President Barack Obama responded Thursday to a front page story in the New York Times which reported that Wall Street handed out $18.4 billion in bonuses for the year, calling the payments “outrageous”

From the AP:

President Barack Obama issued a withering critique Thursday of Wall Street corporate behavior, calling it “the height of irresponsibility” for employees to be paid more than $18 billion in bonuses last year while their crumbling financial sector received a bailout from taxpayers. “It is shameful,” Obama said from the Oval Office. “And part of what we’re going to need is for the folks on Wall Street who are asking for help to show some restraint, and show some discipline, and show some sense of responsibility.”

The president’s comments, made with new Treasury Secretary Timothy Geithner at his side, came in swift response to a report that employees of the New York financial world garnered an estimated $18.4 billion in bonuses last year. The figure, from the New York state comptroller, drew prominent news coverage.

From the Times’ article on Wall Street bonuses:

Despite crippling losses, multibillion-dollar bailouts and the passing of some of the most prominent names in the business, employees at financial companies in New York, the now-diminished world capital of capital, collected an estimated $18.4 billion in bonuses for the year.

That was the sixth-largest haul on record, according to a report released Wednesday by the New York State comptroller.

While the payouts paled next to the riches of recent years, Wall Street workers still took home about as much as they did in 2004, when the Dow Jones industrial average was flying above 10,000, on its way to a record high.

Some bankers took home millions last year even as their employers lost billions.

From the New York Times

By almost any measure, 2008 was a complete disaster for Wall Street — except, that is, when the bonuses arrived.

Despite crippling losses, multibillion-dollar bailouts and the passing of some of the most prominent names in the business, employees at financial companies in New York, the now-diminished world capital of capital, collected an estimated $18.4 billion in bonuses for the year.

That was the sixth-largest haul on record, according to a report released Wednesday by the New York State comptroller.

While the payouts paled next to the riches of recent years, Wall Street workers still took home about as much as they did in 2004, when the Dow Jones industrial average was flying above 10,000, on its way to a record high.

Some bankers took home millions last year even as their employers lost billions.

The comptroller’s estimate, a closely watched guidepost of the annual December-January bonus season, is based largely on personal income tax collections. It excludes stock option awards that could push the figures even higher.

The state comptroller, Thomas P. DiNapoli, said it was unclear if banks had used taxpayer money for the bonuses, a possibility that strikes corporate governance experts, and indeed many ordinary Americans, as outrageous. He urged the Obama administration to examine the issue closely.

“The issue of transparency is a significant one, and there needs to be an accounting about whether there was any taxpayer money used to pay bonuses or to pay for corporate jets or dividends or anything else,” Mr. DiNapoli said in an interview.

Granted, New York’s bankers and brokers are far poorer than they were in 2006, when record deals, and the record profits they generated, ushered in an era of Wall Street hyperwealth. All told, bonuses fell 44 percent last year, from $32.9 billion in 2007, the largest decline in dollar terms on record.

But the size of that downturn partly reflected the lofty heights to which bonuses had soared during the bull market. At many banks, those payouts were based on profits that turned out to be ephemeral. Throughout the financial industry, years of earnings have vanished in the flames of the credit crisis.

According to Mr. DiNapoli, the brokerage units of New York financial companies lost more than $35 billion in 2008, triple their losses in 2007. The pain is unlikely to end there, and Wall Street is betting that the Obama administration will move swiftly to buy some of banks’ troubled assets to encourage reluctant banks to make loans.

Many corporate governance experts, investors and lawmakers question why financial companies that have accepted taxpayer money paid any bonuses at all. Financial industry executives argue that they need to pay their best workers well in order to keep them, but with many banks cutting jobs, job options are dwindling, even for stars.

Lucian A. Bebchuk, a professor at Harvard Law School and expert on executive compensation, called the 2008 bonus figure “disconcerting.” Bonuses, he said, are meant to reward good performance and retain employees. But Wall Street disbursed billions despite staggering losses and a shrinking job market.

“This was neither the sixth-best year in terms of aggregate profits, nor was it the sixth-most-difficult year in terms of retaining employees,” Professor Bebchuk said.

