At a conference in London, a Goldman Sachs international adviser, Brian Griffiths, praised inequality. As his company was putting aside $16.7 billion for compensation and benefits in the first nine months of 2009, up 46 percent from a year earlier, Griffiths told us not to worry. "We have to tolerate the inequality as a way to achieve greater prosperity and opportunity for all," he said.
Eight months ago it looked as if Wall Street was in store for strong financial regulation -- oversight of derivative trading, pay linked to long-term performance, much higher capital requirements, an end to conflicts of interest (i.e. credit rating agencies being paid by the very companies whose securities they're rating), and even resurrection of the Glass-Steagall Act separating commercial from investment banking.
Today, Congress is struggling to produce the tiniest shards of regulation that would at least give the appearance of doing something to rein in the Street.
What happened in the intervening months? Two things. First, America's attention wandered. We're now focusing on health care, Letterman's frolics, and little boys who hide in attics rather than balloons. And, hey, the Dow is up again. The politicians who put off Wall Street regulation for ten months knew that the public would probably lose interest by now.
Second, the banks keep paying off Congress. The big guns on Wall Street increased their political donations last month after increasing their lobbying muscle. Morgan Stanley's Political Action Committee donated $110,000 in September, for example, of which Democrats got $43,000.
Official Wall Street PAC donations are piddling compared to the tens of millions of dollars that Wall Street executives dole out to candidates on their own (or with a gentle nudge from their firms). Remember -- the Street is where the money is. Executives and traders on the Street have become the single biggest sources of money for Democrats as well as Republicans. And with mid-term elections looming next year, you can bet every member of Congress has a glint in his or her eye directed at the Street.
That's why the President went to Wall Street to raise money Tuesday night, gleaning about $2 million for the effort. He politely asked the crowd to cooperate with reform -- "If there are members of the financial industry in the audience today, I would ask that you join us in passing necessary reforms" -- but those were hardly fighting words. It's hard to fight people you're trying to squeeze money out of.
Which is the essential problem.
Ken Feinberg, the President's "pay czar" came down hard on executive pay yesterday, for those banks still collecting money under TARP, as well he should. But Feinberg isn't trying to pass new financial reform legislation, and TARP no longer covers several of the biggest banks with the highest pay and bonuses -- although they're still getting subsidized by the government with low-interest loans.
Wall Street and the Treasury want us to believe that the TARP money will be repaid to taxpayers, but Neil Barofsky, the special inspector general keeping watch over TARP, said yesterday that just 17 percent of the TARP money has been repaid, and "[i]t's extremely unlikely that taxpayers will see a full return on their investment." Later he told a reporter that it's unlikely "we'll get a lot of our money back at all."
Brian Griffiths, the Goldman international adviser who told us inequality is good for us, doesn't know what he's talking about. America is lurching toward inequality once again, led by the financial industry. The Street is back to where it was in 2007, but most of the rest of us are poorer than we were then -- largely due to the meltdown that occurred because Wall Street overreached. The oddity is that we bailed out the Street, including Griffiths and his colleagues, but apparently won't even be repaid.
And now that Griffiths et al, knows his firm and the other big ones on the Street are too big to fail, he and his colleagues will make even bigger gambles in the future with our money.
Cross-posted from Robert Reich's Blog
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The American people have been treated to Kibuki Theater, where the brave Samurai warrior comes out with his gleaming sword to sing songs of "bank reform" and "curtailing the power of Wall Street". Only to end up having the dragons from Broad and Wall with their tigers, their lobbyists, pouncing on the reforming warrior.
Or maybe Barney is the Wizard of Oz and his Democratic colleagues are dutiful and obedient munchkins. Forever chanting "Follow the Yellow Brick Road to Barney's House" as long as we don't have to run into any witches on Wall Street.
It's jail time for bankers or it is street duty for an irate public.
Obama's financial team is led by two guys who helped create the financial mess - Geithner and Summers... once he announced those two were on his 'team' it was clear to wall street that the status quo would rein and their would be no change in operations or regulations...
obama's no liberal democrat... just like clinton was no liberal democrat - they're both members of the political elite single corporatist party that runs this country today... and has for the past fifty-plus years...
Nothing will happen until there is rioting in the streets.
As hundreds of banks are shut down, as businesses continue to lay off workers or shut down for good, as jobs continue to move overseas, it won't take long now.
We can then pay of our debts and have a balanced budget. We can then invest in jobs and industry to re-create the American middle class again.
I assume that we now have Griffith's approval to create inequality in order to achieve greater prosperity.
So I propose that we pass a law to regulate the pay of all bankers and hedge fund managers restricting them to the minimum wage. This will give the rest of the economy much greater prosperity.
This will also balance the financial advantage they have enjoyed for the last 2-3 decades.
I wonder how noble Griffith and his pals would be under that inequality?
I wonder if his statement is only conditional on the current loopholes and evasions they enjoy now?
They can make as much as they want. We the people will simply reclaim 95% of it
http://www.pbs.org/wgbh/pages/frontline/warning/view/
remains trhe same
time may change
me...
All of which have resulted in the banks making untold fortunes and wild profits off of everyone else's demise. The thing they are brilliant at is stealing a profit off of everyone's misery. They know the craft well. Yes, to them inequality or the caste system of the filthy rich feeding off the captive hosts of Casino style Capitalism is their very way of life. Gives a whole new meaning to "Mr. Griffiths, tear down that wall."
Wall Street executives took us down the path of economic disaster and now reward themselves because they simply can't conceive of anyone else doing such a terrific job gambling with other people's money. They're addicted to their own egos and the gambling habit.
Our Congress would rather see another meltdown than lose the next election. Where is the shame???
and with a clear conscience do take all they can take.
But if that were the root cause of evįl, then out of self-preservation
we would demand honest laws, have an open and transparent
government and the public would have all eyes on government.
Truth is, the root cause of all evil is pride, the illusion that no one
more intelligent can fool you, by a pretense of good hide their intent
to enrich themselves upon the misery of you.
Abolish our capitalist dictatorship and replace it with democratic equality.
U.S. Constitution, 50th Amendment
(1) Delete: “All men are created equal”
(2) Add: “All men are not created equal, therefore the highest priority
of government shall be to protect those less intelligent from the
supremely intelligent rich.”
What Chernow points out is that as the financial collapse unfolded, it too was "limited" initially to Wall Street. Chase, J.P. Morgan et al tried to "rescue" the collapse without government intervention. They failed. Despite periodic rises and temporary "recoveries" in share prices, the damage spread to the real economy. Only with the election of FDR and the findings of the Pecora hearings was regulation introduced, much of which was undone with the gutting of Glass/Steagall that reached its apex during the Clinton Administration.
Yes, we can blame Wall Street money. But, we have to scrutinize the New Democrats - the Clintonites who still populate the Obama administration. To what extent are they unwilling to cut their ties to Wall Street?