Crashed: How a Decade of Financial Crises Changed the World

by Adam Tooze

In Britain, the most egregious case was RBS, a now majority state-owned bank that announced in February 2009 that it intended to honor £1 billion in bonus contracts.4 In the United States the figures were far larger. In the 2008 bonus season, after suffering tens of billions in losses, Wall Street paid out $18.4 billion to its top staff. That was two and a half times the amount that Congress approved for the president’s priority of modernizing America’s broadband infrastructure. Alternatively, if it had been retained by the banks, it would have made a substantial contribution toward their recapitalization.5 But the investment banks weren’t conventional public companies. They were partnerships run primarily for the benefit of their managerial elite and they expected to be paid, whatever happened. In the 2008 bonus season Merrill Lynch alone was responsible for $4–5 billion in payments. And it made sure to pay out earlier than normal in December 2008, just after the firm revealed a fourth quarter loss of $21.5 billion and days before it collapsed into the reluctant embrace of Bank of America.6 But of all the bonus scandals, the one that really caught the public’s attention was AIG. It closed its fourth quarter of 2008 with a loss of $61.7 billion, the largest in US corporate history. Nevertheless, on March 16, 2009, the company announced that its Financial Products division, which had been at the heart of the toxic spill, would be awarding $165 million in bonuses, a figure t...