A decade or so ago, some states gave welfare recipients food stamp debit cards. Welfare mothers could use them to buy groceries with plastic, just like virtually everybody else in the check out line. Plastic made accounting easier for clerks because the debit cards failed to function for excluded items like cigarettes and alcohol.
That's what America needs for Wall Street. When bankers get money from the $700 billion bailout called Troubled Asset Relief Program (TARP), they should receive it on plastic. A TARP debit card would restrict bankers' spending. TARP plastic would fail to function if bankers tried to use it for excluded items like $18 billion in year-end bonuses, private French-manufactured jets and $35,000 inoperative toilets.
TARP debit cards are required because Wall Street's wizards of finance have shown repeatedly they can't or won't control their own spending.
These are the guys who bankrupted their own financial institutions with unrestrained risk-taking. Then they went bawling to Congress for a bailout that was supposed to free up credit for the rest of the country. Not true to their word, the bankers didn't extend credit, and businesses and municipal governments across the nation suffered the ugly consequences: that being, of course, unemployment. In the last quarter of 2008, more than 1.5 million Americans lost their jobs -- the highest number in more than a quarter century.
Still, after causing all that devastation, and asking those same Americans to clean it up, Wall Street's bankers don't understand that they are on the dole. They've behaved as if their banks made profits, as if they had a credit card, not a big fat IOU to the American public.
Let's start with the bonuses. The very financial institutions that already have taken $350 billion in taxpayer dollars to prevent their collapse turned around and gave away more than $18 billion in bonuses to employees. The average bonus was $112,000.
By contrast, the Social Security Administration reported that in 2006, the most recent year for which it has statistics, the average non-Wall Street American's wages for an entire year's work totaled $37,078.
Still, the Wall Streeters pouted about their bonuses. Of 900 surveyed by eFinancialCareers.com, a job search Web site, 46 percent said they thought they deserved more.
And no wonder. Look what their bosses get. The financial services industry pays its CEOs more than any other, an average of nearly $19 million in 2007, according to a study by Lawrence Mishel, president of the Economic Policy Institute. Think about 2007. That was one year before Wall Street crashed, taking the country down with it. And its CEOs were making $19 million while overseeing the bankrupting of the system.
The bankers are all claiming none of those bonus bucks they paid out at year's end came from their TARP funds. But let's look at it this way. Lehman Brothers didn't get a TARP bailout. It failed in September, and its workers left the building with their belongings in boxes. None got a year-end bonus. If the U.S. taxpayers had permitted any one of the institutions that got tens of billions in TARP money to go bankrupt, their workers would be in the same shape as Lehman's -- carrying cardboard boxes not big fat bonus checks.
Of course, there's also the in-your-face bonus behavior of John A. Thain, the former Merrill Lynch chief executive who spent $1.2 million renovating his personal office including that just-for-show toilet and a $1,400 trash can. Thain decided to hand out between $3 and $4 billion in bonuses while Bank of America was struggling to take over the failing Merrill with the help of billions in TARP welfare.
Thain tried to defend the bonuses by saying they are an essential tool banks use to keep their best people. Jon Stewart, host of "The Daily Show," provided the only reasonable response to this assertion: "You don't have 'best people!' You lost $27 billion! Do you live in Bizarro World?"
Yes. Yes, he does. This is a guy who asked the Bank of America board to give him a $10 million bonus in December after Merrill, the company he directed, lost $15 billion that quarter -- for a grand total of $27 billion in one the year.
Though Bank of America originally received $25 billion in TARP welfare, after Thane's third quarter losses, it had to return to the taxpayers of America for $118 billion in government loan guarantees and an additional $20 billion in TARP welfare to complete the purchase of Merrill.
Bizarro World is right.
John A. Thain and his ilk, who blithely spend more on decorative toilets for their offices than middle class families can scrape together for a year of college tuition, need a rude awakening.
More than just the debit card, these guys ought to experience the humiliation of standing in a welfare line.
For some reason, when bankers get in trouble, the treasury secretary and the chairman of the Security and Exchange Commission have been running up to New York to huddle in weekend-long secret meetings in those fancy Wall Street offices with decorative toilets to solve their problems by handing them billions in taxpayer money.
No wonder those bankers act so entitled.
Let them drag their sorry lack-of-assets down to Washington, D.C. and stand in line and beg for taxpayer bucks in tawdry public offices like other welfare recipients must do.
When and if they qualify, hand them TARP debit cards that forbid expenditures on bonuses and $1.2 million office renovations for CEOs. Go ahead with President Obama's plan to limit to $500,000 the salaries of CEOs who receive TARP welfare, but make sure that those wise guys can't find sneaky ways to circumvent those restrictions with bonuses that come in the form of restricted stock, for example. Otherwise, CEOs will just be buying cigarettes with their taxpayer-funded TARP debit cards.
