Prepare for a new firestorm of completely justified populist outrage. Some of the country's largest Wall Street firms have set aside billions of dollars for bonuses to executives and traders -- many of whom are the same people whose reckless risk-taking led to the current recession.
Amazingly, giant insurance conglomerate AIG is currently scheduled to pay another $198 million in bonuses next March.
Remember that AIG's sale of unregulated "credit default swaps" helped trigger the financial collapse that led to the recession. "Credit default swaps" were essentially insurance policies that, if the underlying financial instrument fell below a certain price, AIG would insure the loss. Only problem was, that since the "credit default" business was completely unregulated, AIG had no capital requirements to guarantee that they could pay off.
To prevent what they thought might be a world-wide systemic meltdown, the Government was ultimately forced to invest $180 billion of taxpayer money, and now owns 80% of the company.
But earlier this year AIG actually paid $168 million in bonuses to executives and traders in the company's Financial Products Division that had run the "credit default swap" program, causing universal outrage.
Does it make any sense at all to give even more financial rewards to the very people who have helped put millions of Americans out of work and caused the worst economic downturn since the Great Depression? Of course not, but that is exactly what AIG management is poised to do.
One of the problems the company's management says it confronts is that they are "contractually bound" to make these payments. Apparently contractual obligations mean more when it comes to stock speculators than it does when it comes to labor agreements where companies constantly demand changes if "economic circumstances" warrant. At the very least, they should make the people who helped bring us the recession sue the company in open court and tell a jury why they deserve millions of dollars in bonus money for the brilliant job they did.
Kenneth Feinberg, the U.S. Treasury's point man on compensation for bailed out firms, has advised the company to scale back its payments to avoid another public firestorm. He is dead on.
But AIG is only the tip of the iceberg. According to the Washington Post, J.P. Morgan Chase has set aside $2.78 billion in compensation for its investment bankers for the third quarter - a 28% increase over the same period last year.
J.P. Morgan Chase is able to pay those kinds of bonuses because the financial bailout by the taxpayers has put it - and the other big Wall Street Banks -- in a position where they will generate very strong profits in the third quarter. J.P. Morgan Chase itself will generate profits of $3.59 billion - the strongest results in two years.
Community and Regional banks, on the other hand, are in deep trouble. The difference is that the Wall Street banks are making money on investment banking activities - on underwriting equity plays and speculative trades - exactly the activities that sent the financial sector into a tailspin. The Community and Regional banks, on the other hand, are restricted to traditional banking activities - receiving deposits and making loans. But the recession has caused demand for loans to drop and delinquencies on loans to increase.
So the Community and Regional banks that didn't have anything to do with causing the recession are paying the price -- along with the rest of America. But the big Wall Street banks that actually caused this catastrophe are rolling in money and handing it out in huge chunks to the brilliant young speculators that drove the process.
That ain't right. It's not right morally and it certainly isn't right economically. If the economic incentives continue to encourage reckless speculation and penalize sound banking, we're going to get reckless speculation.
The Obama Administration has made regulatory reform proposals that are the first step down the road to changing these economic incentives - and reining in the massive power of the financial sector as a whole. This package includes regulation of so called "derivatives" -- essentially bets on the direction of underlying investment instruments -- including the "credit default swaps" that sunk AIG. Their passage is not just a matter of "good policy" - it is a matter of national economic security.
If our economic system continues to be dominated by an outsized financial sector -- if world-class reckless risk-taking continues to receive massive economic rewards -- then we are headed to another financial collapse in two years, or five years or fifteen years.
Just as surely as America had to change the policies that had made it vulnerable to terrorist attacks on September 11, 2001, we have to change the policies that made us vulnerable to the attack of the Wall Street speculators that culminated in the collapse of Lehman Brothers on September 15, 2008.
Robert Creamer is a long-time political organizer and strategist, and author of the recent book: "Stand Up Straight: How Progressives Can Win," available on amazon.com.
HuffPost Politics brings you the top political stories three days a week. Learn more