Bankruptcy

Why Should we be Shocked?

By J. Michael McBride

Given the exit money paid to the executives who ran Fannie Mae and Freddie Mac into the ground, literally threatening the US economy to the extent that the federal government “had” to buy these private companies, this story should come as no surprise. Evidently, the higher up’s at Lehman are getting to share in a bonus pool of about 2.5 billion, yes, billion.

Qutoe; Up to 10,000 staff at the New York office of the bankrupt investment bank Lehman Brothers will share a bonus pool set aside for them that is worth $2.5bn (£1.4bn), Barclays Bank, which is buying the business, confirmed last night.

The revelation sparked fury among the workers' former colleagues, Lehman's 5,000 staff based in London, who currently have no idea how long they will go on receiving even their basic salaries, let alone any bonus payments. It also prompted a renewed backlash over the compensation culture in global finance, with critics claiming that many bankers receive pay and rewards that bore no relation to the job they had done.

A spokesman for Barclays said the $2.5bn bonus pool in New York had been set aside before Lehman Brothers filed for chapter 11 bankruptcy in the United States a week ago. Barclays has agreed that the fund should continue to be ring-fenced now it has taken control of Lehman's US business, a deal agreed by American bankruptcy courts over the weekend.

Here is a link to this article:
http://www.independent.co.uk/news/business/news/fury-at-25bn-bonus-for-lehmans-new-york-staff-937560.html

Michael

Full post as published by Texas Lawyer Blog on September 22, 2008 (boomark / email).