses to his campaign’s coffers as in the last election, he’s cool with the magnitude of the bonuses. The populist appeal is a verbal shakedown for campaign cash.

  3. LavrentiBeria says:

    “Is it just me or does this sound like Obama just doesn’t get it?”

    One is, of course, tempted to give the benefit of the doubt here and say that the man is well motivated but simply the victim of a certain naivete, a people pleaser that wishes to offend no one. But square that vision with the Harvard education and the personal choice of a career in the sewer that is American politics, will you. I don’t think you can. What you have here is just another cynical eel, caught up in a kind of narcissistic self absorption and the perception that he can navigate his way through these problems with the same skills he employed when head of the Harvard Law Review. I’ll believe Obama cares about people when he’s well enough informed to know what a human being is and his grasp of questions regarding human life are hardly encouraging in this connection. He is a slippery, self-serving pretender at the philosophy of these questions, a rank amateur, but not without a measure of calculation. Show me a man who wouldn’t consider the unwanted pregnancy of his daughter a “problem” and I’ll show you a person who can grasp the human dimensions of this crisis. Given his present moral blindness, I wouldn’t put it past Obama cynically to use the ruse of a ginnied-up war to conceal his limitations.

  4. Vangel says:

    Is it just me or does this sound like Obama just doesn’t get it?

    It is not you. He is way over his head and still does not know it.

  5. LavrentiBeria says:

    Here’s the next protestation of the terribly accomodative Barak Obama:

    http://www.bloomberg.com/apps/news?pid=20601087&sid=aDLk0lPYaSa0&pos=1

    As anyone can see from these remarks, Obama isn’t clueless, he is quite intentionally positioning himself as he has. He’s just the most oily of marionettes.