Echoing Mr. DiNapoli, Professor Bebchuk said he was concerned that banks might be using taxpayer money to subsidize bonuses or dividends to stockholders. “What the government has been trying to do is shore up capital, and any diversion of capital out of banks, whether in the form of dividends or large payments to employees, really undermines what we are trying to do,” he said.

Jesse M. Brill, a lawyer and expert on executive compensation, said government bailout programs like the Troubled Asset Relief Program, or TARP, should be made more transparent.

“We are all flying in the dark,” Mr. Brill said. “Companies can simply say they are trying to do their best to comply with compensation limits without providing any of the details that the public is entitled to.”

Bonuses paid by one troubled Wall Street firm, Merrill Lynch, have come under particular scrutiny during the last week.

Andrew M. Cuomo, the New York attorney general, has issued subpoenas to John A. Thain, Merrill’s former chief executive, and to an executive at Bank of America, which recently acquired Merrill, asking for information about Merrill’s decision to pay $4 billion to $5 billion in bonuses despite new, gaping losses that forced Bank of America to seek a second financial lifeline from Washington.

A Treasury department official said that in the coming weeks, the department would take action to further ensure taxpayer money is not used to pay bonuses.

Even though Wall Street spent billions on bonuses, New York firms squeezed rank-and-file executives harder than many companies in other fields. Outside the financial industry, many corporate executives received fatter bonuses in 2008, even as the economy lost 2.6 million jobs. According to data from Equilar, a compensation research firm, the average performance-based bonuses for top executives, other than the chief executive, at 132 companies with revenues of more than $1 billion increased by 14 percent, to $265,594, in the 2008 fiscal year.

For New York State and New York City, however, the leaner times on Wall Street will hurt, Mr. DiNapoli said.

Mr. DiNapoli said the average Wall Street bonus declined 36.7 percent, to $112,000. That is smaller than the overall 44 percent decline because the money was spread among a smaller pool following thousands of job losses.

The comptroller said the reduction in bonuses would cost New York State nearly $1 billion in income tax revenue and cost New York City $275 million.

According to The NY Post, President Obama is greasing the voting process a bit with some libations at the White House for lawmakers who are considering his stimulus bill.

WASHINGTON – President Barack Obama has invited Republican and Democratic lawmakers for drinks at the White House as they consider his economic recovery bill that still faces opposition.

White House aides say about two dozen key members of Congress were invited to the Executive Mansion Wednesday evening. The guest list includes six House Democrats, six House Republicans and five senators from each party.

The New York Times has more about the gathering:

One day after President Obama visited Capitol Hill, he is returning the favor by being host to about two dozen Democrats and Republicans on his turf. The event, scheduled to begin at 7:30 p.m., is the first-of-a-kind gathering in the new administration and the latest sign that Mr. Obama is attempting to build relationships with Congress.

The bipartisan affair is set to come shortly after the House considers the president’s economic stimulus bill. The roll call vote could make for some interesting conversation, particularly if the bulk of Republicans oppose the proposal as planned.

The reception will take place in the Red, Blue and Green rooms of the executive mansion.

Earlier in the day, the President expressed confidence that the bill would pass.

Looking beyond expected House approval of an $816 billion economic stimulus plan, President Barack Obama said Wednesday the nation is at a “perilous moment” requiring swift and decisive action…

During his talk and in the earlier Roosevelt Room session with business CEOs, Obama said the people running the companies that are the engine of the American economy are behind him. Asked at one point if he was confident of getting Republican support, he replied only: “I’m confident we’re going to get it passed.”

President Obama is scheduled to visit the Pentagon tomorrow afternoon, where he is to meet with Defense Secretary Robert Gates and other military leaders about his plans to withdraw combat troops from Iraq while beefing up the U.S. military presence in Afghanistan.

Obama has called for the withdrawal of U.S. combat troops from Iraq within 16 months, a mission he conveyed to military leaders during a White House meeting last Wednesday, one day after taking office. Meanwhile, U.S. military commanders in Afghanistan have called for 30,000 more U.S. troops to be sent there to help stabilize a situation that Obama has described as “perilous.”

The visit to the Pentagon will be Obama’s first since taking office. The president made the State Department his first Cabinet department stop last Thursday, underscoring his administration’s stated intention of emphasizing diplomacy in foreign relations.

