Roosevelt Institute Braintruster Marshall Auerback wonders why bailed-out banks are getting giddy with dangerous speculation and sky-high bonuses when the rest of us are still dealing with financial chaos. Has the American public had enough?
Bank of America Corp., JPMorgan Chase & Co. and Citigroup Inc., the three biggest U.S. lenders, collectively reported a total of $10.2 billion in profits for the second quarter that largely relied on investment banking and asset sales to counter growing losses on consumer loans. Goldman Sachs Group Inc., which gets almost none of its revenue from retail consumer banking, reporting earnings of $3.44 billion, its highest quarterly result since becoming a public company.
The Goldman Sachs earnings announcement in particular was basically a big "SCREW YOU" to the American public. True, the results appear to show that we have stepped back from the financial abyss. The stock market is up by a third from its March lows. Of more significance than the earnings was Goldman's announcement that it will be awarding individual bonuses in the tens of millions of dollars -- which suggests that the bank anticipates little AIG style backlash from a bailout weary public. The very same public whose taxpayer dollars prevented Goldman from going the way of Bear Stearns and Lehman last autumn.
As Mike Lux indicated in the Huffington Post, the underlying message is: see you if you can try to stop us, because we know you can't.
And of course they are right because Obama's economic advisors actually equate a healthy financial sector with a healthy economy. Is this assumption correct?
More than half a century ago, then-General Motors President Charles Wilson (in his Senate confirmation hearings as Eisenhower's Defense Secretary) was misquoted as having said, "What's good for General Motors is good for the country."
That remark came to epitomise the auto giant's arrogance, although what Wilson actually said was, "What is good for the country is good for General Motors, and what's good for General Motors is good for the country" in response to a question as to whether (in his future government capacity as head of the Pentagon) he could ever envisage taking action in the nation's defense interests which might compromise his old company. Wilson acknowledged he could but the quote indicates that he could not envisage circumstances in which the interests of GM would not be coincident with those of the country.
You can read the rest of Roosevelt Braintruster Marshall Auerback's piece at New Deal 2.0.