US banks tackle 2008 bonus conundrum

I know the American people are outraged about some compensation practices on Wall Street, John Mack, chief executive officer of Morgan Stanley, told the House Financial Services Committee on February 10 at a meeting convened to discuss what banks have done with the $165 billion of capital they have collectively received from the US government since last year.

And the outrage is understandable. Taxpayers are questioning why financial institutions, which have been bailed out with public money, are using that same money to pay bonuses. The situation is exacerbated by the fact that many taxpayers place the blame for the current recession squarely on bankers. And disclosures by the attorney general of New York Andrew...