Time to fix Wall Street's accountability deficit.
MAYBE WALL STREET should open a casino right there on the corner of Broad, because these guys simply cannot lose. After kneecapping the global economy, costing millions their homes and livelihoods, and saddling our grandchildren with massive debt—after all that, they're cashing in their bonuses from 2008. That's right, 2008—when amid the gnashing of teeth and rending of garments over the $700 billion TARP legislation (a mere 5 percent of a $14 trillion bailout; see "The Real Size of the Bailout"), humiliated banks rolled back executive bonuses. Or so we thought: In fact, those bonuses were simply reconfigured to have a higher proportion of company stock. Those shares weren't worth so much at the time, as the execs made a point of telling Congress, but that meant they could only go up, and by the time they did, the public (suckers!) would have forgotten the whole exercise. It worked out beautifully: The value of JPMorgan Chase's 2008 bonuses has increased 20 percent to $10.5 billion, an average of nearly $6 million for the top 200 execs. Goldman's 2008 bonuses are worth $7.8 billion.
And why are bank stocks worth more now? Because of the bailout, of course. Bankers aren't being rewarded for pulling the economy out of the doldrums. Nope, they're simply skimming from the trillions we've shoveled at them. The house always wins. Indeed, 2009 bonuses are expected to be 30 to 40 percent higher than 2008's. And don't forget AIG, which paid the same division that helped cook up collateral debt obligations and credit default swaps "retention bonuses" worth $475 million, in some execs' cases 36 times their base salaries.
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As anyone who watches Dog Whisperer knows, rewarding bad behavior produces more of the same—so it's no surprise that Wall Street is back to business as usual. Derivatives are still unregulated (thanks, Congress!), exotic sliced-and-diced securities are being resliced and rediced, and the biggest offenders in peddling subprime mortgages? They are raking in millions in federal grants to—wait for it—fix subprime mortgages.
And the worst part? These fat-cat recidivists don't even have the decency to fake contrition. The New York Times' Andrew Ross Sorkin says that whenever he asked Wall Street CEOs "Do you have any remorse? Are you sorry? The answer, almost unequivocally, was no." When asked by MoJo's Stephanie Mencimer if he regretted helping to bring down the economy, former AIG CEO Hank Greenberg said flatly, "No. I think we had a very good record." Lloyd Blankfein, Goldman Sachs' CEO (his haul between 2006-2008: $157 million) went so far as to tell the Times of London, "We help companies to grow by helping them to raise capital. It's a virtuous cycle. We have a social purpose." Bankers like him are "doing God's work."
This is blasphemy worthy—along with usury—of the 7th circle of hell. And while Goldman's PR minions, visions of pitchforks dancing in their heads, coaxed Blankfein into coughing up a lame apology, the comment perfectly distilled the Kool-Aid Wall Street has forced down our throats. MoJo's Kevin Drum sums it up in his investigation of Wall Street's outsize influence in Washington: Political payola—$475 million in campaign contributions just in the 2008 cycle—is only part of it. Something more insidious is at work. "Unlike most industries, which everyone recognizes are merely lobbying in their own self-interest, the finance industry successfully convinced everyone that deregulating finance was not only safe, but self-evidently good for the entire economy, Wall Street and Main Street alike," he writes. Some call this phenomenon "intellectual capture," he adds, but "considering what's happened over the past couple of years, we might better call it Stockholm syndrome."
Sure enough, as our Washington bureau chief David Corn reports, pollsters have been surprised to find that while Americans are angry about the economy, they often blame not the bankers, but politicians—and even themselves. We spent too much, the logic goes, and now we're reaping the rewards. There's some validity to that—we all played along as if the good times would never end. But who sold us this crock? Wall Street and its troubadours, from faux regulators like Alan Greenspan to so-called financial journalists like Jim "Mad Dog" Cramer.
And actually, when it comes to restraint and humility, consumers seem to be the only ones learning their lesson. Personal savings are up for the first time in decades; spending is down. Why? Because we, the little people, actually felt the pain of the crash. New incentives, new behavior. Not so on Wall Street; not so in Washington.
It's not too late. If nothing else, last summer's tea parties showed that politicians will listen to popular outrage—when it seems to threaten their jobs. What if, as Nobel-winning economist Joe Stiglitz suggests, we foreclosed on bankers and politicians who are morally bankrupt? What if people started showing up at town halls demanding accountability from those who gambled away their jobs and homes? There is plenty of blame to go around. Let's start putting some of it back where it belongs.
Soon after being elected President, Mr. Obama said about the economic meltdown, "We must all share the pain." Apparentally he wasn't including The Bankers in this "share the pain".
Yeah, we saw the pain Obama and his entourage have been "suffering" ever since taking office on his empty promises of change and hope. Life has been one White House party and social gala after another as well as jet-setting boondogles across the globe. Is it Washington that corrupts the man or the men that corrupt Washington?
. . . where are the progressive Tea Party?
Maybe it's time for someone to print up some "Listen To Me" signs and get out on the streets?
Not that the media would cover the demonstrations, of course, unless people started chucking rocks and getting arrested. It just doesn't fit the media template.
Progressive Tea Parties, wouldn't they be called Coffees? Or these days, given their propensity for shooting themselves in the foot, Coffee Clutzes! (just playing around with the language, here)
We all need to go to our mutual fund brokers and cash out our accounts, and make sure they know it's because of the Wall Street Burglers' actions. Having no investors will get their attention.
We all know our mis-representatives are whores: we just need to make them read the results of their STD tests from time to time: Work for us, or find a new job!
