MSNBC's Ed Schultz and Congressman Barney Frank (D-Ma.) clashed tonight over Congress's response, or lack of response, to the news that JPMorgan, Goldman Sachs and Morgan Stanley are distributing $30 billion in bonuses this year, a 60 percent increase on their bonus payments from last year.
The "newsflash" on the bonuses, according to Schultz, is that there is nothing Congress can do to stop it. Frank disagreed, saying Congress has a few tools at its disposal: "We can tax it. Let's not forget that."
Schultz argued that this misses the point because "we dished out billions of dollars to Wall Street and they're doing the bonus dance right now. That wasn't in the fine print, Barney, and you know that."
Frank took umbrage at this, pointedly telling Schultz not to "condescend to him." Schultz refused to back down:
Congressman, why can't you just admit that this was a serious misstep on the part of the Congress. You forked out billions of dollars to save the economy. I get all that, to get the structure back going again. But you didn't ask them any questions about how this is gonna go.
Frank insisted Schultz is wrong, and that if Congress passed the legislation pending to allow shareholders to vote on bonuses then they would veto these large payouts. The disagreement largely boils down to Schultz accusing Congress of being too lax with Wall Street and Frank defending the body's actions.
In October 2008, Frank advocated a freeze on Wall Street bonuses, reports Bloomberg.
"There should be a moratorium on bonuses," Frank said at the time. "They have a negative incentive effect because they are the ones that say if you take a risk and it pays off you get a big bonus," but if those risks cause losses "you don't lose anything."
Frank said the moratorium "ought to be for all firms," and that it should last "until [Wall Street] can get a better structure without that perverse incentive." He added that the freeze shouldn't be limited to those firms getting bailouts.