As a result, states have been forced to make drastic cuts:32
21 states have made cuts to public health programs.
22 states have made cuts to services for the elderly and disabled.
24 states have made cuts in K-12 education.
32 states have made cuts in higher education.
40 states have made cuts in their government workforce, often through layoffs
Back to Business as Usual
While taxpayers suffer under the crushing burden of the economic crisis and are on the hook for the Wall Street bailouts, the banksters are back to business as usual. They are ignoring their commitments to taxpayers and are helping themselves instead, setting aside tens of billions for bonuses, returning to the same risky behavior that caused the crisis in the first place, and making tens of billions in profits -- all on the backs of American consumers and home owners.
Billions in Bonuses
Wall Street's bonus structure emphasized and incentivized short-term profits over long-term stability. Bankers were awarded bonuses based on how their trades performed in the short run. If their bets went bad a couple of years down the road, they got to keep the money anyway. This encouraged excessive risk-raking, since the bankers' trades only had to perform well until they were paid their bonuses. This perverse compensation structure has been identified as a central culprit in the economic crisis.33
In his report on Wall Street bonuses, New York State Attorney General Andrew Cuomo wrote of Wall Street's "heads I win, tails you lose"34
bonus system:
[T]here is no clear rhyme or reason to the way banks compensate and reward their employees"[I]n these challenging economic times, compensation for bank employees has become unmoored from the banks' financial performance.
Thus, when the banks did well, their employees were paid well. When the banks did poorly, their employees were still paid well. And when the banks did very poorly, they were bailed out by taxpayers and their employees were still paid well.35
The Rip-Off Continues
Despite this recognition that excessive and perverse compensation structures helped fuel the economic crisis, the big banks are continuing to pay their executives astronomical salaries and bonuses. This past winter, the nation's top six banks (Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, and Wells Fargo) paid out $31.2 billion in 2008 bonuses to reward their bankers for posting $84.6 billion in losses last year and wreaking havoc on the global economy.36
