Sanders: Ban Bonuses for Bailed Out Bankers

BURLINGTON, October 25 - Senator Bernie Sanders (I-Vt.) urged Treasury Secretary Henry Paulson to ban bonuses for employees of the country's nine largest banks that were recently propped up with a $125 billion infusion of taxpayer funds.

Sanders also called on Paulson to freeze shareholder dividends for investors in financial institutions rescued with the $700 billion Wall Street bailout.

Sanders made the case for the bonus bans and dividend freeze in a letter sent to Paulson late Friday.

Big year-end bonuses totaling more than $70 billion already have been budgeted, according to a report in Forbes, by Citigroup, JPMorgan Chase, Bank of America, Merrill Lynch, Goldman Sachs, Morgan Stanley and others. "The same people who created the financial crisis are in line to collectively reap billions of dollars while the middle class is left to pick up the tab," the senator told the treasury secretary.

Instead of fat paychecks for financiers, Sanders said the Treasury Department should redirect the funds to help homeowners refinance troubled mortgages at affordable rates.

In calling for the dividends freeze, Sanders cited the work of Harvard economists David S. Sharfstein and Jeremy C. Stein, who projected that dividends paid out next year would route $25 billion in taxpayer funds to troubled financial firms' shareholders. Among the biggest beneficiaries, the economists said, would be the officers and directors of the nine banks who stand to pocket about $250 million in dividends.

"All of us have a responsibility to make sure that the insatiable greed on Wall Street is not allowed to continue and that we do everything possible to ensure taxpayer dollars are protected," Sanders said.

Unless the Bush administration bans bonuses and freezes dividends for firms that took taxpayer funds, Sanders said he would introduce legislation after Congress reconvenes.