They do have a license to steal. There is no other way to read Tuesday's report from the New York state comptroller that bonuses for Wall Street financiers rose 17 percent to $20.3 billion in 2009. Of course that is less than the $32.9 billion for bonus rewards back in 2007, when those hotshots could still pretend that they were running sound businesses.
The economy is anything but sound, but you would hardly know that from looking at the balance sheets of the big investment banks. The broker-dealer firms on Wall Street made a record profit, estimated at greater than $55 billion by the comptroller, and the only thing holding back even more grotesque bonuses was concern over criticism from a public that was hardly doing as well.
The enormous rewards last year come not from their having righted the ship of finance by lowering the rate of mortgage foreclosures for ordinary folks, one of four who are now "underwater" on their loans. Consumer confidence this month is the lowest in 27 years, and unemployment is expected to hover near 10 percent for the next two years. No, they get bonuses because the Federal Reserve, backed by the Treasury, bought the toxic mortgage securitization packages that Wall Street banks were left holding. They, and they alone, were made whole.
The way the scam worked is that the Treasury deposited taxpayer dollars with the Federal Reserve, which in turn purchased a whopping $1.25 trillion in toxic mortgages. That's the figure after the Treasury on Tuesday committed to depositing $200 billion more with the Fed to increase spending on this program--one that was ostensibly designed to increase credit availability to small businesses and others but has hardly accomplished that goal. Credit is still very tight because the big financiers have used the low-cost cash they received from those charitable government programs to solidify their own positions through acquisitions and the like.
Call it the "no banker left behind" program. While this plan didn't keep people in their homes, it did wonders for Wall Street profits. To be accurate, it's mostly the big bankers who reaped the rewards, for, as the FDIC reported Tuesday, the list of smaller banks throughout the country faced with default is growing longer. The big financial conglomerates, which have come to be covered by the FDIC under questionable circumstances, benefit from that arrangement, but they are hardly the ones hurting. The victims are primarily the smaller traditional banks that played by the rules but were overwhelmed after the housing market became dreadfully corrupted.
The number of banks on the FDIC's "problem list" soared from 252 at the end of 2008 to 702 last month, and the government's fund to insure depositors fell to minus $20.9 billion. The source of the problems for those banks is the sorry state of the housing market, with the number of loans that are more than three months overdue at the highest level in the 26 years that such records have been collected. Those hurting are mostly smaller banks, which are paying for the havoc in the housing market that the Wall Street giants created with their collateralized debt obligations (CDOs) and credit default swaps (CDSs). Those mysterious financial innovations meant turning the housing market into a grand casino using people's homes as chips, with the Wall Street crowd holding all the high cards.
Yet when the crash occurred, it was not those who designed and sold the toxic packages that suffered but rather the individual homeowners whose mortgages had been put into play. They and the smaller banks were still playing by the old rules, which meant that houses were presumed worth the money loaned on them. But there was no such disadvantage for the brokers, who would convert those mortgages into stock bundles. They had succeeded in getting the U.S. Congress, at the end of 2000, to exempt those CDOs and CDSs from any regulation.
This debacle was the accomplishment of the Commodity Futures Modernization Act, pushed through Congress during the last years of the Clinton administration by former Goldman Sachs honcho and onetime Treasury Secretary Robert Rubin and his protégé and successor, Lawrence Summers, now the top economic adviser in the Obama White House. The intent was, in Summers' words, to provide "legal certainty" for those CDO investment gimmicks, meaning no regulator could look to see what was inside the packages. We still don't know, although we taxpayers now are on the hook for 1.25 trillion dollars' worth of them.
Can't say it didn't work out for the folks at Goldman Sachs and JPMorgan Chase, where total average compensation was up last year by 31 percent. How did you make out?
http://americaspeaksink.com/2010/02/unemployment-benefits-deniedover-a-million-families-destroyed/
Now the banks are bigger then ever, more profitable, and paying record bonuses (and record lobbyists).
I take this as irrefutable proof that government CAN be effective, when it wants to be.
Does this then mean that record unemployment, foreclosures, personal bankruptcies, are problems that government doesn't want to fix?
To be frank most of my friends and the people I meet are becoming physically ill that 2008 has resulted in Obama praising and abetting the wealth of bankers and extending GWB's wars.
