According to this New York Times article, bailout benefactors, Goldman Sachs, JPMorgan Chase, the American International Group and others allegedly doled out bonuses to its highest earning employees immediately following the distribution of billions of government (i.e. taxpayer) aid. As per the article:

In a report to be released on Friday,Kenneth R. Feinberg, the Obama administration’s special master for executive compensation, is expected to name 17 financial companies that made questionable payouts totaling $1.58 billion immediately after accepting billions of dollars of taxpayer aid, according to two government officials with knowledge of his findings who requested anonymity because of the sensitivity of the report.

But Feinberg, while he can attempt to compel the companies to payback the ill-used money, has no legal authority to do so. And we shouldn’t hope, based on past behavior, that the companies will do anything resembling that which is ethical.

Mr. Feinberg’s political leverage has been weakened by the banks’ speedy repayment of their bailout funds. Eleven of the 17 companies that received criticism in the report have repaid the government with interest, so they have no outstanding obligations to reimburse.

As a result, Mr. Feinberg will merely propose that the banks voluntarily adopt a “brake provision” that would allow their boards to nullify or alter any bonus payouts or employment contracts in the event of a future financial crisis. All 17 companies have told Mr. Feinberg that they will consider adopting the provision, though none has committed to do so.

Thus, we reach a catch-22 in providing bailouts to companies such as this. We realize that, at least initially, the companies’ own internal practices or ill-fated business sense (all the ills that come with the mortgage bubble and credit crisis) got them into a position to need bailing out, and at the same time, the failure of some companies would have meant a cataclysmic blow the overall economy. Yet, I dare say enough was changed inside those same companies to make operations more efficient or check the clambering hands of greedy executives.

On Wall Street, meanwhile, profits and pay have already rebounded. Goldman Sachs is on pace to hand out an average of $544,000 per worker in salary and bonuses, though many could earn several times that amount. JPMorgan Chase’s investment bank is on track to pay its workers, on average, about $400,000, while the average Morgan Stanley employee could collect about $262,000.

If the second half of 2010 plays out like the first half, Wall Street bonuses will be paid out at about the same level as last year and similar to 2007 levels, when the crisis had just started to unfold.

Glad to see that things are going so well for them once again. I have a sneaking suspicion why.