And then taxpayers, who despise the notion of welfare queens, will demand Congress "discredit" and dethrone the kings of Wall Street.
TARP is a tarp thrown of a 600 Trillion dollar Derivative debt.
Don't look under that tarp,
The Banks cannot be saved with money.
Only regulation of the banks,
and Investment in Americans,
can save the Banks, Wall street, The economy, and the country.
Hoover bailed out the banks causing the depression, Japan too, causing a 10 year depression.
FDR closed the banks for an audit, reorganized the monetary system, and put in place strict regulation and oversight of Wall street.
The banks who took TARP funds are additionally seeing downward pressure on their stock prices, which is hitting senior executives and other employees hard. So there is a great deal of incentive for the banks to repay the money as quickly as possible.
I am horrified by the excesses of Wall Street also. There were plenty of greedy people making money in very shady ways, particularly in the investment banks. More regulation is coming, and is necessary. But it's time to stop labeling TARP as "welfare" or "free money," when it most definitely is NOT.
The institutions buying these troubled assets, such as BofA buying Merrill and Countrywide, JP Morgan Chase buying Bear Stearns and WAMU, Wells Fargo buying Wachovia, deserve a different look. If not for the acquisition by these institutions, all of the losses would be on the governments dime and would be significantly higher than the TARP monies provided for liquidity. The companies would fold, like Lehman, exasperating an already difficult economic environment.
Let's focus on the real issues and real solutions and stop the name calling and pettiness.
Don't We, the People have the right to expect something in return?
How about starting with public release of the income tax returns of all corporations above a certain size (say, $10 million in assets)?
more...
Now that we have identified the problem we can deal with it in an organized fashion. Instead of “cash for trash” we should be talking about “indictments for felons”. Yes, every mortgage broker who wrote a liar loan, his manager, all the appraisers who worked with real estate agents to falsify home values, the institutions and those within them that knowingly bought these mortgages, bundled them into securities and coerced the ratings agencies to slap AAA ratings on these junk bonds and then sold them as the real deal instead of the c.rap that they were. How many thousands of indictments are going begging while the whole steaming pile is being glossed over by everyone from the Wall Street executives and Treasury Secretaries to Bush and now Obama?
Insanity of this people is still tolerated.....
Globalization has ruined the USA, and taken us off the perverbial cliff. In order to sell products, Multi National companies have destroyed the quality of life for 10' s of millions of Americans for cheap labor in other countries!
Paulsen. Bush. Bernanke are to blame.
Paulsen promised to use the money for mortgage relief as Congress stipulated.
He. LIED>
Take the socalled bailout money and Loan it to the banks that didn't gamble, that are sound and well run. Demand to see their books, just like FDR did, and then Loan it at reasonable interest, with strict rules on how it should be repaid and used to stimulate the economy, and then make sure that money gets into the hands of Middle Class America which has always done all the heavy lifting when it comes to making this country powerful.
Let the rich eat each other. For once let's save ourselves.
Hell, Bush and Cheney had to WORK HARD, FOR EIGHT long YEARS, to DEFRAUD Ameriacan taxpayers out of a few trillions of dollars.... Reid, Pelosi, & crew are HANDING THAT MUCH OUT, IN THE PAST THREE MONTHS, ALONE !!
Btw. the ROCKEFELLERS are SYNONYMOUS with CHASE-MANHATTEN bank, now JPMorgan-Chase.
If that doesn't indicate a teeny, tinny CONFLICT OF INTEREST........ well, duh
So much for "hope".
Not only is controlling exec pay a matter of fairness, it's also a matter of motivation.
If the bank execs on the dole have their pay limited, they will be extremely motivated to get in the black, pay off the gov't debt, and move on.
Let's throw the money changers out of the Temple they created for themselves by a show of solidarity for the workers of the world. Following the money into political coffers will reveal who benefits from the product of think tanks and the titans of corporate finace and banking who helped create the fascist movement in the Thirties. These same interest are at work today to limit real wages for workers and control the panets resources. Their interests span the globe and their allegance is to themselves.
Bottom line - all our corporate actions from finance to international trade, demand good regulation so that we can restore consideration for human beings who live in the US and the rest of the world and NOT just the bottom line. That requires not just good will but major law reform since, brick by brick, statute by statute, these evildoers have altered our federal codes in their own interests. David Cay Johnson's "Free Lunch" shows how they did it. NOW - we can change the law. Keep the pressure up on each and every Congress person and Senator. NOW.
Anything more will make them lazy.
he shut em down for a week to force an audit.
It will be necessarily.
Financial institutions that give out ridiculously high bonuses when they have lost money are more than proving they do not deserve to be in business. Americans who continue to place their money in these banks are idiots and have no right to complain because they are inadvertently condoning this entitlement and ripoff behavior.