“That process that started at the beginning of this administration continues tomorrow at the Pentagon,” said White House Press Secretary Robert Gibbs. “I think they’ll talk about a number of issues. Obviously, one of them will be Iraq and Afghanistan.”

President Obama, on his sixth day in office, called for direct “direct diplomacy” with Iran:

President Barack Obama’s administration will engage in “direct diplomacy” with Iran, the newly installed U.S. ambassador to the United Nations said Monday.

Not since before the 1979 Iranian revolution are U.S. officials believed to have conducted wide-ranging direct diplomacy with Iranian officials. But U.S. Ambassador Susan Rice warned that Iran must meet U.N. Security Council demands to suspend uranium enrichment before any talks on its nuclear program.

“The dialogue and diplomacy must go hand in hand with a very firm message from the United States and the international community that Iran needs to meet its obligations as defined by the Security Council. And its continuing refusal to do so will only cause pressure to increase,” she told reporters during a brief question-and-answer session.

On Monday night Obama gave his first formal interview as president to Arabic news network Al Arabiya, in which he reassured the Muslim world that “Americans are not your enemy.” As HuffPost’s Sam Stein reported:

Much of the interview was spent defining the new approach that the United States would implement in that region: respectfulness over divisiveness, listening over dictating, engagement over militarism. But the president drew the line when it came to terrorist organizations.

“Their ideas are bankrupt,” he told host Hisham Melhem, when asked to respond to recent audio clips from al Qaida leadership calling him various epithets. “There’s no actions that they’ve taken that say a child in the Muslim world is getting a better education because of them, or has better health care because of them.”

Obama also announced that his special envoy to the Middle East, George Mitchell, is departing on his first peace mission to help solidify a cease-fire between Israel and Hamas:

Obama spoke Monday in the Cabinet room, flanked by the newly named envoy, former Senate Majority Leader George Mitchell, and Secretary of State Hillary Rodham Clinton.

As he dispatched his new envoy, Obama said he did not expect immediate success from Mitchell’s mission. But he said he hoped this early dialogue from his administration would help open the way for an Israeli-Palestinian peace.

White House Press Secretary Robert Gibbs also held a presser, discussing Obama’s foreign policy announcements and further developments on the creation of a stimulus package. Gibbs also admitted that the White House email system had broken.

President Obama on January 25th, his fifth day in office, received strong signals from leading Republican politicians and intellectuals that they would oppose his stimulus package as it is currently written.

House Minority Leader John Boehner and Senator John McCain voiced their opposition to the current stimulus plan on the Sunday morning talk shows.

Think Progress compiled a video of prominent conservative intellectuals Bill Kristol and Charles Krauthammer slamming the bailout as well. Watch the video below.

The other big news that emerged from Obama’s fifth day in office was his intention to reverse a Bush environmental policy that barred California from setting its own fuel-efficiency standards:

The attention to energy comes as Obama heads into his first full week as president, with an agenda dominated by economic woes and a push to get a huge stimulus plan through Congress.

In one key move, Obama is aiming to let California and other states set their own tailpipe emission standards _ without having to get a waiver from the Environmental Protection Administration, as has been the case. The policy change would furnish another alternative for reducing greenhouse gases, principally carbon dioxide, which contribute to global warming. It also would reverse a Bush era policy that put up legal obstacles to California’s go-it-alone stance.

And in another policy change, Obama is likely to order the Transportation Department to enact short-term rules on how automakers can improve the fuel efficiency of their new models.

On Saturday, January 24th, President Obama’s fourth day in office, it emerged that his administration is planning wide-ranging changes to the nation’s financial regulatory system. The New York Times reports:

Officials say they will make wide-ranging changes, including stricter federal rules for hedge funds, credit rating agencies and mortgage brokers, and greater oversight of the complex financial instruments that contributed to the economic crisis…

…A theme of that report, that many major companies and financial instruments now mostly unsupervised must be swept back under a larger regulatory umbrella, has been embraced as a guiding principle by the administration, officials said.

The AP, in an analysis piece, concluded that Obama’s various moves regarding the State Department and signals from his Secretary Of State Hillary Clinton meant diplomacy had returned to the forefront of U.S. foreign policy:

Diplomacy now trumps defense as the main instrument of American foreign policy.

