I don't know Andrew J. Hall, and I have nothing against him personally. But there is no way in the world that he deserves $100 million in oil trading fees from CitiGroup, a bank that is entirely on taxpayer welfare. If the administration lets him get away with it, Obama's poll ratings will continue to plummet. Their failure to come down hard on Wall Street, I believe, is the root cause for why the American public is turning away from the president. He may even lose the allegiance of those most counting on him -- the nearly 30 million who are out of work or underemployed.
We need to save Obama from his own economic team, which is acting more and more like a Wall Street farm team. They seem blind to the obvious fact that Andrew J. Hall has not earned his keep. Let us count the ways:
1. That money is our money: CitiGroup has received more than $387 billion in government support, including $45 billion in TARP funds. Without our largess CitiGroup would go under. We're talking $1,269 for every man, woman and child in the country. That's our share of the subsidy. That's what's backing Mr. Hall's bets when he plays at the oil market casino. (See excellent accounting provided by Nomi Prins.
2. The entire financial sector is floating on government bailouts to the tune of more than $19 trillion in TARP funds and various asset and loan guarantees. Mr. Hall could not have "earned" a dime had we not rescued the entire financial sector from collapse -- there wouldn't have been any functioning markets or solvent partners left for him to trade with.
3. Mr. Hall has not created $100 million of real economic value for our economy or for our collective well-being. The profits that Mr. Hall generated for CitiGroup comes from a series of bets using other people's money. He has no personal downside for any losses. It's like you going to Vegas knowing that all of your losses are covered. It's clear you would be gambling in a very different way than if your own money were on the table.
So where does his $100 million come from? From all of us. Mr. Hall's winnings come from the speculative portion of the oil market. He doesn't have a tangible interest in selling his own oil or in buying oil for his use. But he and others are skimming a bit off through trades, and all of us are paying for that in the form of higher oil prices either at the pump or in products and services that depend on oil. His "work" adds nothing to the real economy. It just transfers money to Mr. Hall and to CitiGroup from all of us. (If I've got this wrong, perhaps Mr. Hall can explain to the public how his work helps create employment opportunities for the 30 million unemployed and underemployed Americans. And please don't tell us that you contribute by providing work for the restaurants you frequent.)
4. Mr. Hall's high pay and speculative activities are precisely the kind of activities that crashed the system in the first place. By now it should be crystal clear that our obscene distribution of wealth combined with financial deregulation set up the fantasy finance casino on Wall Street which spewed toxic assets around the world. As long as such speculators are permitted to play their games and are rewarded with astronomical sums, we will have cured absolutely nothing. The Obama Administration seems so concerned with restarting the financial sector that it is reluctant to curb these speculative excesses. But the administration should not expect the rest of us to follow. This kind of speculation and reward system must be stopped before it cripples us again. (Please forgive me for urging you to look at The Looting of America for a full description of the origins of the financial crisis.)
5. For reasons of plain decency, no one should walk off with that kind of paycheck, especially during a time of general economic hardship. We cannot allow one individual to receive $100 million from a tax-payer owned bank while 30 million struggle to find work.
6. Allowing Mr. Hall this bogus bonanza makes a mockery out of the pay constraints espoused by the Obama Administration. It makes the Pay Czar look as hapless as Czar Nicholas.
7. It will feed anti-government sentiment and undercut the Obama Administration. It will make it much more difficult to win necessary financial reforms in Congress. It will cause even more people to conclude that the Obama Administration is a tool of Wall Street. The administration will lose more credibility among those of us who are furious about the financial rip-offs that nearly threw us into a Great Depression. It will be hard to forgive the administration as the rip-offs start up again. Or as Paul Krugman put it,
I don't know if administration officials realize just how much damage they've done themselves with their kid-gloves treatment of the financial industry, just how badly the spectacle of government supported institutions paying giant bonuses is playing.
The big boys are betting that our fatalism, disappointment and despair will immobilize us. Wall Streeters are supremely confident that we are no match for their iron will to pay themselves whatever they want, whenever they want. But this is a winnable issue if only we are willing to let our outrage be known.
Let's start a campaign right here, right now to deny Mr. Hall his jackpot. Each of us needs to help shame the administration into doing the right thing. Readers and bloggers, columnists and progressive media sites, concerned citizens and activists should get on this case. Andrew J. Hall's $100 million payday is so egregious and so outrageous that it can become the symbol for everything that is wrong with Wall Street. It could help remind the country that these same people and these same salaries were what crashed the system in the first place. To let them profit again at our expense is unconscionable.
We need to be relentless and make sure there are no loopholes -- no voluntary controls, no deferred compensation, no equity stakes, no pious and porous statements about stockholder transparency. I'd like to set Mr. Hall's compensation as no more than the president of the United States -- $400,000 -- for as long as the financial sector is on the dole.
Let's not get hung up on the mechanism for capping pay or who should be covered. And let's not get lulled into complacency by a "recovery" that has yet to produce one job for the millions who are without work. This is the time for a loud, united chorus to just say "No" to Mr. Hall's $100 million payout and to those who are letting him get away with it.
There's only one question: Do we have the guts to take this on?
Les Leopold is the author of The Looting of America: How Wall Street's Game of Fantasy Finance destroyed our Jobs, Pensions and