Report criticizes Wall Street bonuses

The SEIU report also argues that half of the total — $73 billion — could be used by banks to reset mortgage principal and interest rates on all underwater home loans. 

In addition, the bonus money is enough to bridge the $130 billion budget gap for every state next year, as state and local governments are focused to cut vital services to make up for budget deficits. 

Overall, 37 percent of every dollar the top six banks take in gets set aside for bonuses and compensation, the report said. 

So while the SEIU report places the blame for the financial crisis largely on Wall Street's bad behavior, another report released Wednesday blames the government's actions in the housing market for causing the near-collapse.

Four Republican members of the Financial Crisis Inquiry Commission released a separate document Wednesday — a month ahead of the panel's scheduled report — saying that government policies surrounding the housing market brought down the economy. 

Their report argues that Fannie Mae and Freddie Mac played a large role in the crisis stemming from the government's backing of the mortgage lenders and declining lending standards. 

They say government policies encouraged bad loans while convincing investors to buy the bad debt. 

Leaders of the mortgage lenders have argued that Wall Street put pressure on them to make bad loans, which led to large losses in their portfolios. 

Former Rep. Bill Thomas (R-Calif.), who once chaired the Ways and Means Committee Douglas Holtz-Eakin, former Congressional Budget Office director and economic adviser to Sen. John McCain's (R-Ariz.) presidential campaign; Peter Wallison, American Enterprise Institute scholar and Reagan-era Treasury official; and Keith Hennessey, a Hoover Institute fellow and former George W. Bush economic adviser, were the four who issued the report. 

In the 13-page document, they said there were three important ways that the government pushed investors toward investing in mortgage debt. 

• First, the regulatory capital requirements associated with mortgage debt were lower than for other investments. 

• Second, the government encouraged the private market to extend credit to previously underserved borrowers through a combination of legislation, regulation and moral suasion. 

• Third, and most important, during the bubble's expansion, the largest investors in the mortgage market, the government-sponsored enterprises (GSEs) — Fannie Mae and Freddie Mac — were instruments of U.S. government housing policy.