At least that is the intent that President Barack Obama and his change-minded secretary of state, Hillary Rodham Clinton, spelled out on their first days. They made clear that the military will be a prominent _ but no longer dominant _ tool for achieving U.S. goals abroad.

The message was reflected clearly in Obama’s decision, on his second full day in the White House, to close the military-run prison for suspected terrorists at Guantanamo Bay, Cuba, and to include the State Department in a broad government study of how to proceed with terrorist detentions in the future.

In a subtler but equally telling way, the commander in chief’s decision to visit the State Department before stepping foot in the Pentagon indicated his intention to elevate the role of diplomacy.

Setting the stage for what amounted to Obama’s first foreign policy address since his inauguration, Vice President Joe Biden told State Department employees on Thursday that Clinton’s charter is to “put diplomacy back in the forefront of America’s foreign policy,” and to do so immediately.

“For too long, we’ve put the bulk of the burden, in my view, on our military,” Biden said.

Obama put it this way: “A new era of American leadership is at hand, and the hard work has just begun. You are going to be at the front lines of engaging in that important work.”

Obama used his first weekly address as President to unveil more details about his stimulus package before meeting with his team of economic advisers. From the AP:

The two-hour session in the Roosevelt Room focused the proposed $825 billion economic stimulus package that Congress is considering. The group also discussed the upcoming federal budget, Obama’s first chance to shape the country’s spending amid a recession that lost 2.6 million jobs last year, the most in a single year since World War II.

“Our economy could fall $1 trillion short of its full capacity, which translates into more than $12,000 in lost income for a family of four. And we could lose a generation of potential, as more young Americans are forced to forgo college dreams or the chance to train for the jobs of the future,” Obama said in a five-minute address released Saturday morning by radio and the Internet.

“In short, if we do not act boldly and swiftly, a bad situation could become dramatically worse.”

On Friday, his third day in office, Obama signed an executive order lifting what is known as the abortion ‘gag rule’. From the AP:

President Barack Obama on Friday struck down the Bush administration’s ban on giving federal money to international groups that perform abortions or provide abortion information–an inflammatory policy that has bounced in and out of law for the past quarter-century.[...]

The Bush policy had banned U.S. taxpayer money, usually in the form of Agency for International Development funds, from going to international family planning groups that either offer abortions or provide information, counseling or referrals about abortion as a family planning method.

Critics have long held that the rule unfairly discriminates against the world’s poor by denying U.S. aid to groups that may be involved in abortion but also work on other aspects of reproductive health care and HIV/AIDS, leading to the closure of free and low-cost rural clinics.

Suspected US missiles killed 18 people on the Pakistan side of the Afghan border on Friday, the AP reported. These missile attacks were the first launched by Obama since becoming President, according to ABC News.

Pakistan’s leaders had expressed hope Obama might halt the strikes, but few observers expected he would end a tactic that U.S. officials say has killed several top al-Qaida operatives and is denying the terrorist network a long-held safe haven.

Obama also met with House and Senate leaders from both parties in the morning to discuss his new stimulus package. While Obama has stressed his desire for the stimulus package to be crafted in a spirit of bipartisanship, that outreach will only go so far, HuffPost’s Sam Stein reported:

Barack Obama and his team of advisers have framed the process of crafting a stimulus package as one that will be inclusive and bipartisan in nature.

But in private and increasingly in public, Democrats are scoffing at some of the demands of their Republican brethren. Elections have consequences, the refrain goes. The GOP can expect consultation and input, but anything beyond that is gravy.[...]

An emerging attitude among Democrats [is] that Obama should not deviate much, if any, from his recovery plan proposal in order to accommodate the opposition. The president himself, in a meeting with House and Senate GOP and Democratic officials Friday morning, defended his position by noting, succinctly: “I won.”

Obama upset a number of Democrats and government watchdogs on Friday by nominating William Lynn as Deputy Secretary of Defense. HuffPost’s Sam Stein explains:

Having lobbied the government on behalf of the defense industry giant Raytheon, Lynn’s appointment violates the newly-instituted ethics guidelines that the president applied to his staff shortly after taking office. Questioned about the transgression, the White House said Lynn was being granted a waiver.