Yes it's bad but what do we do about it? Nothing seems to be the answer. The Greeks will take to the streets with as much force as they can muster but we watch cable TV.
We get the government we deserve because unlike a real democracy this Republic is run by thieves for Oligarchs. They now know we are nothing like our grandparents. We will get no New Deal because we are not threatening a full scale revolt. American Capitalism eats its own flesh: yum.
Pay off all debts.
Incur no new ones.
Bankers can NOT securitize loans if they never exist in the first place.
Corruption comes from money. Keep what you have in your pocket. That means lower prices, more affordable living and a smaller income gap. Ask yourself - do I REALLY need those extra 27 cable channels? The 3rd cell phone? That new pair of shoes?
The problem is that this sound advice runs counter to generations of American "more" culture, of limitless horizons and novelty for its own sake. Our own red-white-and-blue cultural values are as much to blame for this debacle as the specific mechanism is.
Entire Senate: F*** THE POOR!
French Revolution, 90% of the population living at sustenance level income; government borrowed the equivalent of one year of the country's GDP to finance war, creative accounting hid true state of budget; loan payment defaults followed, and rich nobles refused financial reform requiring them to pay taxes; natural disaster (crop failure), food riots, heads rolled.
Russian Revolution, 85% of the population at sustenance level; usurious rents, high unemployment, deplorable work/living conditions; Czar diverted state monies to costly wars; food riots, citizen protesters brutalized, Czar shot.
Iranian Revolution, 70% of population at sustenance level, revenues from oil and technological advances primarily benefit the few, rich feudal landlords; inflation, usurious rents and greedy politicians drive middle class towards poverty; citizen protesters brutalized, Shah exiled.
Earmarks for both parties? No problem.
Trillion dollars for TARP & the banks and bankers? No problem.
Trillion dollars for war in Iraq, Afghanistan, Pakistan, Yemen, 700 military bases around the world, and coming soon...War in Iran? No problemo.
Single-payer or public option to drive down the cost of people's health care? No chance.
Social Security? Nope, gotta needs test.
Jobs for the people? Due to the "benevalance" in our hearts, and since its an election year, we your masters, offer you a $15B program. Don't spend it all in one place.
This is the change we can believe in (?) Democrats are corrupt, weak, or frauds. Republicans are worse. Can we vote for none of the above? Mr Nader...I'm so sorry. I bought the crap about not throwing my vote away...and then promptly threw my vote away. Here in Florida, they didn't count them anyway, either in Bush v Gore or later in the Democratic primary. But not to worry. We have super-delagates that know how we should vote.
Yes we're a mess. But I'd STILL rather be here than there. Let's fix the mistakes, jail the criminals, ENFORCE existing laws and move forward. If done properly, we can get through this one.
When I needed to see a doctor in Cuba, I was tended to by a world class physician and it did not cost a cent. You do not have 50,000,000 people without sufficient food to eat like you do in the USA. You do not have one in four childeren living on inadequate food stamps like in the USA. All children get an education in Cuba. They get every single thing the country has to offer. If a child has talent, they get the best coaching, the best teachers to help him or her achieve their total potential. Not in the USA though, there you are free to freeze and starve to death in the dark, if you have a child that has talent but he comes from an impoverished family, too bad for him or her. They do not have a chance in hell of ever doing anything with that talent..
Most people in the world are waking up to the fact that capitalism, is anti christian and is the worse evil ever perpetrated on man.
The USA has 27% of it's population either unemployed, or underemployed. At the same time the 1% of the population that are true capitalists are taking home millions in bonuses on top of their 7 figure salaries and own 95% of the wealth of the entire country.
Not one of the 95% of Americans in your undeclass will ever get into that upper 1%.
Capitalism is sinking your country, in the end it will destroy it. So keep dreaming if you want about how wonderfull it is, but millions of Americans are not swallowing that Koolaid any more, just the slow ones like you are doing that.
For everybody who thought the bailing out Warren Buffet @Goldman Sachs was cute-n-funny, I hope you like what you see.
So, you see, there is a silver lining to the rich getting richer. Too bad 95% of us won't see a rise in our standard of living, but you have to congratulate Wall Street for taking care of their own.
Obama does not begrudge these Oligarchs their wealth as he hopes to be the first President to make a billion from boasting about how little he achieved. That will put him in the Top 1% middle class range. Rachel Maddow with her tens of millions is in the new lower class of the top 1%.