Merrill Lynch pays out $4 bn in bonuses covered by TARP funds

The Financial Times reported that Merrill Lynch accelerated its normal time schedule for awarding bonuses and distributed $ 4 billion dollars on Dec 29, just 3 days before its takeover by Bank of America. At the same time Merrill posted $15 billion in losses for the fourth quarter. The total compensation for Merrill Lynch employees in 2008 was $15 billion.

That’s way more than just an outsized sense of entitlement, that’s flat-out stealing.  And the money for this comes from, you guessed it, the US government. The Bank of America was prepared to back out of the deal once the size of the Merrill Lynch loss became apparent. The deal was completed only after guarantees of government money by the US Treasury.

What’s more, because Congress is so up close and personal with all their friends on Wall Street who donate so generously to their re-election campaigns, those bonuses are not subject to payroll tax and are treated as long term capital gains income, taxed at a mere 15%. Since the payroll tax is just over 15% (half paid by the employer), they essentially are paying less tax on their income than minimum income wage slaves.

I read another blogger who had compared the financial bailout to the incident of Colin Powell waving around the vial of anthrax.  There was no anthrax, but boy, the fear of the anthrax made everyone forget commonsense and asking questions and taking things slowly.  Same with the Wall Street “crisis”, waving around these “toxic securities” like anthrax, screaming that if we didn’t do something immediately there would be grave consequences, right now, no questions asked, give us money, no oversight!