But there is a second layer to the Lynn issue that also is leaving a bad taste in the mouths of Democrats, good government groups and Republicans eager to cry hypocrisy. Raytheon is no mom-and-pop defense contractor shop. It is the type of industry behemoth that protesters of the Iraq invasion bemoaned for profiting off of the war and encouraging militarization. And as the man who led “the company’s strategic planning and [oversaw] the government relations activity,” Lynn was intimately involved.

In response to Lynn’s nomination, John McCain issued his first criticism of Obama since the election, saying he was “disappointed” that Obama had hired a defense lobbyist.

Breaking forcefully with Bush anti-terror policies, President Barack Obama ordered major changes Thursday that he said would halt the torture of suspects, close down the Guantanamo detention center, ban secret CIA prisons overseas and fight terrorism “in a manner that is consistent with our values and our ideals.”

“We intend to win this fight. We’re going to win it on our terms,” Obama declared, turning U.S. policy abruptly on just his second full day in office. He also put a fresh emphasis on diplomacy, naming veteran troubleshooters for Middle East hotspots.

The policies and practices that Obama said he was reversing have been widely reviled overseas, by U.S. allies as well as in less-friendly Arab countries. President George W. Bush said the policies were necessary to protect the nation after the Sept. 11, 2001, terror attacks _ though he, too, had said he wanted Guantanamo closed at some point.

“A new era of American leadership is at hand,” Obama said.

Executive orders signed by the new president would order the prison camp at Guantanamo Bay, Cuba, shut within a year, require the closure of any remaining secret CIA “black site” prisons abroad and bar CIA interrogators of detainees from using harsh techniques already banned for military questioners.

That includes physical abuse such as waterboarding, a technique that creates the sensation of drowning and has been termed torture by critics at home and abroad.

For the signing ceremony, Obama was flanked in the Oval Office by retired senior U.S. military leaders who had pressed for the changes.

Underscoring the new administration’s point, the admirals and generals said in a statement: “President Obama’s actions today will restore the moral authority and strengthen the national security of the United States.”

Not everyone felt that way.

Criticism surfaced immediately from Republicans and others who said Obama’s policy changes would jeopardize U.S. ability to get intelligence about terrorist plans or to prevent attacks.

House Minority Leader John Boehner was among a group of GOP lawmakers who quickly introduced legislation seeking to bar federal courts from ordering Guantanamo detainees to be released into the United States.

Boehner, R-Ohio, said it “would be irresponsible to close this terrorist detainee facility” before answering such important questions as where the detainees would be sent.

Obama said he was certain that the nation’s security is strengthened _ not weakened _ when the U.S. adheres to “core standards of conduct.”

“We think that it is precisely our ideals that give us the strength and the moral high ground to be able to effectively deal with the unthinking violence that we see emanating from terrorist organizations around the world,” he said.

“We don’t torture,” Obama said, but Bush had said the same. The question has always been defining the word.

Later in the day, Obama visited the State Department to welcome newly confirmed Secretary of State Hillary Rodham Clinton, emphasizing the importance his administration intends to give diplomacy in his foreign policy. He told Foreign Service officers and other department employees they “are going to be critical to our success.”

The president and Clinton jointly announced the appointment of former Senate Majority Leader George Mitchell, who helped broker peace in Northern Ireland, as special envoy to the Middle East. Former U.N. Ambassador Richard Holbrooke, who helped write the peace deal that ended Bosnia’s 1992-95 war, was named special envoy for Pakistan and Afghanistan.

But for all the talk of a new era, it remained unclear how much of a shift Obama plans for the Middle East.

Though he named high-profile envoys to regions where critics say American attention lagged under Bush, the Mideast policy Obama outlined was no different.

He said he would aggressively seek a lasting peace between Israel and the Palestinians while also defending Israel’s “right to defend itself.” He called on Israel and Hamas to take steps to ensure the cease-fire that is in place in Gaza will endure. And he called on Arab states to show more support for the beleaguered Palestinian government of President Mahmoud Abbas.

On the surface, those views mirror the Bush administration’s.

As for the treatment of terror suspects, Obama’s policy overhaul was an implicit though not directly stated criticism of what he, other Democrats, nations around the globe and human rights groups have called Bush’s overreach in the battle against terrorism.