As for those thieves on Wall Street: Stockholders must demand that management bonuses be tied to P/E ratios of 5/1, not the obscene 35/1 ratios they are showing these days. No real performance, no bonus.
The Masters of the Universe would have us understand that income is distributed as it is because of forces beyond our understanding. How unequal in understanding are we that it should come at such cost to almost everyone's health and future?
same old same old! They buy up a few legislators and everyone is fat dumb and happy! This also brought down the Copenhagen accord!
http://www.thenation.com/blogs/copenhagen/507429/george_monbiot_speaks_w...
dennis baker
India has better business schools and they're culturally averse to binge drinking, duplicity, extortion, bribery, thievery, .......... At least it would save the stockholders billions of dollars a year.
Just this once I have to dispute the " "”we all played along as if the good times would never end." It is simply not true, not even close to accurate.
Many of us -individual American citizens- have endured the derisive comments and social ostrcism that was common for years that came of being frugal, careful with how we handled money. We never reaped the benefits of the "good times" and so never had the option of spending like there was no tomorrow. We didn't personally get slammed by the stock market "correction" (what a silly euphemism!) because we never made enough money to do more than pay our bills, and pay them we did. We never pretended that the stock market, and consequently the joke of 401ks as reliable retirement planning and so forth are, was anything more than a guessing game and we passed on it just like we pass on lotteries. But we were sucked deeply into the vortex created when the market fell so spectacularly.
We are the first to be made to pay the bills that others can't or won't. Since we tend to be low on the ladder in employment, we are the first to get laid off. We have the thinnest margin between us and economic disaster, so even though we had proper mortgages and never made a late payment we have the prospect of losing our homes hanging over us like the sword of Damocles.
We did not all contribute to what has happened, and continually saying we did aids and abets those who are most responsible in their getting away with it.
Thanks, Brooke. Your point is well taken, and no disagreement here--we meant "we all" metaphorically, not literally. Lots of people who didn't get to join the party are nonetheless having to foot the bill.
Just this once I have to dispute the " "”we all played along as if the good times would never end." It is simply not true, not even close to accurate.
Many of us -individual American citizens- have endured the derisive comments and social ostrcism that was common for years that came of being frugal, careful with how we handled money. We never reaped the benefits of the "good times" and so never had the option of spending like there was no tomorrow. We didn't personally get slammed by the stock market "correction" (what a silly euphemism!) because we never made enough money to do more than pay our bills, and pay them we did. We never pretended that the stock market, and consequently the joke of 401ks as reliable retirement planning and so forth are, was anything more than a guessing game and we passed on it just like we pass on lotteries. But we were sucked deeply into the vortex created when the market fell so spectacularly.
We are the first to be made to pay the bills that others can't or won't. Since we tend to be low on the ladder in employment, we are the first to get laid off. We have the thinnest margin between us and economic disaster, so even though we had proper mortgages and never made a late payment we have the prospect of losing our homes hanging over us like the sword of Damocles.
We did not all contribute to what has happened, and continually saying we did aids and abets those who are most responsible in their getting away with it.
Just this once I have to dispute the " "”we all played along as if the good times would never end." It is simply not true, not even close to accurate.
Many of us -individual American citizens- have endured the derisive comments and social ostrcism that was common for years that came of being frugal, careful with how we handled money. We never reaped the benefits of the "good times" and so never had the option of spending like there was no tomorrow. We didn't personally get slammed by the stock market "correction" (what a silly euphemism!) because we never made enough money to do more than pay our bills, and pay them we did. We never pretended that the stock market, and consequently the joke of 401ks as reliable retirement planning and so forth are, was anything more than a guessing game and we passed on it just like we pass on lotteries. But we were sucked deeply into the vortex created when the market fell so spectacularly.
We are the first to be made to pay the bills that others can't or won't. Since we tend to be low on the ladder in employment, we are the first to get laid off. We have the thinnest margin between us and economic disaster, so even though we had proper mortgages and never made a late payment we have the prospect of losing our homes hanging over us like the sword of Damocles.
We did not all contribute to what has happened, and continually saying we did aids and abets those who are most responsible in their getting away with it.
Great article, but I have to disagree with this one quote:
"It's not too late. If nothing else, last summer's tea parties showed that politicians will listen to popular outrage"”when it seems to threaten their jobs."
Joe Lieberman ignored popular opinion during the health care debate and his approval ratings in Connecticut tanked because of it. It doesn't matter to Joementum. His corporate masters will serve him well after he loses his seat or retires.
Kevin,
I saw your appearance on Bill Moyers show, but due to an untimely phone call that I received I didn't get to listen to much of the program. I intend to read your featured story.
One point that I would like to make about Wall Street is that the truth has been revealed. Most pundits and the media want to say how these bankers have gotten away with something when in reality they haven't.
The world knows what happened regardless of how strong their grip is on Washington. The real question is how strong is their grip on the American people? The pot of water is slowly coming to a boil. Change is in the air.
Regarding the financial grip on America, Ted you create an image of American's water coming to a boil. I was struck by that image, its the analysis of, "the frog in a pot of water." No one jumps into boiling water, but slowly over time America has become aware how treason and terrorism have sway with our economy through the financial system's access to and control of our government especially after they needed to be, "Bailed Out." America needs to put the heat on the causes and those who willingly sell out our country. We need to wake up and change this relationship of government by Oligarchy. DISRAELI! warned his government about the two worlds back then and did something about it.
I fear that they will get away with it because the boil is coming so slowly: A slow rise in temperature boils all frogs!
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