Obama branded Wall Street bankers “shameful” on Thursday for giving themselves nearly $20 billion in bonuses as the economy was deteriorating and the government was spending billions to bail out some of the nation’s most prominent financial institutions.

Obama was reacting to a report by the New York State comptroller that found financial executives had received an estimated $18.4 billion in bonuses for 2008, less than for the previous several years but the same level of bonuses as they received in 2004, when times were flush.

I find this justification puzzling. The implication is that the bonuses were justified in 2004. But the malpractice was going on all along. Why is it only now that the bonuses are shameful? Fraud is fraud. To even invoke these sorts of year-over-year comparisons is to accept the existence of a "reasonable" bonus total for 2008.

It's not like the earnings in 2004 were perfectly honest, and so bonuses were justified, but then starting in 2005, some people started to go rogue. The reason why "times were flush" in 2004 was because people were still foolishly pouring their money into the scheme. But it's been the same scheme all along. By 2004, the bubble was quite well inflated.

From the archive, Niall Ferguson:

This hunt for scapegoats is futile. To understand the downfall of Planet Finance, you need to take several steps back and locate this crisis in the long run of financial history. Only then will you see that we have all played a part.

Finally, to clarify a point of usage. I would argue that Obama's use of "shameful" is misdirected. The bankers themselves are clearly shameless. It is their actions which are shameful. But only the naive could expect a public display of shame from bankers. Even Madoff did not apologize to his investors.

A recollection:

On August 5, 1981, President Reagan fired 11,345 striking air traffic controllers and banned them from federal service for three years. They were replaced initially with nonparticipating controllers, supervisors, staff personnel, some nonrated personnel, and in some cases by controllers transferred temporarily from other facilities. Some military controllers were also used until replacements could be trained. The union was decertified on October 22, 1981.

Shame - NYTimes.com