In his presidential campaign, Obama had pledged to close Guantanamo, where many suspects have been detained for years without trial or charge.

Bush, too, had said he wanted to shut down Guantanamo. It never happened on his watch, amid the questions that must be answered to do so: Can other countries be persuaded to take some of the 245 men still be held there? Under what authority should remaining detainees be prosecuted? And, most difficult, what happens to the handful of detainees who are considered both too dangerous to be released to other nations and for whom evidence is deemed either too tainted or insufficient for a trial?

Obama has to answer those same questions.

As to that tough, third category of detainees, a senior administration official said “everything’s on the table” as a possibility, including the use of military tribunals that were much criticized by Obama. The official would brief reporters only on condition of anonymity, contending that was necessary in order to speak candidly about details.

The administration already has suspended trials for terrorist suspects at Guantanamo for 120 days pending a review of the military tribunals.

A task force must report in 30 days on where the Guantanamo detainees should go, as well as a destination for future terror suspects.

The national commander of the Veterans of Foreign Wars of the U.S. criticized Obama’s action.

“The detention facility is a valuable tool in the fight against terrorism because it provides useful intelligence information and it keeps our enemies off the battlefield,” said Glen Gardner.

Said Obama’s GOP rival for the White House, Sen. John McCain: “Numerous difficult issues remain.”

Recent polls show the nation essentially split on the topic. An Associated Press-GfK poll last week found about half wanted the prison shut on a priority basis, and 42 percent did not.

On interrogations, another review panel will have 180 days to study whether interrogation techniques allowed under the U.S. Army Field Manual would be acceptably effective in extracting lifesaving intelligence from hardened terrorists.

But the order opens the door to divergences from the Army manual, as it allows the panel to recommend “additional or different guidance” for use by intelligence agencies. That would not, however, allow “enhanced interrogation techniques” to be reintroduced, the official said.

Obama left room for the practice of “extraordinary renditions” of detainees to other nations to continue, though the White House said none would be sent to countries where they might be tortured.

The executive orders also throw out every opinion or memo that the Bush administration used to justify its interrogation programs. And the Obama administration said all terrorism suspects will be covered by standards set by the Geneva Conventions, something the Bush administration opposed.

Obama also ordered the Justice Department to review the case of Qatar native Ali al-Marri, who is the only enemy combatant currently being held in the U.S.

Though the full U.S. Senate approved six of President Barack Obama’s cabinet secretaries after his swearing in on Tuesday, Senator Hillary Rodham Clinton’s confirmation as secretary of state was postponed until Wednesday over the objection of a single Republican Senator.

According to Fox News Senator John Cornyn of Texas objected to including Mrs. Clinton’s name in the unanimous consent vote for Obama Cabinet nominees, citing ethical questions surrounding donors to former President Bill Clinton’s charitable foundation, which has in the past accepted donations from foreign governments.

“This is not an effort to scuttle or block the nomination, but a legitimate policy difference. Senator Cornyn’s goal is to create transparency on all levels of government,” the Texas politician said through spokesman Kevin McLaughlin.

Bloomberg reports that Hillary Clinton rejected a request from the committee for broader limits on contributions, saying disclosure terms worked out with Obama’s transition team were adequate and went beyond legal requirements. Moreover, prior to Hillary Clinton accepting the nomination, the Clintons agreed to split off the Clinton Global Initiative from the Clinton Foundation upon Hillary Clinton’s confirmation and said it wouldn’t accept contributions from foreign governments while simultaneously agreeing on a list of steps with the Obama transition team such as publishing a list of past contributors.

Despite Tuesday’s setback Senate majority leader Harry Reid plans to hold a roll-call vote on Sen. Clinton’s nomination on Wednesday, which is expected to go off smoothly irrespective of Cronyn’s objection.

“It only takes one person to object to a vote,” said Reid spokesperson Jim Manley. “She’ll be confirmed tomorrow with an overwhelming bipartisan support,” he added.

Sen. Clinton, who bid an informal farewell to her constituents at a reception hosted by New York Governor David Paterson on Monday night, did not comment on the decision, however she will not formally resign her Senate seat until she is confirmed.